A stunning 56 percent of Americans say they feel behind on saving for retirement, according to a recent Bankrate survey, and it’s leaving many feeling financially insecure. But working with a retirement financial advisor can help many of them get their financial life in order as they prepare for retirement and during their golden years, helping them live their best life. This kind of advisor specializes in areas that are vital as you prepare for your after-work life.

Here’s what a retirement financial advisor is and how they can help you prepare for retirement. Once you’ve chosen a retirement financial advisor, you can be on your way to financial freedom.

Need expert guidance when it comes to managing your investments or planning for retirement?

Bankrate’s AdvisorMatch can connect you to a CFP® professional to help you achieve your financial goals.

Key retirement financial advisor takeaways

  • A retirement advisor focuses on the most relevant issues for clients planning their finances leading up to and during retirement.
  • Research has shown a good financial advisor can increase your returns by 3 percent per year, so you’d end up with nearly 1.8x as much money over 20 years, according to Vanguard.
  • A good retirement financial advisor can help you live the kind of retirement that you want to live – and do so with less worry about the future.

Financial security and retirement preparedness

It’s unfortunate that so many Americans feel unprepared for retirement, especially when some relatively modest changes or decisions could help put them on secure retirement footing. In fact, just 21 percent said they think they’re on track for retirement, according to a Bankrate survey.

Preparing for retirement requires knowing how much you need to do so, and many Americans don’t know. A full one-quarter say they don’t know how much they’ll require for their golden years. A good place to begin, however, is understanding your current spending as well as what you’d like your retirement to look like – exactly where a retirement financial advisor can help.

While 52 percent of Americans say that it’s likely they can get enough money to retire, another 45 percent say it’s unlikely. And even the optimistic group may be not wholly realistic on their chances of success here, especially with about one-third of Americans saying they need more than $1 million to live comfortably once retired. Here’s another great place for a retirement advisor who can build a path to retirement – and the confidence that you can hit your goals.

What is a retirement financial advisor?

A retirement financial advisor is a specific type of advisor focused on issues and topics that are most relevant for clients looking to plan their retirement. While other types of advisors may focus on broader or narrower financial topics, a retirement advisor hones in on those most relevant for an audience looking to plan their finances leading up to and during retirement.

Studies have shown a good financial advisor can increase your returns by 3 percent per year – meaning you’d end up with nearly 1.8 times as much money over 20 years.

What does a retirement financial advisor do?

A retirement financial advisor focuses on the financial needs that are key to retirees and would-be retirees, including:

  • Financial planning: Financial planning could involve building up enough assets before retirement and then developing a budgeting plan during retirement, among other tasks.
  • Social Security: One of the biggest decisions for retirees is when to take Social Security, and you could make tens of thousands more if you make the right decision.
  • Estate planning: Estate planning involves deciding how your assets will be distributed and safeguarded for your spouse and the next generation.
  • Investment management: An advisor can help find the best investments, given your time horizon and other needs, helping reduce the risk that you run out of income.
  • Managing retirement accounts: A 401(k) and IRA have many benefits and twists, and a good financial advisor can help you get the most out of them while minimizing taxes.
  • Long-term care planning: An advisor knows the benefits and drawbacks of establishing long-term healthcare plans and what you need to watch out for.
  • Tax planning: Advisors can help you maximize your after-tax income by reducing your tax liabilities across retirement accounts and estate plans.

A retirement financial advisor may have even more specialized expertise. For example, if you run your own business, the advisor may be able to help you minimize taxes on a sale or transfer of the assets. So it’s vital that you find an advisor who fits your specific needs.

A typical advisor might cost about $250 an hour, but may charge an all-in fee for a retirement planning package that evaluates and manages these related retirement issues. The fee can be money well spent, if it sets you up for a prosperous future and helps optimize your accounts.

How is a retirement financial advisor useful to you?

The biggest advantage of using a retirement financial advisor is that you have an expert’s insight. It’s the only time you’ll be going through retirement planning, but you can work with a pro who’s seen it all (almost) and knows the benefits and drawbacks of key retirement strategies.

A good advisor will be able to leverage their experience and deep knowledge to help you make smart retirement decisions and avoid the dumb ones, potentially saving you a bundle of money.

Other advantages of working with a retirement financial advisor include:

  • Social Security forms the basis for many retirees’ income, but it’s a complex system to navigate with many different options. An experienced advisor can show you the best paths to get the most money from the program.
  • Outliving your income is one of the biggest dangers in retirement, and a smart financial advisor can help you set up your investments to avoid this danger, both by not being too conservative nor too aggressive in how you grow and spend your money.
  • A financial advisor can help you withdraw money from retirement plans such as 401(k)s and IRAs in the most advantageous ways, helping you minimize taxes.
  • The legal issues surrounding tax and estate planning such as for wills and trusts can be complex, and an experienced advisor can help you navigate them and avoid expensive mistakes that could seriously affect your income and assets.
  • A good financial advisor can also help you stay motivated about your financial plan, keeping you on the path that leads to a financially secure retirement.

In short, a good retirement financial advisor can save you a ton of money and help you live the kind of retirement that you want to live – and do so with less worry about the future. But you’ll want to find an advisor who works in your best interest.

Retirement savings FAQ

  • How much you should save for retirement depends heavily on how you want your lifestyle to look. A Ferrari and caviar will require more money than a Ford and catfish. So advisors often start with your expenses first and then work backward to how much you need. Experts suggest that you’ll need about 80 percent of your regular salary in retirement, though if you’ve eliminated fixed expenses such as a mortgage, then you may need less. Then you can subtract Social Security payments to come up with how much extra you need to fund each year. That difference, say some advisors, should be 4 percent of your savings, so you’ll need about 25 times that amount over the course of your retirement. This article runs through further specifics and numbers.
  • Your full retirement age for Social Security depends on when you were born. Those born in 1937 and before have a full retirement age of 65. For those born between 1938 and 1942 it’s 65 + 2 months for every year after 1937. For those born between 1943 and 1954, it’s 66 years old. For those born between 1955 and 1959, it’s 66 + 2 months for every year after 1954. Finally, for everyone born in 1960 or later, full retirement age is 67 years old. Deciding when to take Social Security is one of the biggest factors in what you receive from the program.

  • The first step in retirement planning is understanding what resources are available to you. You may be able to access Social Security, and your employer may offer a retirement account such as a 401(k). In addition, all working Americans have access to an IRA. Still other plans may be available to you, depending on your employer. From there you’ll need to familiarize yourself with the benefits of the plans and then understand how much money you need to retire comfortably.
  • Workers have some attractive tax-advantage retirement accounts at their disposal, including a 401(k) and IRA. Both allow workers to contribute money and defer or eliminate taxes on the earnings of the account. Those looking for specific investments should consider funds that have attractive long-term returns and low expense ratios. One of the best investments over time has been an S&P 500 index fund, which has delivered about 10 percent annual returns on average.

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