Questions To Ask About Your Retirement Plan
We can provide investment advisory services in these states and other states where we are registered or exempted from registration.
What Does Your Family Think Of Your Plan
After thinking about your dreams, consider that your family may have some dreams of their own for your retirement. You’ve been busy working for many years now so they may relish a little extra time with you, and be really thankful to have some help with grandkids, too.
Unless you’ve already been talking about your plans, they will have made some assumptions about how you will be spending your retirement.
Having a conversation about your plans will help everyone start thinking about the impact this big life change will have on the entire family especially if you’re planning to be even busier in retirement than your working years and set everyone up for success.
Enlist the help of a professional
While these key questions can help you plan your life in retirement, there are many financial questions to answer, too.
At what age should you begin taking Social Security? Whats the best move to make with your 401 once youve retired? What is the best strategy to establish a steady, reliable income stream?
Consider consulting a financial professional who is familiar with the ins and outs of retirement planning, distributions and taxes to share your plans and ensure that youre on course to achieve your goals.
What Age Can I Retire
Nearly half of Americans call it quits on work between ages 61 and 65 while 18 percent retire even earlier, according to data from LIMRA Secure Retirement Institute. By age 75, 89 percent of Americans have left the labor force, LIMRA says.
These retirement statistics no doubt include some people who cant find work or who cant work because of health problems. Still, early retirement can mean an income squeeze. In order to properly determine the retirement age that makes the most sense for your finances, if you have this luxury, you need to determine the following:
- Your investments
Read Also: 4 Percent Rule Retirement Calculator
Key Questions To Ask Your Retirement Plans Investment Advisor
It is fairly common for employer-sponsored retirement plans s, 403s) to hire an investment advisor as an additional benefit to Plan participants. An investment advisor can provide various ancillary benefits to the Plan, such as assistance, education, and advice to Plan participants, and oversight and discretion over the Plans investment lineup.
It is important to note, however, that not all investment advisors are created equal meaning, not all advisors are held to the same standard. While there are some advisors who are required by law to act in the best interests of Plan participants , other advisors provide advice or recommendations to participants that may primarily serve the best interests of themselves or their advisory firm . Adherence to a Fiduciary standard is not only critical to the level of trust that a Plan Sponsor and Plan participants give to their advisor, but it can also substantially reduce the amount of risk that the Plan is subject to.
As a result, a common question that is asked is: How do I know if my investment advisor is acting in my best interest? Below is a list of the Top 8 ways that you can help to make this determination. Remember that you can always ask your advisor any of these questions if you are unsure of the answers. Knowing the answers to these questions can help you to assess the level of risk that your Plan, or your individual investment account, is exposed to. Is your advisor truly working in your best interest?
Do I Have A Personal Planand Needed Documents
Take some time to plan for your own careand that of your spouse, if you’re marriedas you get closer to the risks of advanced age. Set up healthcare proxies, powers of attorney, and other documents well before you need them when you can thoughtfully consider your needs and preferences.
Don’t leave these crucial decisions until there is an emergency when your energy and abilities may be compromised. Others could end up making choices that would not have been your preferences. Get there first and arrange your own life.
You May Like: Jp Morgan Chase Retirement Plan Administration
Top 5 Questions To Ask A Financial Advisor If Youre Planning To Retire
Financial Advisor – “I help soon-to-be retirees achieve financial independence so they can live comfortably in retirement.”
There are several financial transitions throughout life. One of the most significant financial transitions is retirement. The shift from pre-retirement when you are earning, saving, and growing assets to retirement when you are withdrawing assets is monumental.
A successful retirement transition can make or break retirement. Its important your retirement financial advisor is able to make this journey with you. If youve never worked with a financial advisor or if you already have a financial advisor but are not sure if they can help you make the retirement financial transition, the following five questions will help you better understand their capabilities, experience, and philosophy when it comes to helping clients create a successful retirement.
1. Why do you do what you do?
This is a question that doesnt get asked often enough. At the end of the day, you dont just want an advisor to legally put your interests ahead of their own. You want a financial advisor that is honored to always put your interests ahead of his/her own an unbiased and independent steward of your money. Find out what makes him tick. Why does she do what she does? Ask why they do what they do so you can learn why they want to work with you.
