Planning Your Retirement: Get Professional Financial Help

Last Updated Apr 11, 2011 10:40 AM EDT

Planning for a healthy and prosperous retirement that might last 25 years or more can be a daunting task. You want to make your financial resources last the rest of your life -- no matter how long you live -- and you don't want to be wiped out by medical or long-term care expenses. So it makes sense to seek guidance from trained professionals for some of your most important decisions.

Welcome to Week Two of my 12-week series on Planning Your Retirement, which started last week with How Long and How Well Will You Live? That post offered tips to motivate and inspire you to take 12 weeks to plan the rest of your life.

This post focuses on getting the professional financial help you need to plan a lengthy retirement. You can't afford to make mistakes, and you'll need to make every dollar count. And you'll want to start this step early in the process, since you might need professional help for steps you'll be taking in future weeks. It might also take a few weeks to line up the help you need. Since there's a lot to cover on getting help, my next post this week will cover the nonfinancial help you might need.

Let's start with the obvious -- help with financial planning and investments. It's a good idea to distinguish between these two skills. An investment advisor might be good at helping you decide your asset allocation and selecting specific securities or mutual funds -- this may have been all the advice you needed while you were growing your nest egg. But using your retirement savings to generate retirement income is more complex, and you'll need someone who is experienced at helping people decide whether to generate retirement income by drawing down invested assets or buying an immediate annuity, or some combination of the two. You might also need guidance on when to start drawing Social Security benefits, or how to take a distribution from a traditional pension plan.

When you're interviewing potential advisors, ask about their training and experience with generating retirement income. Look for credentials that require substantial training and experience -- two such examples are Certified Financial Planners (CFP) or Chartered Financial Analysts (CFA).

Make sure your advisor has no incentive other than acting in your best interest when deciding between annuities and investing. One way to insure this is to find someone you pay by the hour or by a flat fee; an advisor who charges a percentage of assets under management won't be too thrilled recommending an immediate annuity, since those assets won't be subject to charges. Two networks of fee-based financial planners I know of are Garrett Planning Network and the Alliance of Cambridge Advisors. Having a trained professional whose compensation is aligned with your best interests can increase the odds that your retirement nest egg will turn out sunny side up -- not scrambled.

Next, you might need help to get the right insurance, which can include life insurance, medical insurance, and long-term care insurance. Again, make sure your advisor isn't just trying to sell you products that generate substantial commissions for the agent, such as expensive whole life insurance. When it comes to protecting against the threat of long-term care expenses, you'll first want to decide whether to purchase long-term care insurance or to self-insure. But don't ask long-term care insurance agents to help you with that decision -- you can guess what their answer will be! Instead, if you need assistance, try consulting the financial advisor you pay by the hour or by flat fee. If you do decide to buy long-term care insurance, then you'll want to find an agent who specializes in this form of insurance. One place to start looking for help is the American Association for Long-Term Care Insurance.

Most people need an accountant to prepare their tax returns, and here's one area where you might just continue during retirement with the professional you've been using (if you're satisfied with his work). In most cases, special training isn't needed to prepare tax returns for retired individuals. Some accountants might also want to be your financial or investment advisor. If that's the case, make sure they've received training with personal finance and investments, as described above. The usual training for Certified Public Accountants (CPA) focuses on taxes or business accounting, but the American Institute of CPAs (AICPA) also confers a special Personal Financial Specialist (PFS) credential which requires training in financial planning.

One last thought about seeking help: At this stage in your life, you might consider getting help from professionals who are younger than you. Once you've found great people to work with, you don't want them to retire before you do!

As with all the retirement planning steps in this series, what I'm asking you to do may seem like a lot of time and trouble. And I don't expect that you'll finish identifying and locating the help you need in one week; it might be realistic to decide what kind of help you need and start your investigations. That's ok -- start now and finish later. And to keep on task, remember if you don't get the help you need now, you might spend a lot more time and money down the road trying to fix the problems. You don't want to wait until you're in your 70s or 80s when you're broke or sick to seek help. It's well worth your time to find the right professionals now to help you live long and prosper.


Want to learn more about retirement planning? Check out my latest creation -- an innovative online retirement planning guide Money for Life. I've organized a rich collection of more than 150 blog posts, articles, research reports and video clips on the most important retirement planning decisions regarding money, health and lifestyle.
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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.