Key Retirement Questions for Your Advisor

As you near retirement, it’s important to talk to your financial advisor about retirement. While the essentials of retirement planning don’t change, the 2020s have brought some unique conditions: huge market swings in a short time, fast-rising interest rates, and ongoing global economic uncertainty. For 2024, here are a few questions to ask your financial advisor about retirement. After all, you need to know that your advisor can competently guide you on your retirement goals, build a plan that lets you maintain your preferred lifestyle, and help your money last as long as possible.

This begins with having a conversation around your unique situation. It’s good to ask your financial advisor the right questions that help put everything in context. To help you get started, here are some questions to ask your financial advisor about retirement:

• Tell me about what you do to help people with retirement planning.
• How long have you worked as a retirement financial advisor?
• Why do you do what you do, and what are you most passionate about in this field?
• When do you think that I can retire, and what are my options?
• Do I have enough money to retire?
• What should my retirement goals be?
• What do you think of my current financial plan for retirement?
• How much can I spend in retirement? Will I be able to keep up my lifestyle?
• How will I fund my lifestyle once I have retired?
• What will taxes be like for me in retirement?
• How long will my money last before I run out of income?
• What can you do to help me be ready for major financial risks in retirement?
• I have a pension. What could happen if something happened to my old employer or if my pension benefits were cut?
• When should I take Social Security benefits?
• What should I know and do about Medicare and health coverage in general?
• What can healthcare cost me throughout my retirement years?
• What do you do to help my retirement plan keep up with inflation?
• What can happen if I retire in a recession or market crash? How do we plan for that?
• What are some other ‘bad situations’ to keep in mind, and how can you help you plan for those scenarios?
• Say I choose to delay retirement or keep working. What are the advantages and disadvantages of doing that?
• What can we do to ensure that my spouse or I have sufficient financial resources in place should one of us pass away?
• How much could long-term care cost us in retirement? How likely are we to need some sort of long-term care support?
• What sort of life changes have you seen other people experience in retirement?
• What do you think of my estate plan?
• What else can I do to prepare for retirement?

What do you do to help people prepare for retirement planning?

Your financial advisor should be doing several things to help their clients be ready for retirement planning.

They should be looking at your current financial situation, future needs for retirement income and cash-flow, and how your current assets will sustain your retirement lifestyle net of taxes, inflation, and other factors. These are just a few vital areas of retirement planning strategy.

Your financial advisor can also help you with important decisions around your financial future. That includes whether you should work longer, whether the levels of risk in your asset holdings make sense, and if you on track overall to meet your financial goals.  

For example, they should be able to tell you whether you have too much market risk at that point in time – or too little market exposure for your assets to keep up with inflation. Your advisor should have a clear idea of what you need to be investing in so that you can meet your financial objectives.

How long have you worked as a financial advisor?

This answer is important for a variety of reasons. How many market cycles has your financial advisor helped other clients through? What sorts of conditions have their strategies or recommendations been battle-tested and proven?

It’s prudent to seek someone who have experience in helping others navigate complex retirement issues. You want them to be able to bring that expertise to bear on your personal situation.

Another thing to keep in mind is that your financial advisor is a kind of coach. They are there as an objective guide, helping you guard against bad decisions or financial knee-jerk reactions that can take your progress off the rails.

The years of experience that a financial advisor has in the industry are one indicator. Another one is their professional financial designations. Those designations are a recognition of how your advisor has taken rigorous coursework and passed tests to demonstrate their knowledge in different areas.  

A few common designations are the Certified Financial Planner® credential or the Chartered Life Underwriter® designation. There are many other designations spanning many areas of financial expertise, including for retirement income planning and even federal employee benefits.

Still, there is no substitute for experience at the end of the day. An advisor who has at least five years of experience should usually be able to help you achieve your financial goals.

Why do you do what you do? What are you most passionate about in this field?

Most financial advisors are driven by their desire to help clients achieve their financial goals and realize their lifelong dreams. However, every advisor will have their own philosophy or unique vision regarding how to accomplish this goal.