2. How long have you been working as a retirement financial advisor?
3. Does your firm hold my money and investments?
How Long Do You Need Your Money To Last
This question is really asking how long you plan on living. Life expectancy isnt something most people like to think about, but the reality is that your expected longevity will play a significant role in your retirement planning projections. The longer your life expectancy, the greater the anticipated cost of retirement.
After turning 65, one in three women and one in five men will live beyond 90. Before you can estimate how many years you will spend in retirement, you need to figure out when you want to retire. You should use as realistic of a life expectancy as possible. You also should personalize your assumptions based on your own health and wellness history as well as your familys history of longevity.
You can use the average life expectancy for men of 76 years, or 81 years for women. If you’re not sure how long you’ll live or if your retirement date is a moving target, there are a few different retirement scenarios to help you decide how long your money should last.
Also Check: Roth Conversion Strategies For 65 Retired Person
Finding A Financial Advisor That Suits You
Deciding which advisor is right for you often depends on your financial sophistication. If you have the knowledge and experience to handle certain aspects of your plan, you may want to use someone who specializes in the areas where you are weak. Once you know how much help you need, there are many options to pursue advice:
- Discount brokerage
- Investment advisor
Who Will Depend On You For Personal And Financial Support
Roles and norms that characterize the American family are changing. Its becoming more common for children to live with their parents well into their 20s, or circumstances forcing a return to “the nest” after previously moving out on their own.
Many pre-retirees find themselves providing support or care for their own parents. And with soaring childcare costs, grandparents may need or want to take on a larger role in raising grandchildren.
While many of these situations happen suddenly and unexpectedly, it may be possible for you to take measures to plan for or avoid these circumstances by having conversations with your children.
Thinking about it now and exploring the potential cost of supporting loved ones can help you formulate your financial and lifestyle plan accordingly.
Recommended Reading: Jesse Dietz Retirement Planners Of Texas
What Can I Expect To Pay In Taxes During Retirement
When you reach retirement age, youll likely have accumulated accounts with various tax treatments. Your traditional IRA withdrawals would be subject to income tax, while withdrawals from a taxable investment account could be subject to either short-term or long-term capital gains and withdrawals from Roth IRAs would be tax-free.
Bringing up this issue before you reach retirement age allows your financial planning team to facilitate distribution strategies from your various accounts to fund your cash flow needs in a tax-efficient manner.
Does The Plan Offer Guaranteed Or Safe Monthly Income
You can explore guaranteed return plans because robust, comprehensive insurance coverage is no longer about only a Sum Assured. Top money-saving plans look at protecting life, generating an income stream, giving away loyalty additions, and financially supporting the family till the end of the policy period. For example, Guaranteed Income for Life plan of Canara HSBC Oriental Bank of Commerce Life Insurance gives out a regular stream of income until your natural demise.
Such plans are very important, especially for the later years of your life when youd like to retire from managing your finances as well.
These plans are most useful when held jointly with your spouse. If one partner passes before the other, the pension income automatically transfers to the other spouse.
Recommended Reading: Purchase An Annuity For Retirement
How Healthy Is The Company Or Government Entity Thats Providing Your Pension
If the monthly income option makes sense to you, but you dont feel good about the employer thats handling your pension, you still may want to take control of this important asset. A pension is generally used to be a reliable income source for life. Unfortunately, failures and closures have become more common, leaving retirees who depend on those benefits to scramble. Of course, pensions so have the protection of the Pension Benefit Guarantee Corp., however the full balance of your pension may not be what you ultimately receive. Employers who offer pensions are required by law to send participants an annual notice with details on how well-funded the pension is. Be sure your company and the pension are both in good financial shape.
If youre one of the fortunate few who still have a defined-benefit pension coming, dont take it for granted. Treat it as a critical part of your plan. Your goal should be to get the most from every source of retirement income you worked hard to earn.
*The hypothetical example provided is for illustrative purposes only it does not represent a real-life scenario and should not be construed as advice designed to meet the particular needs of an individuals situation. Neither the firm nor its agents or representatives may give tax or legal advice.
Kim Franke-Folstad contributed to this article.
Why You Should Ask Questions
Many financial advisors take the lead on your financial plan to relieve you of having to do your own research. However, even if you have the best financial advisor in the world, its still your money, and you should know what is happening with it.
