Even though we spend our careers saving and investing for retirement, making the transition from building up those funds to living on them can feel like moving into a very unpredictable situation. It’s impossible to know exactly know how much will be “enough” because life itself is unpredictable. But starting to explore your options five to ten years before the age you’d like to retire puts time on your side: your plan can include investment and tax strategies that minimize costs to you while creating a steady stream of income. And you can put a backup plan or two in place for some of the most common expenses that come up after retirement age.

What many people don’t realize and don’t prepare for is the stress that can come with transitioning to a fixed income. In this article, we’ll take you through our holistic approach to retirement planning at DHJJ and the kind of relationship you can expect to have with your financial advisor.

Support Through Your Transition

While they are actively earning money, most people choose from a narrow assortment of saving and investing options vetted by their employer. Some of our clients have diligently saved and might have one or two main investments. Others have taken a more aggressive investing strategy and need to lower their risks significantly while avoiding high tax rates. The new range of possibilities can be overwhelming when you’re preparing to retire, especially without your employer’s trusted financial resources. 

In addition to a wider variety of choices, your relationship with your savings and investments begins to change when you start nearing retirement. Have you thought about how it will feel to start spending what you’ve saved? You don’t necessarily have to take the most conservative route, and your retirement plans shouldn’t come from a place of worry that you might outlive your savings. Seeing the numbers can help you feel a bit more comfortable and make better decisions, but your advisor should also take your money mindset and other needs into account: What material things and experiences will bring you joy in retirement? Do you want to provide support for your children’s college education, pay for a wedding or take yearly vacations? What will your life look like when you are enjoying what you have saved your whole life for? 

Questions to Explore With Your Financial Advisor

When choosing a financial advisor, the most important factors to assess are their values, the types of financial services they provide, their ability to provide unbiased service and your level of personal comfort with them. Are they a fiduciary, which means they have to act in your best interest? We recommend you ask about their fee structure: are they compensated hourly, by a percentage of your assets or based on a commission of products sold? Communication is another key factor: How often can you communicate with them, and in what ways? Will it cost you every time you pick up the phone? 

We always want our clients to feel free to ask questions when they have them so you never end up feeling alone and making decisions out of stress. In a great advisor-client relationship, you should feel comfortable exploring the following questions:

• Can I retire from a financial standpoint? 
• Do I have enough in savings and investments, and how long will it last?
• How can I capitalize on my last few high-income years before retiring?
• Can I maintain my current lifestyle after retiring, or will I need to make some adjustments?
• Which financial resources do I tap into first? How can I time my strategy for the biggest tax savings over my lifetime?

Our Approach to Retirement Planning

While other firms may suggest certain strategies based on your financial patterns, we create a holistic year-by-year plan for each of our individual clients. The strategies in our arsenal range from tax and charitable donation planning to Roth conversion and asset allocation. We help you determine where you can take money from first, which investments to keep growing and how to possibly lower your Medicare premiums, all the while considering how the tax impact of your investments will change and what strategies will lower your lifetime tax payments. From a planning standpoint, it’s incredibly important to be proactive and know when to take specific actions as well as what you should do. 

We take an educational approach to our clients, teaching you only the concepts you need to know while helping you understand the ramifications of your decisions. We work through an annual to-do list with you in addition to your long-term plan, and we adjust as needed. Events that may call for an adjustment include life events like marriage, divorce and death, but changes in tax laws and legislation can also merit a change in strategy. DHJJ advisors reach out to meet with clients about once every quarter, and some of our clients choose not to go to every quarterly meeting. We may meet with new clients more frequently until their plan is in place. 

Don’t Miss Significant Opportunities

If you are ten years away from retirement or less, now is the time to seek out a financial advisor you feel comfortable with. You are approaching the years of your life when you’ll be in your highest tax bracket, and then the transition to retirement will change almost everything about where your income comes from and how it is taxed. It’s a lot for one person to think about, and you don’t want to find out later on that there was a more efficient way to organize your funds. 

We won’t make you any grand promises about what we can help you achieve, but we can give you the peace of mind that you have a long-term strategy with both short- and long-term goals. We’ll be there by your side as you cross the finish line of your career and begin a long and fulfilling retirement. 

Ready to start the conversation? Get to know our team of financial advisors today and get in touch with us to set up a consultation.