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  • Writer's pictureMark Fonville, CFP®

Best Questions To Ask A Financial Advisor About Retirement

Updated: Jan 31


Best Questions to Ask a Financial Advisor Before Retirement

Are you ready to retire?


Of course you are! The only problem is that you have one chance to make your money last nearly twenty five years or more.


That‘s no easy task which is why you've decided to work with a financial advisor to help you retire.


At a minimum, your advisor should create a free retirement assessment that helps you create a strategy, reduce taxes, and optimize your investments.

But the work doesn't stop there.

You want to make sure the relationship continues to serve you and your finances for the long haul—up to and through retirement. To help accomplish that goal, you’ll need to ask the right questions.





You may be wondering, “What are the best questions to ask a financial advisor about retirement?”


Here's a quick video I created to help cover crucial questions around retirement.



While there is no definitive list of the perfect questions to ask, we've compiled a list of some of the most powerful questions based upon our experience in helping hundreds of clients retire.


Here are some important questions to consider in your financial planning journey.


1. “Am I On Track To Reach My Goals?”


Regardless of your stage in life, you need to know if you are on track to reach your goals. If your advisor can’t answer this question, then you can’t expect that they will actually help you reach your destination.


This question is crucial because it prompts your advisor to ask you clarifying questions so that they can assess your likelihood of achieving your goals.

For starters, your advisor should be well versed in your top financial goals. You should feel confident and comfortable expressing your goals to your advisor, even if they change.


What goals should you consider in retirement?


financial goals in retirement

Goals can be challenging to define, so it can help to have a checklist. If you don't have a checklist of goals to consider for planning purposes, you can download a master list of goals for retirement and other financial goals here.

Whatever your goals are, ensure you put them in writing and prioritize them. Again, your advisor should be able to help with this task.

Some goals may be easier to define than others. When you can, it’s best to keep the following acronym in mind while listing your goals: SMART. Specific, measurable, achievable, relevant, and time-bound goals bring more intention and purpose to the process.


For retirement planning, here several questions to ask a financial advisor as it relates to your goals :


  • When can I retire?

  • How much will my monthly fixed expenses be in retirement?

  • How much do I need to plan on spending on healthcare before turning 65?

  • How much should I plan on spending on healthcare upon turning age 65 (Medicare)?

  • How much can I spend on travel each year? How many years of travel should I plan on?

  • Can I afford the new home improvement plan?

  • What’s the best way to continue giving to charity or church?

  • What's the best way to give to my kids/grandkids?

  • Can I afford to purchase new cars through retirement? How much and how often?

  • What costs should I expect for long-term care later in retirement?

  • What type of estate planning measures should I take?


2. “When Should My Spouse and I Take Social Security?”


The decision of when to claim your Social Security benefits is often one of the first long-term decisions you’ll make when you retire. Nearly everyone starts by asking themselves which age is best to start: 62, full retirement age, or 70.

The answer that’s right for you depends on a myriad of factors, including your other income sources, financial need, spousal considerations, health status, and more.

Asking your advisor this question will show you if they take the time to develop the best answer since it’s not the same for everyone and shouldn’t be made in a vacuum.


For example, here's a hypothetical social security stress test that we often run for clients. As you can see, Robert and Elizabeth see a $505,045 additional lifetime benefit by delaying taking social security until age 70 vs. taking social security as soon as possible.


social security analysis example

But this is only part what you need to know. You also need to consider other areas of your retirement income and your decision’s impact on taxes.

Your decision can have a significant effect on whether or not your money will last throughout retirement.


The right social security timing decision can potentially provide hundreds of thousands of dollars or more in benefits depending on how long you and your spouse live. Proper social security planning could also extend the life of your savings by several years.


Be sure to ask your financial advisor about social security when it comes to your retirement planning.


3. “How Can I Gain Control of Taxes in Retirement?”


Perhaps one of the best questions to ask your financial advisor is: "How can I reduce taxes in retirement?". A financial advisor with tax experience should be able to provide you with immense value in retirement through sound tax planning.

Tax planning isn’t just about lowering your tax bill for the sake of lowering your tax bill either, although that’s certainly a benefit. Taxes in retirement constitute a significant component of making your money last because reducing your tax bill directly mitigates the strain on your savings.

If you ask your advisor about managing retirement taxes, they should be able to discuss specific strategies with you. Proactive tax planning is a critical area that can’t be brushed off.

Some of our fundamental tax and retirement planning techniques involve strategies to:


  • Avoid Medicare Income-Related Monthly Adjusted Amount (IRMAA) surcharges, and

  • Optimize retirement withdrawal strategies by creating a tax-free retirement income bucket through Roth IRA contributions and Roth conversions.

  • Identify tax reduction strategies for state and federal taxes.

Another one of our favorite tax planning techniques is to strategically reduce taxable income before 65, to help you qualify for Affordable Care Act subsidies to pay for healthcare.


It’s vital to start early when planning for your healthcare costs because this particular one is a multi-year process.


4. “What Adjustments Should I Make To My Retirement Investment Portfolio?


Your advisor should also discuss all the essential elements of investment advice—including how, when, where, why, and what to invest in.

An advisor should have a solid investment strategy and a clear history of healthy investment management. Before working with them you should know if their ideas and practices align with your investment philosophy.





