Retirement & Tax

Retirement Advice or Not

Ron Gambassi
March 27, 2013

What’s Best for You?

Deloitte (the accounting and financial services firm) recently released the results of a study that asked people about their decision to engage professional help in retirement planning. With millions of Baby Boomers entering or nearing retirement, planning for it will be a hot topic for years to come.

The study found that about 66% of people don’t consult professionals for advice. Of those with more than 15 years until retirement the number is about 75%.

A third of respondents felt they didn’t need professional advice, yet only 22% of all respondents feel confident that they can meet their financial goals in retirement.

The obvious question then, is: why do so few people seek professional retirement advice?  Unfortunately, the answer is much less obvious. Only 13% said they had a bad experience in the past. Another 12% said they couldn’t afford to hire a professional.

Many people simply don’t want or feel they need professional advice.  Maybe they have not saved enough and don’t want to hear “the answer”. Others (think entrepreneurs, executives, other 50 hr. work-week professionals) simply don’t love the elements of personal finance enough to make the time to do it. They hope it’s enough to contribute to their 401k or profit sharing plan at work.

The majority of “boomers” don’t have a pension plan in retirement (like their parents). Social Security should be there but it is not enough.  The majority of retirement income will still need to come from invested assets, or from continued employment (which is not always a bad thing).

Regardless of the reasons to engage, or not to engage professional retirement advice, most people agree that retirement planning is critical and complex.   It’s not terribly hard but it does take time, effort and a great deal of interest in the subject.

Here’s a list of competencies and interest areas for the “do-it-yourself” retirement planner. If that’s not you, then use this list to qualify a professional who can demonstrate expertise in these areas:

  • Interest in Economics (domestic and international)
  • Enjoyment of the study and application of personal finance
  • Strong familiarity with asset allocation models and portfolio diversification (i.e. stocks, bonds, real-estate, natural resources, art, collectibles, etc.)
  • Ability to construct Time Value of Money scenarios on a financial calculator
  • Comfort analyzing and modeling future market returns and rates of inflation into calculations
  • Ability to project income needs in the 10,20, or even 40 year time horizon
  • Factoring the effects of inflation on purchasing power and investment returns
  • Ability to identify the strengths and weaknesses in an estate plan
  • Determination of a family’s insurance need (i.e. Long Term Care) and its impact on retirement
  • Running retirement simulation scenarios using various calculators (many are available online)
  • Regularly reading the financial press and comments from smart people around the world
  • Time and interest  in researching  assets and asset classes for your portfolio
  • Measuring and tracking results and adjusting when necessary

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