Many financial professionals operate on the well-known model of using investments to build out a strategy. Their bread and butter are the ‘usual suspects’ of stocks, bonds, mutual funds, ETFs, and other investment products that fit together in a strategic mix.

Meanwhile, some agents are on the insurance side, and they incorporate annuities or even various kinds of life insurance in their strategies. They are focused more on the protection and risk control side of retirement. Some financial shops will incorporate all of these tools at their disposal.

There is no one right answer to what type of advisor you should choose, except that you need to feel comfortable with them. You should feel at ease with telling them about your financial goals and dreams.

Some advisors are passionate about fee-based portfolio management. Others hold an insurance license, and they rely heavily on insurance-based products to achieve their clients’ financial goals. They can be useful for clients who want guarantees in their financial plan, and perhaps have a low tolerance for financial risk.

Both types of financial professionals can help you get where you want to go financially. They simply have different methods. Sometimes they are better fits for some clients than for others.

Just be sure to find out what makes your financial advisor tick and whether it lines up with your own personal financial philosophy.

When do you think that I can retire, and what are my options?

Any financial advisor worth their salt will be able to give you honest answers to these questions after they have had a chance to analyze your financial situation. A straightforward financial advisor will tell you if they don’t think that you can safely retire for another 10 years, or if you can retire today.

For instance, say that you still carry a large amount of debt, such as a mortgage and student loans. Then a financial advisor might tell you to keep working for a while longer.

Even more importantly, a financial advisor should be able to tell you what your options are in retirement. Say that you have little in retirement savings and are looking to quit working in the next five years. Then they should talk to you about how you will need to keep working for at least five to ten years longer (and save something for retirement during then).

 Should you have some money saved for retirement, then your advisor can provide you with a few possible scenarios showing how your finances could last after you stop working.

Not all those scenarios will likely appeal to you, but it’s the advisor’s job to be honest with you.

Do I have enough money to retire?

This is the most bottom-line question about retirement that you can ask a financial advisor.

If you have enough money to retire, then your advisor can tell you what kind of quality of life you can expect to enjoy during retirement. If you don’t, then your advisor should be very upfront about this with you.

No competent advisor or agent will simply tell you what you want to hear in order to get a planning fee, fees for new assets they bring under management, or a commission.

All advisors, regardless of the types of licenses they hold or the designations that they have earned, are duty-bound to be honest with you and tell you how it is. That applies whether it’s what you want to hear or not.

What should my retirement goals be?

The real question here is, “Will I have enough income from my investments to retire?” The issue here isn’t how much money you have saved. It’s whether your savings can generate enough income during retirement to meet your basic needs and wants.

Some assets are designed to generate a predictable stream of income for retirement, such as fixed-income investments. In that regard, annuities are the only financial vehicle that can pay you guaranteed streams of retirement income.

Meanwhile, other assets are more oriented towards long-term growth (such as stocks, stock mutual funds, and ETFs). Financial-planning theory talks about having a guard against inflation in your financial plan. Also, talk with your advisor about what your options are for generating reliable monthly income for your retirement goals. Annuities may or may not be something to consider in that mix, depending on your risk tolerance, need for liquidity, and openness to annuities in general.

No matter what, the ultimate goal here is to generate enough income for you to live the kind of life that you want to after you stop working.

What do you think of my current financial plan for retirement?

A good financial advisor will be willing to tell you whether your current retirement plans are realistic or not.

If someone thinks they might retire comfortably with $50,000 of retirement savings, then an honest answer from an advisor might be, “That won’t enough to support you in retirement.” Should someone’s plan seem like it can support their goals, then the financial advisor will be able to tell them what different options look like.

They may suggest paying off debts before you stop working. Or it may be beefing up your savings a bit more so that you have some margin for error before you retire.

The bottom-line? You should be comfortable with whether they have given you their honest opinion or not.

How much can I spend in retirement?

This is one question that you may be able to answer for yourself. If you continue to spend money like you do now before you retire, will your savings or other sources of income be enough to continue to sustain you after you stop working?

