You probably read or hear about some “Top Ten” list nearly every day, but take a moment to read this one. This list is different, and probably not the kind of list you’d expect a financial advisor to write.
Reason #10: “It’s too expensive” Being penny wise and dollar foolish isn’t necessarily a great idea. There are unfortunately far too many in the financial industry that are salespeople and not planners. A good financial advisor should bring far more value than any fees charged whether that is from better investment performance, tax reduction, Social Security maximization, or something else. At our firm we generally won’t take on a client unless we believe we can bring over 3 times more value to them than whatever fees are charged. Sometimes the cheapest option can end up being the most expensive option if you’re missing out on other planning opportunities.
Reason #9: “I’m too busy” I can’t tell you how often I hear this excuse. So many people want to plan for a better retirement and future, but they don’t have time. They think they’ll take care of it tomorrow, or the day after that … and before they know it, years have gone by. The best advice I can give is to stop procrastinating and start planning. My great grandfather use to have a saying that ‘procrastination is suicide on the installment plan.” There’s a lot of wisdom and truth in that saying, especially when it comes to finances, taxes, investments, and retirement planning.
Reason #8: “It’s too soon” The notion that you shouldn’t have to start planning for your retirement until it’s almost time to retire is incorrect. The truth is, the sooner you start planning, the better chance you stand of having the kind of retirement you want. It’s never too soon. If what you thought about your financial future turned out not to be true, when would you want to know about it? As soon as possible so you can make simple and easy corrections, or later when it’s not as simple or easy? Often if you’re failing to plan you’re planning to fail.
Reason #7: “It’s too late” So what if you’re already near or in retirement? Does that mean all is lost and whatever you’ve got is what you’re stuck with? Is it now too late to do anything about it? Certainly not. If you’re unsure of what your options are, speak to a professional. Even if you’ve already retired, it’s important to consider how you’re receiving income, how long it will last, how much in taxes you’re paying, and whether your investments are still the most suitable for this new phase of life. It’s never too late to make improvements; but the longer you wait, the more costly avoiding taking corrective action can become.
Reason #6: “I don’t need to” I’ve heard this excuse many times and it always baffles me. Many people think that because they’ve been diligent about contributing to a retirement account, they’re all set. While saving for retirement is good, you also need a plan for income distribution once you enter retirement. The front 9 of this golf course is very different from the back 9. Are you certain that what you’re saving will be enough? Have you considered your distribution plan? What about taxes? What about inflation? Are you sure your money is best positioned to create an ever increasing income to offset ever increasing prices? There may be other, better options for you and it quite likely would prove worthwhile to look into them.
Reason #5: “My finances are a mess” This is all the more reason to seek out an advisor who can help you sort through and understand your assets. Perhaps you have several 401(k)s from former employers scattered across several companies, a couple of savings accounts, a trust from a deceased relative, and some stocks that your parents bought in your name when you were younger. A hodgepodge of accounts like this can be confusing and feel overwhelming, but leaving it as is won’t improve the situation. Consider speaking with someone who can look at your complete financial picture, help you to understand it, and help you to develop a plan to simplify it.
Reason #4: “The Government will take care of me” The bottom line is this: If you think the government is going to take care of you then you’re likely not going to live the lifestyle in retirement you’d like.
Reason #3: “Between my savings and my 401(k), I’ll be fine” Saving for retirement is one thing, but creating a distribution plan is completely different. How will you use that money once you have it? And while you may think you’ll have everything you’re going to need, have you considered how much will be lost to taxes and inflation? There is over a 50% chance that a 65 year old couple in average health will have at least 1 partner live past age 92. Will your assets last that long? If they won’t, what then? It’s a good idea to look ahead and have a plan for lifelong, increasing income and to account for lifelong potentially being very long.
Reason #2: “I don’t want to think about it” With financial markets having their worst start to a year since the Nixon administration, many view the thought of discussing financial matters right now as unappealing. I can certainly understand that, but ignoring the problem isn’t going to make it go away. Having a good, solid, well constructed plan and portfolio can alleviate the pressures and anxiety a volatile market can bring, particularly if that plan ensures you have the income you want and need regardless of what is going on with the economy, stock market, and elections.
Reason #1: “I don’t know how” If you knew everything there was to know about financial planning, you’d probably be writing articles like this instead of reading them. While it is possible to do everything on your own, that generally results in poorer outcomes. The first time you do something like build a deck, drive a car, or ride a bike, is it usually the best? You only get one retirement and the reality is struggling through it one time alone will likely result in many expensive learning experiences along the way. Working with a financial professional that has seen and helped hundreds through the process can prevent you from making first timer’s mistakes. If you’re putting off retirement planning because you don’t know how, then you need to speak with a skilled professional who does.
Don’t let one of these top excuses prevent you from reaching your full financial potential. Retirement is supposed to be about going out and making memories, not worrying or stressing. The sooner you get started optimizing a plan likely the sooner you can start living the retirement you want.
If you’re looking for a financial advisor in Topeka to help you start a plan to lower your taxes and increase your income, give us a call at 785-228-0222.