By Adam K. Wright, CFA®, CFP®
Thinking about retirement is equal parts thrilling and terrifying. How do you know if you have enough money saved? When should you take your Social Security benefits? Will your retirement plan survive a recession?
When planning for retirement, we consider the retirement redzone the five years before and the five years after the big day you marked on your calendar. These years are critical because even small financial mistakes can derail the retirement lifestyle you’ve worked so hard to build. That’s why it’s so important to partner with a fiduciary financial adviser for your retirement plan. Here are 3 ways a good fiduciary adviser can add value during your retirement redzone.
Experience Helping Clients Retire Confidently
So much of the financial service industry is built around helping clients acquire and grow wealth, but many advisers are not trained in helping clients define a plan to spend all their hard-earned savings. Think about it this way, if you were going to have knee surgery, you want to go see an orthopedic surgeon, not a heart surgeon.
When it comes to retirement planning, a good fiduciary adviser has the knowledge and experience to help you navigate all the retirement decisions you need to make. They know that Roth conversions can be sensible strategies during your retirement redzone, but they also know how those conversions may affect how much you pay for health insurance via Medicare. It’s easy for an adviser to make mistakes if they are not trained and experienced with retirement planning.
At Wright Associates, we’ve been helping clients retire by design, not default, for over 20 years. We can analyze your retirement needs, create an efficient retirement income strategy, and help you navigate market downturns so you can trade worry about the future for sheer excitement.
Review & Reevaluate Your Risk Tolerance
A good adviser knows that one of the most important pieces of the retirement planning process is that it should be reviewed and reevaluated each year. As you enter the retirement red zone, your ability to take risk changes, as do your needs from your retirement and investment portfolio. It’s no longer about saving and investing. Now it’s about generating retirement income for the rest of your life. Bad markets during the five years before and the five years after your retirement day are known as sequence of return risk. For example, a bear market and high inflation negatively affects how much you can spend from your portfolio. Your retirement plan must account for sequence of return, and your fiduciary adviser should be able to communicate their time-tested strategy for how to deal with it.
We feel strongly that your retirement plan should never collect dust. Instead, we will repeat the financial planning process (yes, the whole process) with every client every year. This way, your retirement plan adapts and evolves as your life does. No matter how your life changes, we are here to identify the ways it could impact your long-term financial plan. And we do it in real-time so we can catch any potential pitfalls before they cause damage to your plan.
The markets change by the nano-second, and tax laws change in massive ways. All these ongoing changes are outside of our control, but that’s why you have a retirement plan. It sets the course and then through the process of reviewing and reevaluating your retirement plan each year, you stay in front of disruptive change.
For instance, during the COVID-19 panic of 2020, Congress suspended required minimum distributions from retirement accounts. Many clients had alternative retirement income sources, allowing us to convert huge chunks of IRA rollovers to Roth IRAs. Clients were able to effectively shift retirement funds to tax-free accounts while prices were depressed. In normal times, you must take a required minimum distribution first and conversions come second, usually doubling up on income and making them not such a good deal.
Adding value doesn’t come nice and steady every single year. It comes in waves. Being on top of changes and in constant, proactive communication with clients is something we are very proud of at Wright Associates. It’s how we add value to your retirement plans.
Are You in the Retirement Redzone?
If you’re currently in the five years before and after retirement with questions about where to go from here, please reach out to us! It’s never too late to start planning for the future, and we’re here to help you do it. Schedule a complimentary phone call to get started today.
Adam Wright is a CERTIFIED FINANCIAL PLANNER™ professional at Wright Associates, helping clients plan and prepare their investments to retire on their terms. If you’re serious about planning for your retirement and investing for your future, his annual process will help you make the right money choices today. Therefore, Adam and his team will proactively manage your accounts while communicating the progress of your financial plans. He believes the retirement advice you receive should be intentional and actionable.
Adam has a Bachelor of Science in Supply Chain and Information Systems from The Pennsylvania State University and a Master of Business Administration from University of Pittsburgh, Katz Graduate School of Business. He lives in Upper St. Clair with his wife and two children. When he’s not working, Adam enjoys the outdoors (fly fishing), reading, and taking long runs while listening to a favorite podcast. He’s also currently encouraging himself to take up golf. To learn more about Adam, connect with him on LinkedIn.