PLANNING FOR TOMORROW

Financially preparing for retirement

We all want to be ready for retirement, to wake up and enjoy more of the moments that matter most. But dragging financial struggles into this new chapter can put a damper on your hard-earned reward. Devising a solid plan now can help you enter retirement worry-free. 

The big questions
“When I retire, will I have enough savings?” 

This is one of the most frequent internet searches on retirement, and financial planners across Central Virginia say being able to answer “yes” with confidence comes down to organizing your assets and developing a strategy to reach your goals. 

“About 58 percent of retirement savers — from all age groups, whether you’re 25 or a couple years away from retirement — say outliving their assets is their greatest retirement fear,” says Brent Helms, a financial advisor with Edward Jones in Lynchburg. 

He says his job is to help clients “get to that point where they can retire and live off what they have or help them make adjustments so they can.” 

Sometimes that means serving up a dose of reality. 

“There’s give and take in retirement planning. … You might have to invest more, you might have to cut out some costs, you might have to work longer. You might have to wait longer to take Social Security. Those things are on an individual basis, different for each person.” 

Although about 70 percent of his retirement planning clients are 55 or older, Helms says the earlier you start, the better. 

“Time’s our biggest ally. [You can say] the more I’m able to put away and the longer I’m able to do that, the more likely I’m going to be able to retire on my terms and retire the way that I want to retire.” 

John Hall, President of Lynchburg Wealth Management, puts it this way: “The best time to plan was yesterday; the second-best time is today.” 

“While a plan will be tweaked and become more focused as years go by, starting early, from a financial perspective, is always preferable,” he says. “Yes, there’s still hope for those who didn’t start early. The most important step is to start.” 

Rules for the road
Financial planners are hesitant to recommend certain investment products without first getting to know the client, but there are some time-tested rules everyone can follow. 

“The first step for those approaching retirement is to have the conversation at home with your family as to what you value and want to achieve, outcome-wise,” Hall says. “Then, it’s finding a trusted advisor to partner with to help make it a reality.” 

He says an advisor should focus on the client’s needs and wants: “What are their values and priorities? What does an enjoyable retirement look like to them? What legacy do they want to leave?” 

A proper plan should include some breathing room for unforeseen circumstances that could greatly impact your retirement savings. “I have more responsibility to my clients than just building their money up. I also have to make sure that we are preparing for those unexpected things,” Helms says.

To shore up savings as you go, some planners advise against spending any raises you receive and instead contributing that amount to your 401(k), or other investment, and continue to live off your previous income. 

Helms recommends a diversified portfolio: “Most folks have a goal of not relying on Social Security. They want to plan so that they have enough of their own resources to maintain their standard of living.” 

And he warns not to forget to plan for the inevitable: inflation. “If your retirement savings are not making enough to keep up with the cost of goods going up, the cost of living going up, then that can increase the chance of you outliving your money.” 

Many clients of retirement age abide by the widely accepted 4 percent rule, which says if you withdraw 4 percent or less of your initial retirement portfolio value in the first year, allowing the rest to continue to grow, then you will be able to safely increase your withdrawals in subsequent years and still ensure your savings will last you 30 years. 

Trust the experts
Quick bursts of financial advice on the internet leave out personal factors — like health issues, travel, charitable giving and the many unexpected, often expensive, disasters life can bring. 

“Generic advice can only get you so far, and retirement is an important stage of life,” Hall says. “A trusted advisor helps multiple clients retire and live in retirement every single year and has learned from that experience what works, what doesn’t, and what to be aware of.” 

Personalized guidance and built-in accountability is invaluable in maintaining a plan. Some financial planners prefer to call it “life planning” instead of “retirement planning.” Unlike the client, they have the advantage of stepping outside the family’s emotions and looking at the big financial picture. 

“We believe that financial planning is a continuous process; one that’s best done not at once but over a years-long partnership with two-way trust,” Hall says. 

A study from Herbers & Company, a business management consulting firm, shows that people who work with a professional are three times happier than those who manage their own money. Vanguard research also shows that using an advisor can net you 3 percent or more in returns. 

While traditional face-to-face meetings are still important, many financial planners are complementing their services with the latest technology. Apps and software can help you see your plan in real time, as spending happens and investments build, and help advisors and clients to communicate more easily. 

If you’re ready to reach out to a financial advisor, research their certifications in the field and years of experience as a fiduciary, a signal that they have taken an oath to do the right thing for their clients, acting in their best interests. ✦