Preparing for Retirement? A Financial Advisor Can Help

We all know what a critical time retirement can be.  Today’s retirees may spend thirty years or more not working.  That’s a heavy burden to place on your nest egg.  Take out too much, and your savings will run out.  Take money from the wrong account, and you’ll pay for it at tax time.  That’s why many Americans ask a financial advisor to help them prepare for retirement and coordinate their retirement income strategy throughout their retirement years.

For example, only 36% of individuals who do not work with an advisor know how much they should withdraw each year, according to the Franklin Templeton Retirement Income Strategies and Expectations Survey.  Many think they can withdraw 7% or more each year with impunity, without realizing that if they do so they risk depleting assets.  Those working with an advisor are almost twice as likely to know their optimal withdrawal rate.  38% of those who have never worked with an advisor think Social Security will provide the majority of their income during retirement. Less than 20% of those working with an advisor make that same mistake.

Handling a portfolio on your own might save money, but could be more than you’ve bargained for. “If you screw up, you can end up losing a lot more than you might save,” says Walter Updegrave at Money magazine.  He references a recent study by benefit consultant Aon Hewitt and advice firm Financial Engines.  They looked at the 401(k) returns of more than 425,000 investors from 2006 through 2010, years of significant market turbulence.  “The findings: the median annual return of those who got professional help was almost three percentage points higher than the return for those who invested on their own, even after taking fees into account.”   The reason?  Do-it-yourself investors were much more likely to be too aggressive or too conservative in their investment strategy, and cash out during market declines, causing them to miss the rebounds.  A financial advisor can bring more structure and discipline to the investment process, resulting in better long-term returns.


About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!
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