You may not need a financial advisor to answer for you. If your computations tell you that you are going to run out of money within five years of retirement, then the answer is no. You won’t be able to keep up your current lifestyle after you retire.

This post on evaluating your retirement savings can help you as a starting point of this factor.

 Keep in mind that there are risks that are hard to anticipate or even project, such as sequence of returns risk. In that case, seeking out an advisor is a prudent course of action.

Your financial professional can delve even more into the details of your personal situation and give you answers that are based on a variety of outcomes and economic conditions.

How will I fund my lifestyle once I have retired?

Similar to how “location, location, location!” is for real estate, it’s all about the income when it comes to retirement! You want to have a clear idea of how much your lifestyle will cost you each month in retirement.

Also, don’t forget about those long-held goals that you might have dreamed of for a long time: visiting foreign lands, traveling nationwide in an RV, contributing to causes you care about in a meaningful way, or embarking on a second-act career, to name a few possibilities. The price tag for these less-frequent expenditures should be accounted for in your retirement plan as well.

Once you have a clearer idea of what these spending numbers look like, it’s a matter of determining where the money will be coming from. Here are a few steering questions to help guide you.

How much money will your portfolio be able to generate for your lifestyle and these other dreams? Do you have any other assets that you can tap for cash-flow? What sort of tax status do these assets have?

Your financial advisor can walk you through these questions and different scenarios for your situation.

What will taxes be like for me in retirement?

The answer to this question will depend upon several factors. Generally, people often find themselves paying less in taxes during retirement than they did during their working years. That is because their income in retirement is often less than the income that they took home during their careers.

That being said, these trends don’t account for a new reality: trillions of dollars in new government spending that add to an already-considerable national debt. According to various financial and political observers, taxes will have to be raised at some point to help cover this.

That being said, the accounts where your retirement money sits come into play here. If you have Roth IRAs, a Roth 401(k), or another Roth workplace retirement plan, then withdrawals from your Roth accounts will be tax-free. Keep in mind that certain conditions must be met.

What if you have traditional IRAs or a regular 401(k) plan? Then your withdrawals will be taxable. What’s more, some portion of your Social Security income may become taxable. It all depends upon the amount of taxable income that you will have to declare after you stop working.

If your taxable income is below a certain threshold, then you won’t pay taxes on your Social Security income. If your income is above this threshold, then you may pay taxes on anywhere from 50% to 85% of your Social Security benefits.

You should talk to your tax advisor before retirement. That can give some idea of what your tax situation will be after you stop working.

How long will my money last before I run out of money?

This answer depends, in large part, upon what you have invested your retirement savings in.

Many factors come into play here, including:

• the risk of loss tied to different assets,
• how that might affect their generated income, and
• assumptions about what sort of returns that those assets might have in the future.

The gains from when your assets grow will help replace the money that you take out for retirement income. How much growth that might be is the question, as you will also have down-market years. At that point, account withdrawals will compound on those account losses.

This is one reason why income certainty is an important part of retirement planning. If you have an annuity as part of your financial line-up, then you can receive a guaranteed stream of income that will last you for the rest of your life.

Your holdings will probably also include other types of income-generating investments, such as CDs, bonds, or bond mutual funds or ETFs. In that case, your financial advisor should run some numbers for you showing you how long your money will last.

Be sure that your advisor uses realistic assumptions for rates of return and inflation in their computations for you.

What can you do to help me be ready for major financial risks in retirement?

Your financial advisor will be familiar with major types of risks that can affect your financial portfolio during retirement. Bear markets, low interest rates, and other adverse market conditions should be considered before committing to a specific financial plan during retirement.

Among other resources, your financial advisor can have different tools to stress-test various strategies in different economic conditions to see how they hold up. This can be a useful way to see how they can help you manage and control for different risks in retirement.

For example, should interest rates start to climb, then you may want to consider moving some money out of fixed-interest assets into new assets that pay a higher rate. Your financial advisor can discuss these possibilities with you.

