What does your retirement plan look like? After all, it looks to the future and is intangible. And how do you know how well you are doing? Can you compare the various parts of your plan over time? Can you look at the decisions you made, including those recommended by your financial professional? About 50% of Americans age 50 and older get advice from financial professionals. How can you measure the value of that advice?
You want to know what you need to do better or more of. You want to know what you should change. You also want to know what you are not doing but really should be. Your financial professional should have a process that might resemble your doctor’s process. What’s your current situation, what’s your history, and what outcome do you want?
Retirement planning begins with a “diagnosis” of the likely success or failure of what you are doing and not doing for or in retirement. People often get advice to help manage the investment and savings portfolio. While most retirement planning may prioritize the management of client retirement savings and income, much more can be involved. Evaluation would be easy if measurement was only about performance–but it’s not.
Your own strategy or that with your financial pro will need to take investment risk into account. One goal of your plan will be the income needed during retirement. Your retirement priority might be avoiding losses more than increasing performance. Many clients don’t want to run out of money before they die, so they don’t want to lose much money along the way. How do you evaluate that, without waiting many years?
What is the value of guaranteed lifetime income compared to making monthly savings and investment withdrawals for income? How important is minimizing the risk of running out of money compared to achieving greater investment results? What is the value of optimizing your Social Security claiming age? Claiming later can add substantial value to the total lifetime benefits and perhaps spousal benefits too.
Also, is using favorable income tax strategies important, for the current year or over time? It may include other needs too, such as healthcare costs, longevity, and estate planning objectives for bequests to beneficiaries or charities.
You evaluate your plan and the advice you get by comparing your present situation to your past. There is no shortcut. How are you doing compared to the plan you created, both now and looking ahead. That is part of the value of working with a financial professional. Evaluate your plan annually or more often if events require it. You will learn how to see how you are doing and how to know how well your plan is working.
Disclosure: Dan White is an investment advisory representative and provides advisory services through CoreCap Advisors, LLC. Dan White & Associates, LLC and CoreCap Advisors, LLC are separate and unaffiliated entities. This presentation is for informational purposes only and is not intended as investment, tax, or insurance advice.
