Four Questions to Ask Your Adviser About Retirement Income Planning

Retirement planning can be complicated. It's important to ask your adviser specific questions about how he/she will make sure your retirement strategy is comprehensive.
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By Joe Elsasser, CFP

Finances in retirement can be incredibly complicated. Many people have multiple options for saving, instead of a single retirement nest egg. There are 401(k)s, 403(b)s, IRAs, fixed annuities, certificates of deposit, and more. Additionally, Social Security and pensions can be significant sources of income for retirees. The current tax system, Social Security rules, and other factors can interact to either cost or save you money. It’s a lot to consider, which is why it’s important to ask your adviser these questions to make sure your retirement strategy accounts for all the different factors.

Joe Elsasser

Joe Elsasser, CFP

When should I claim Social Security benefits?

Social Security is way more complex than it appears. There are a variety of factors you need to consider before determining when to claim Social Security benefits. Spousal benefits, widow(er) benefits, longevity, age, and different types of retirement income can significantly impact your Social Security benefit. Talk to your adviser to make sure you’re making the best decision about when to claim–especially if you’re nervous about the future of the Social Security system. You don’t want to leave money on the table. Any adviser can say that they know what they’re talking about when it comes to Social Security – ask your adviser to show you their process for evaluating all the different options available to you.

How will taxes impact my retirement?

Taxes can put a significant drag on your retirement strategy if you aren’t prepared. There are a lot of complicated factors when it comes to determining the taxes you’ll pay. Some types of income, such as Social Security benefits, are taxed based on how much other income we have. If you just had Social Security benefits, they would be entirely tax-free, but once you begin to add other types of income, Social Security benefits become taxable. Certain techniques like Roth conversions or harvesting capital gains or losses can have significant tax advantages. With a new administration, significant tax changes may be on the horizon. Ask your adviser what processes they have in place to help you evaluate tax planning options.

Which account should I pull from and when?

You might think that a retirement strategy is as simple as claiming Social Security and making 401(k) withdrawals. For some people, it may be that simple, but others may have pensions, inherited IRAs, Roth IRAs, 401(k) or 403(b) accounts, home equity, brokerage accounts, or other savings. Choosing the right accounts to withdraw from at the right points in retirement can add a lot of value over time. This type of planning also impacts which investments should be held in which accounts. Ask your adviser how they determine which income streams to use and when to make the most of your retirement income.

How will a down market affect my retirement plans?

It’s completely normal to feel nervous about the volatility of the stock market. You worked hard to reach your retirement goals, and you don’t want to see your plans derailed. However, it’s important to remember that market swings are normal. A good financial adviser can help put your mind at ease by creating a plan that preemptively addresses a market dip. Ask your adviser how a down market would impact your strategy to determine if you can weather the storm. If you’re still nervous about the impact of a down market, it might make sense to talk to your adviser about your risk tolerance and see if your investments are still aligned with your tolerance level.

There are a lot of different elements within a strong retirement income strategy, but you don’t have to navigate alone. An adviser who specializes in retirement income planning should be able to help you navigate these decisions. After your adviser answers these questions, take the next step, and ask to see their process for addressing each of your concerns. Strong advisers have well-defined processes and can show you exactly how they can help you make these decisions systematically to alleviate some of the stress and make sure you’re prepared for the days ahead.

About the author: Joe Elsasser, CFP®

Joe Elsasser, CFP® is the founder and president of Covisum®, a financial tech company focused on creating software solutions, practice management and marketing resources to help advisers and financial institutions grow and improve lives through better retirement decisions. Covisum helps financial advisers serving mass-affluent clients in or near retirement and powers some of the nation’s largest financial planning institutions.


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