I have a pension. What could happen if something happened to my old employer or if my pension benefits were cut?

It’s great if you are receiving a corporate pension of any kind. This type of pension is rapidly disappearing in modern times.

But what if your old employer is bought out or your pension benefits are cut for some reason? You might want to take proactive measures to regain your former stream of guaranteed income.

You may consider buying an annuity with some of your savings, because this could replace the income you were receiving before. Or you may want to move more of your money into income-producing instruments moving forward.

Your financial advisor can help you determine this. The answer depends, in part, upon how dependent you were on your pension income.

When should I take Social Security benefits?

In this day and age, many financial advisors suggest, as a rule of thumb, to delay taking benefits for as long as possible. If you start taking benefits at age 62, then your benefit will be 25% less than it would be if you waited until you reach your full retirement age to start collecting benefits.

But if you wait until you are age 70, then your benefit will be 32% more than it would be at your full retirement age. There are also other strategies at your disposal, including when your spouse takes benefits in relation to the timing of your benefits claim.

Your financial advisor should be able to tell you when some optimal times are to start collecting benefits, and what more you could get by waiting to do so.

What should I know about Medicare and health coverage in general?

If you plan to continue to work past age 65, then you likely won’t have to worry about Medicare until after you stop working. Or maybe you plan to retire by 65 or before. Then it’s good to know about the various options that Medicare offers, and which options are the best for you.

Health insurance always becomes more expensive as you age. Medicare can be less expensive than private forms of health insurance once you reach the big 6-5.

Don’t hesitate to consult with a qualified Medicare expert to see what kind of coverage you can afford and what it will cover during your later years.

What can healthcare cost me during my retirement years?

Healthcare is one of the biggest expenses that most retirees in America face today. Some retirees pay as much as a third of their income, or more, to cover healthcare expenses.

You will want to prepare for this expense so that it doesn’t eat up too much of your retirement income.

If you can afford to buy a supplemental Medicare plan, then your expenses may be much lower. This type of plan covers many of the healthcare expenses that Medicare doesn’t. It can also help protect you against being stuck with a huge medical bill that you weren’t expecting.

What do you do to help my retirement plan keep up with inflation?

Talk to your financial advisor about asset classes that have tended to outpace inflation over time. They might suggest coordinating some of these assets with others that pay predictable monthly income so that your living expenses are covered.

The amount of money that you direct towards this objective will depend upon your risk tolerance, time horizon, and unique goals.

What can happen if I retire in a recession or market crash? How do we plan for that?

A competent financial advisor will account for factors such as recessions and market crashes when they create your personal financial plan.

The markets have historically rebounded from these things. As a result, it’s not necessarily the end of the world if you retire during one of these periods. That being said, it’s still good to plan for the unpredictable risk of sequence of returns.

Talk with your financial advisor about financial options that can provide you with growth opportunity during bull markets and protection of principal and gains during bear markets.

Income-producing instruments, such as bonds and annuities, can help sustain you with current income until favorable markets conditions appear once more.

What are some other ‘bad situations’ to keep in mind? How can you help you plan for those scenarios?

Other bad situations that can arise include periods of high inflation or low interest rates. A good advisor will help guard against low interest rates by using different financial vehicles to bolster your income.

Some of those options might include annuities, REITs, junk bonds, senior-secured loans, or other instruments to bolster your income. If inflation becomes a problem, then your advisor may shift your strategy to protect against the newfound risk.

Say I choose to delay retirement or keep working. What are the advantages and disadvantages of doing that?

Financially speaking, there can be several advantages to delaying retirement and continuing to work. For one thing, you won’t have to use your retirement money to cover as many years after you stop working.

You can also continue to save for retirement while you work. That can help boost your retirement savings that much more.

What’s more, you may also be able to delay taking Social Security until age 70 so that you accrue the maximum possible benefit.

The real disadvantage is that you would keep working for a few extra years. Nevertheless, it still can be a good strategy, especially if you haven’t socked away much to date for retirement.

