Recognizing When You Need Help From a Financial Planner

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Financial Planner

A lot of people prefer to do things without anyone else helping. Considering that accomplishing tasks creates a sense of pride, that’s easy to understand. If you’re like most people, you can change a tire, bandage a cut finger, and mow your lawn. That’s all great. However, when it comes to finances, it’s important to recognize when you need professional assistance.

Many financial advisors tell people to try to figure things out if they can. That way, they learn about savings and investments, including what they should and shouldn’t do. At the same time, it’s just as important to know when you don’t have the qualifications to make sound decisions.

Often, the younger generation doesn’t need much help from a financial advisor, if any. While employed, a lot of people put money in a 401(k) through their employer or invest in a Roth IRA. Since these are pretty straightforward, most individuals make good decisions when it comes to handling their money. Also, with all of the great online apps available, younger people are starting to tackle more professional services on their own and financial planning is no exception. With made-for-consumer financial planning software such as WealthTrace and Quicken, savvy consumers can take on this task on their own and save a lot of money in the process.

Of course, there are always exceptions to the rule.

When You Should Work With a Financial Advisor

Regardless of your age, if you ever have questions about saving and investing but can’t find the information or solution needed, contact a reputable financial advisor. Also, if you have significant wealth, it’s critical to make decisions to not only protect your money but also help it grow. Again, this is where an expert can help.

Then, when you’re between five and ten years away from retiring, again, you should give serious thought to talking to a financial advisor. You’ve worked hard for decades, and you want to enjoy your retirement without worrying about money.

The following are some specific ways an advisor can help you achieve your financial goals.

Tax Planning

Paying and preparing your yearly taxes is much different than dealing with taxes on investments. When working with a trusted financial advisor, you’ll find out if converting your Roth IRA is a good way to diversify your income streams. The advisor will look for various opportunities so you can offset taxes on income and gains.

For example, let’s say a couple planned to retire at the age of 60. As part of that plan, they anticipated living on their pension so they could avoid collecting on Social Security until the age of 70 to receive the maximum benefits. In theory, that sounded great. If they followed their plan, the couple would be in the 15 percent tax bracket.

However, thanks to a financial advisor, they gained insight into what would happen after the age of 70 when they began to get their Social Security benefits and had to take out the mandated minimum distributions from their IRA account.

The advisor showed this couple a better plan, which consisted of doing a Roth conversion. Although that meant jumping to the 25 percent tax bracket, it was only between the ages of 60 and 70.

As a result, once they began to get Social Security payments, they would avoid paying taxes on them. Overall, the advisor’s plan saved this couple thousands of dollars every year so they could enjoy their retirement 100 percent tax-free.

Income Planning

This is another area where a financial advisor can assist you. Once you retire, you won’t get regular paychecks. So, you have to come up with ways to earn money. A poorly timed investment that leads to losses could have devastating financial results. Instead, you want options that guarantee income.

Remember, a financial advisor has tremendous knowledge and experience that can help anyone, even do-it-yourselfers. Say a woman lost her husband to cancer. However, she had no idea that at the age of 60, she could file for survivor’s benefits. For another example, a divorced woman may have no clue that she can file for spousal benefits while she puts her Social Security payments on hold.

If you saw your parents live off their pension and enjoy a wonderful retirement, you might want the same for yourself. However, without the help of a financial advisor, you’ll have a difficult time achieving that same goal.

Especially during retirement, you need to feel confident that you have enough income to not just survive but also thrive. That’s why you need an ironclad strategy, which is what a financial advisor can give you.

Estate Planning

Many people feel overwhelmed when going over the documents required for estate planning. But a financial advisor can review everything on your behalf and then provide you with guidance. This expert will ensure your money goes to the people or charities that you choose.

Quite a bit of work goes into estate planning. So, you will want to talk to a financial advisor. Not only will this individual protect your estate, but they’ll also find ways to diversify so you avoid tax consequences.

Healthcare Planning

Obviously, no one has a crystal ball to determine what healthcare needs they’ll have as they age. Although Medicare covers some things, it doesn’t cover everything. A financial advisor will provide you with options that go beyond Medicare and private long-term insurance, which is expensive.

Investment Planning

Finally, a financial advisor can help you manage your investment portfolio so it works for you instead of against you. This expert’s goal will be to introduce you to ways to minimize fees and various other expenses. An advisor will also keep you calm during volatile times. Overall, you’ll learn how to match your financial plan to your long-term goals.