Additional questions to ask a financial advisor about your retirement portfolio may include:


  • What's the right mix of stocks and bonds/fixed income?

  • How much should I have allocated to U.S. vs. Non U.S. stocks?

  • What types of bonds should I own?

  • What's the best location for specific investments across types of accounts? For example, should U.S. stocks be located in my Roth, IRA, or taxable brokerage account?

  • How can I reduce taxes on my investment portfolio?

A qualified advisor can identify if you hold the proper asset allocation (mix between investments like equities and fixed income) for your goals and risk tolerance and whether or not your investments are appropriately diversified. Your advisor should also be able to provide investment strategies and suggestions for improvement.


If your portfolio isn’t as diversified as you’d like, what will the advisor do to alter it to best fit your long-term investment needs?

During this process, your advisor should also review your investment expenses and, unless you already have low-cost choices, provide you with solutions for reducing those expenses like investing in low-cost mutual funds and ETFs. All of your financial decisions build on one another, so you want to create a strategic long-term plan.

Any response from your financial team should also include a specific plan of investing for retirement income, including creating a concerted and strategic withdrawal plan that seeks to maximize your retirement income.


5. “What Non-Financial Goals Do I Want to Accomplish?”


It's time to put the "personal" in personal finance.

Your personal goals are just as essential as your financial ones. You want to work with an advisor who genuinely cares about both because each is critical to your financial future. Diving into your professional and personal goals will clearly demonstrate if your advisor is a good long-term fit. After all, your money should support the people, places, and things that mean the most to you.

Perhaps you are passionate about giving back to causes you care about. Your advisor should help you create a strategic charitable giving plan like utilizing qualified charitable distributions, contributing to donor-advised funds, donating appreciated stock to offset capital gains tax, among other initiatives.

You may choose to pick up new hobbies in retirement or even embark on an encore career. Or you might decide you want to move closer to family so you can spend more time spoiling your grandchildren.

Whatever your non-financial goals are, be sure you can discuss them with your advisor and that they have a vested interest in helping you use your money to put you on a path to reach those goals.

Discussing these goals also gives your advisor better insight into your personality, directly affecting how you plan. It may uncover something you may not have thought to mention that you need to address.


6. "Should I Take My Pension as a Lump Sum?"


While being offered a pension through work is becoming increasingly rare, workplace pensions can often contribute a sizable amount to your retirement income.


If you have the option of choosing a lump sum payment or a lifetime stream of income from your pension benefits, then you'll want to make sure that you make the right decision.


Several factors must be analyzed around pension decisions to help you maximize your benefit and/or make your retirement savings last as long as possible.


Key considerations around understanding your pension options may include:

  • How long are you expected to live?

  • What's the likelihood your employer will be able to continue payments if they go bankrupt?

  • What is your current risk tolerance and immediate need for guaranteed cash flow?

  • How does a pension vs. lump sum impact my heirs?


7. "What Issues Should I Consider When Reviewing My Tax Return in Retirement?"


For most people, reading a tax return is as about enjoyable as going to the dentist, maybe even worse.


But smart retirees understand that a successful retirement should incorporate your total tax picture. That's why it's important to ask your financial advisor tax return related questions including:

  • How can I reduce my federal taxes?

  • How can I reduce my state taxes?

  • How can I increase my itemized deductions?


If your financial advisor won't review your tax return, find someone who will.


Work With A Trusted Retirement-Focused Fiduciary Advisor


There are thousands of financial advisors out there—but, finding a financial professional you can trust to help you through retirement isn’t easy. But there are a few things you can look out for:


  • Are they a fiduciary? Fiduciaries provide advice that's always in your best interest. They are also obligated to disclose any conflicts of interest, so you know they only give advice that aligns with your financial picture, not their firm's bottom line. We are passionate to operate as a fiduciary firm and love helping you craft plans best for your retirement journey. If you aren't sure if an advisor is a fiduciary, that can be a red flag. Do your due diligence to ensure you're getting the best advice possible.

  • Do they have the credentials and designations to best help you? With us, your financial team will include both a CERTIFIED FINANCIAL PLANNER™ (CFP®) professional and a CPA.

  • How many years of experience do they have? Designations are great but you want an advisor with real experience, too. For example, at my firm, the average advisor has over 10 years of experience.

  • Do they have specialized knowledge, training, or industry experience to serve your needs? For example, does the advisor specialize integrating tax planning with retirement planning?

Taking a few minutes to ask some poignant questions and learn whether or not you're working with the right financial advisor for your financial situation could save you a lot of trouble in the long run.

After all, you’re entrusting your hard-earned money, so it’s a decision worth devoting your time and energy to.

If you are aged 50 plus and have over $1 million in savings and investments, request a free retirement assessment, and we evaluate your personal situation to find out how can better align your retirement plan with your life plan.


 
Mark Fonville fee only financial planner

About Mark Fonville, CFP®

Mark is a fee-only financial advisor and the President of Covenant Wealth Advisors. He specializes in retirement income planning for individuals age 50 plus who have over $1 million in investments.


Forbes nominated Mark as a Best-In-State Wealth Advisor* and he has been featured in the New York Times, Barron's, Forbes, and Kiplinger Magazine.


 

Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place.

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