Ask most retirees what’s the one thing they wish they had known before they retired and they’ll probably tell you, if they had to do it all over again, they would have liked to have that one piece of advice that would have made things significantly easier.
Here’s your chance to get that “one” piece of advice.
It turns out, when you ask professionals what this “one” piece of advice is, you get a handful of precise answers, any one of which can make a difference to you. Imagine doing all these things.
Define Yourself
Know thyself. This is not just a classic answer, it’s a classical answer.
“Don’t focus on what you would have done differently if you could redo it all,” says Matthew Eickman, National Retirement Practice Leader at Qualified Plan Advisors in Omaha. “Focus on what resources, options and relationships are currently at your disposal, and chart a path forward with an interest in getting the most out of those as possible. A retiree, who likely has positively impacted the lives of so many others in his or her families, communities and organizations, should not be defined by what he or she failed to do. Instead, endeavor to be defined by what you have done and find ways to contribute to your family, community and/or organization of interest that provides the greatest personal fulfillment.”
Be Prepared
Scouts honor, you should have already thought of this one.
“Be ready,” says Viktoria Wilson, a financial advisor in Ann Arbor, Michigan. “Preparation, preparation and preparation is the key. A lot of people reach a certain age and decide to retire. They have accumulated some assets, so they feel they are ready. There are a lot of decisions to be made in retirement and a lot of them are one time chances, (like Social Security), so people need to be aware of how each choice may affect them and then choose. Retirement is a new phase of life that they haven’t experienced yet, so it takes some planning to get it right. Especially because people want to enjoy their retirement.”
“Just like a professional investor would say ‘sell into strength,’ make sure that you are retiring into a position of financial strength,” says Chris Gure, Investment Consultant at Fortress Financial Partners in Raleigh, North Carolina. “We are not advising people to work longer than they need to but have a plan on how that nest egg you’ve built up is going to support you.”
“If you are thinking about retiring you should start the process 3-5 years before the date you want to retire,” says Mark Minder, Vice President of Retirement Plans & Benefits at Darden Wealth Group in Ann Arbor, Michigan. “You should create a plan with a fee-based advisor that shows you what is possible. This plan should not only include your basic income needs but your wants and dreams for the future. This plan should look at all sources of income, plan for inflation, and your spending habits. This could mean looking at credit card statements and bank statements and seeing where your money is flowing. When you start planning for retirement, you should be willing to be honest with yourself and the planner you are working with. You should also build into your plan the likelihood of market fluctuations and that yourself or your spouse have a great chance of in-home care or at a care facility.”
Should You Stay Or Should You Go?
There are several trains of thinking on what you should do with your retirement account once you leave your company. The answer is, as always, “it depends.” Reflect on the differing views below and see which best fits your particular set of circumstances.
“Understand your options for your retirement savings!” says Julian Schubach, Vice President of ODI Financial in Long Island, New York. “There are benefits and drawbacks of leaving your money inside your employer’s retirement plan. The same can be said about rolling your savings over to an IRA. It’s important to consider the platform fees of the group plan vs an individual account as well as the underlying fund expenses, advisor fees and recordkeeping expenses. Additionally, participants may have limited fund offerings in a group plan whereas they may be able to choose from a much more expansive universe of investments inside an IRA.”
“Many participants feel a need to move ‘their’ assets out of their former employer’s plan,” says Rich Rausser, Senior Vice President, Thought Leadership and Practice Management at Pentegra in White Plains, New York. “Participants should consider keeping their assets in the plan after retirement in order to leverage the purchasing power and scale of their employer’s plan in an effort to keep their investment costs low. Seeking the help of a financial advisor can help them meet this challenge.”
“Better decisions are made when you understand the costs you are paying and what you are getting for those costs,” says Jeff Coons, Director of Institutional Services at High Probability Advisors in Pittsford, New York. “As a result, investment costs should be an important part of your decision to remain in or roll out of your former employer’s retirement plan.”
Get Help… Or Not
Like the previous answer, there are two schools of thought here. Which one suits you?
“Build an income plan with a professional who understands the myriad issues that a retiree faces when attempting to live off their savings,” says Brian G. Blackwell, Director of Financial Planning at Spotlight Asset Group in Atlanta. “There is no other educational program available which equally equips advisors with the knowledge around all the strategies for taking income in retirement. They will be able to help you build an income plan (which everybody should have) that fits with your situational needs.”
“The one thing I would tell someone about to retire is this: don’t rely on your 401(k) advisor or the plan administrators for selecting your investments and making changes to your holdings,” says Christopher Panteli, Founder of LifeUpswing.com in Denver. “Employers love to save on administrative costs and giving plan participants the responsibility of managing their own investments is one way to cut costs. But it’s too much responsibility to give to the average person who’ll just pick up the first brochure they get from the local Fidelity or Vanguard office. You should take control of your investments yourself and hold the plan administrators accountable for doing their job correctly.”
Don’t Forget Estate Planning
Most people worry about outliving their assets. Sometimes, however, your assets outlive you. What should you do when that happens?
“If you have sizable assets, you need a trust,” says Jeffrey B. Hale, Senior Vice President, ERISA Plans at Odingard Capital Management in Tulsa. “The proper trust delivers valuable living benefits regardless of how much money you have in your portfolio.”