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Finance

3 Essential Reasons to Consult a Financial Advisor

Mark Eisenberg
Last updated: 10.08.2024 10:51 pm
By Mark Eisenberg
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3 Essential Reasons to Consult a Financial Advisor | FinOracle
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Income Planning

Retirement requires a shift from saving money to efficiently using it to cover monthly expenses. This shift involves creating a comprehensive income plan. As Stephen Kates, a certified financial planner, highlights, "Building a large nest egg is different from creating a well-balanced income plan to replace your current paycheck(s)."

Contents
Income PlanningLegacy or Estate PlanningRisk Tolerance

When planning your retirement income, you'll have two main types:

Regular Sources: These include Social Security, pensions, and income annuities. They offer predictable monthly income, ideal for covering fixed expenses like housing and utilities.

Variable Sources: These consist of IRAs, employer-sponsored retirement plans, and savings accounts. You manage these, deciding annual withdrawal amounts.

To build a solid income plan, discuss these questions with your advisor:

  • How much should I have in an emergency fund by retirement?
  • How can I adjust my portfolio for predictable, inflation-resistant income?
  • How can I ensure my income covers essential expenses?

Legacy or Estate Planning

Having a plan for asset transfer upon passing is crucial, given the complexities of tax laws. A financial advisor can help ensure your assets are transferred according to your wishes while minimizing tax implications.

"Many retirees know their wishes for their heirs," explains Kates, "but without a plan, these may be derailed by unexpected expenses or mismanagement."

Consider asking:

  • Is the amount I wish to leave my heirs realistic?
  • How can I ensure I can leave $X to my heirs?
  • How can I simplify the process for my heirs and avoid probate?

Risk Tolerance

Understanding your risk tolerance is vital, especially as you near retirement. The stock market's volatility can significantly impact your savings if you're overly invested in risky assets. "Recent market turbulence is a wakeup call," warns Kates. "Retirees can't afford to take risky steps with their future income."

However, being overly cautious can also hinder growth, leaving your income vulnerable to inflation. Balancing risk is essential.

Discuss these questions with your advisor:

  • How can I protect my portfolio from sequence of returns risk?
  • How exposed is my portfolio to specific companies or sectors?
  • How can I adopt a rules-based approach to avoid distractions from market trends?

Financial advisors are not just for building retirement portfolios; they're crucial in managing your finances before and after retirement. They help ensure you maintain a comfortable lifestyle and secure your legacy for your heirs.

TAGGED:AccorAIALSAntARAssetBalanceBatBuildingCatCertified Financial PlannerCESComprehensive incomeCureEstate planningEUExpenseFinanceFinancial planFinancial plannerFordFunFutureGrowthIdeaIncomeInflationIonLawLifeLightManagementManagingMarketMarket trendMoneyOrePensionPHPlanningPortReasonRetirementRiskSavingSavings accountSECSecuritySequenceSkinSolidStockStock marketTaxTireTrendsTurbulenceUnderstandingUSWar
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Mark Eisenberg
ByMark Eisenberg
Mark Eisenberg is a financial analyst and writer with over 15 years of experience in the finance industry. A graduate of the Wharton School of the University of Pennsylvania, Mark specializes in investment strategies, market analysis, and personal finance. His work has been featured in prominent publications like The Wall Street Journal, Bloomberg, and Forbes. Mark’s articles are known for their in-depth research, clear presentation, and actionable insights, making them highly valuable to readers seeking reliable financial advice. He stays updated on the latest trends and developments in the financial sector, regularly attending industry conferences and seminars. With a reputation for expertise, authoritativeness, and trustworthiness, Mark Eisenberg continues to contribute high-quality content that helps individuals and businesses make informed financial decisions.​⬤

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