What can we do to ensure that my spouse or I have sufficient financial resources in place should one of us pass away?

A good financial advisor will look at the big picture and set strategies that can continue paying income to the surviving spouse once someone has passed.

A joint annuity will let the surviving spouse continue to receive guaranteed income payments from the insurance company. Alternatively, a life insurance policy can pay out a much-needed death benefit (with tax advantage) to the surviving partner.

Some other things to consider are moving into a smaller house or selling some assets if your spouse pre-deceases you. The proceeds from the sale could then beef up your overall savings and increase your overall income.

How much could long-term care cost us in retirement? How likely are we to need some sort of long-term care support?

Long-term care can be one of the largest expenses during retirement. For instance, the average cost for a full-care nursing home today is about $75,000 per year.

There are a variety of insurance-based options available to help counter this. One possibility is a life insurance policy with accelerated benefit riders that can pay for this type of expense.

This way, if neither you nor your spouse ends up needing care, then you will still have the cash value and the death benefit to fall back on.

No matter what, it’s crucial to have some sort of plan in place to deal with this contingency. According to LongTermCare.gov, over 70% of people aged 65 and up will need some sort of long-term care during their retirement.

What sort of life changes have you seen other people experience in retirement?

Thanks to circumstances beyond their control, some retirees are forced to accept that they won’t be able to realize some of their dreams. The disappearance of guaranteed pensions and rising inflation have taken a hit to many households’ retirement income.

This unfortunate reality can sometimes affect even those who have faithfully saved for retirement all of their lives. Consult with your financial advisor if you are afraid that this could happen to you and to see what can be done to prevent it.

What do you think of my estate plan?

Your advisor should be able to tell you whether your estate plan is in order. They can provide referrals to legal counsel for important documents such as a will, trust documents, and powers of attorney.

They can also help you go over all of your assets, including your retirement and investment accounts, to check your beneficiaries and see if anything needs to be updated. Be sure to check in with your advisor when you have had major life changes. That can affect your beneficiary listings accordingly.

Your financial advisor may also have some suggestions for how to pass on wealth to your heirs in an efficient and tax-advantaged manner.

What else can I do to prepare for retirement?

These questions aren’t intended to be a comprehensive guide. Nevertheless, they are a helpful starting point. Another important thing to keep in mind about retirement is beyond the financial.

You should also prepare for the psychology of retirement. Your mindset will change from looking forward to the weekend to contemplating how you have spent your life. When people leave their career, it’s not unusual for them to experience some loss of identity.

Explore different options for how you will maintain your social connectivity and sense of purpose once you leave the workplace. Do you have causes or charities about which you are passionate? Have you always wanted to start your own business – or another company, for matter? How will your new schedule look, including newfound time with your spouse? Do you want to work part-time to stay “plugged in?”

Another factor: You may have to deal with all the unrealized dreams that you have harbored, and whether they will come true or not. This is one part of retirement that your financial advisor can’t help you prepare for as much.

A trusted counselor or clergyperson may be more able to help you deal with this.

Finding the Right Financial Advisor for Your Retirement

As we can see, asking your financial advisor the right questions about retirement can help in many ways. They can help you see that advisor’s philosophy and whether they are a good match for you. You can better envision how that advisor’s unique experience and insights may help your personal situation.

These questions can help you in interviewing a variety of financial professionals and seeing which candidate seems the best fit for your personal needs. At the very least, don’t ever feel pressured to move forward with a financial professional.

After all, this is the fruits of your life’s work, and your years of hard work, at stake. You should be comfortable that the financial professional to whom you entrust your money is the right partner for you.

Find the right financial professional, and it can do a world of economic good for you now, in the future, and for your loved ones.

If you are looking for someone to help you with your retirement and financial what-ifs, many independent financial professionals are available at SafeMoney.com to assist you.

Get started with our “Find a Financial Professional” section to connect with someone directly. You can request an initial appointment to discuss your goals, concerns, and explore a working relationship at no obligation. Should you need a personal referral, please call us at 877.476.9723.