Landon Loveall, a certified financial planner with KB Financial Advisors said, Dont be afraid to ask anything. You need to have an AMA relationship with your financial advisor. I tell my clients to send me an email if theyre thinking about something with a dollar sign. That way, I can help them learn how to get the most out of our relationship.
The more questions you ask, the more informed youll be and the more trust youll build with your advisor, which, in the long run, can result in greater financial success.
Knowing the right questions to ask a financial advisor will help you get on track, or stay on track, to reaching your goals. Talking to them periodically will help you understand your financial situation and which habits you should change or adopt in the coming months. When it comes time to sit down with your advisor, be sure youre ready with the questions you feel are necessary so you can get the most out of your meeting and your money.
Recommended Reading: Where To Invest Retirement Funds
Should I Increase My Retirement Contributions
If youve recently paid off some debts, like your student loans, or your kids are in college and youre no longer saving for that goal, consider reallocating that money into retirement instead. If, however, you are still saving money in a fund for your child for college, make sure you arent saving for that goal at the expense of others, like your retirement. In other words: always continue to save for retirement, and never take money out of your 401 to fund your childs education.
General Questions You Should Ask Regularly
To fully understand your finances, you should know what questions to ask a financial advisor and how often you should ask them. While some questions are specific to your situation and financial goals, you should always ask general questions that will give you a holistic view of your financial health.
Schedule regular meetings with your advisor, whether that be a quarterly phone call, an annual in-person visit or both.
In addition to the following questions, you may have some of your own. Conversely, you may not feel you need to ask every one of the questions below. Whatever you decide, be prepared ahead of time. Rob Schultz, a certified financial planner at NWF Advisory Services, Inc. told Annuity.org, Come to your meeting with, or email ahead of time, a list you keep on your phone of questions that youre hearing in the media or things that youre thinking about at night.
Having a list of questions handy will ensure that you get the most out of the meeting and give your financial advisor some insight into which topics matter most to you and where you need further explanation.
Recommended Reading: Best Places To Retire Tax Wise
What Will Taxes In Retirement Look Like
Taxes reduce the amount you can ultimately spend in retirement, so its crucial to understand how much after-tax spending you can afford. A detailed financial plan with year-by-year cash flow projections can help you understand the impact of taxes.
When you withdraw money from pre-tax retirement accounts, you typically report that amount on your taxes and you may owe income tax. Those accounts include things like traditional IRAs, pre-tax 401 or 403 balances, SEP and SIMPLE plans, and more. Withdrawals from Roth-type accounts may come out tax-freeas long as you meet all IRS requirements.
Retirement income can also cause tax consequences. In many cases, your pension income is taxable. Social Security income may also be partially taxable, depending on other items on your tax return. You could potentially owe taxes on up to 85% of your Social Security benefit.
With smart planning, it may be possible to optimize the amount you pay in taxes and maximize the amount you can spend. Strategies include planning when and how you take income and withdrawals from different sources. It could even make sense to pay taxes before you really need toon purposein an attempt to avoid higher taxes down the road. Roth conversion strategies do just that.
About Kline Keppel & Koryak
Located in Northeast Ohio, Kline, Keppel & Koryak is an independent Third Party Administrator supporting a wide variety of employers throughout the country, many in Western Pennsylvania and Northeast Ohio. We specialize in the Plan Design, Administration, Compliance Testing, and Reconciliation for all types of Defined Contribution Plans including: 401 Plans, Safe Harbor Plans, Cross-Tested or New Comparability Plans, Profit Sharing Plans, ESOP Plans, and Money Purchase Plans. We work with any investment platform that offers recordkeeping services in conjunction with an independent TPA. In addition, we provide recordkeeping services for plans not wanting to utilize a Daily Recordkeeping Platform. Our personalized service keeps you, the client, in mind in supporting you with all of your Retirement Plan needs. Contact us today!
You May Like: Retirement Homes In Evanston Il
What Are The Fees Being Charged To Me And My Employees
Nothing is ever free. In the retirement plan world, be wary of anyone that tells you that some or any of your plan services are free. The Department of Labor requires that fees be disclosed to plan participants on an annual basis. You need to ask about the fees being charged to you or against the plan assets. These fees come in many forms and can include things like asset fee, advisor fee, services fee, fiduciary fee, fund expense, per participant fee, etc.