Is Financial Planning & Retirement Planning the same?
While financial planning focuses on your current finances and investments for your future, retirement planning focuses specifically on your finances within your retirement and how to ensure you have the adequate funds available for the life you desire after you retire.
Regular financial planners offer their services to people of all ages. Retirement planners, on the other hand, deal with clients in or near retirement. This distinction can prove important if you are specifically looking for a professional to get your retirement affairs in order.
Many financial professionals will, for a fee, help you navigate your way to and through retirement. Using a financial advisor isn't mandatory. If you can't afford, don't trust, or otherwise would prefer not to use an advisor, managing your retirement on your own is always an option.
Comprehensive Financial Planning is more than the active management of investments. It is more than the creation of a retirement plan and it goes well beyond regular check-ups of a portfolio. Truly Comprehensive Financial Planning is the act of planning for, and prudently addressing life events.
Implementing the Financial Planning Recommendation(s)—Often the most difficult step, this requires the client to have the desire and discipline to put the plan into action with the support of their financial planner.
There are two main types of financial advisors: those who give general financial advice and those who specialize in a certain aspect of retirement planning. If you're looking for help with a particular area of your finances, it's important to find an advisor who specializes in that area.
A financial planner generally takes a more comprehensive, long-term approach to money management. While they often hold the same licenses and carry out the same functions as financial advisors, financial planners tend to focus on creating personalized and holistic plans for clients.
If you feel you really need some one-on-one help, or you have substantial assets that you feel require professional management, you might want to consider hiring a financial planner.
| Fee type | Typical cost |
|---|---|
| Assets under management (AUM) | 0.25% to 0.50% annually for a robo-advisor; 1% for a traditional in-person financial advisor. |
| Flat annual fee (retainer) | $2,000 to $7,500. |
| Hourly fee | $200 to $400. |
| Per-plan fee | $1,000 to $3,000. |
The 4% rule is a popular retirement withdrawal strategy that suggests retirees can safely withdraw the amount equal to 4% of their savings during the year they retire and then adjust for inflation each subsequent year for 30 years.
What are the two 2 most popular personal retirement plans?
The primary types of retirement accounts are: Traditional IRAs: a tax-advantaged savings account that lets your funds grow tax-deferred. Roth IRAs: a tax-advantaged savings account of after-tax funds (money that you've already paid taxes on)
The Employee Retirement Income Security Act (ERISA) covers two types of retirement plans: defined benefit plans and defined contribution plans. A defined benefit plan promises a specified monthly benefit at retirement.
- 401(k)
- Traditional IRA.
- Roth IRA.
- SEP IRA.
- Solo 401(k)
- Building an advisor practice and growing a client base may be challenging.
- Completing the necessary requirements to get certified and licensed can be time-consuming and costly.
- Working hours are often long, particularly in the early stages of growing an advisor business.
Everyone has different financial weaknesses, some more common than others. These can include overspending, living beyond your means, not having an emergency fund and not tracking your money. These weaknesses can lead to financial stress and can prevent you from reaching your financial goals.
Having a written financial plan gives you a measurable goal to work toward. Because you can track your progress, you can reduce doubt or uncertainty about your decisions and make adjustments to help overcome obstacles that could derail you.
To find a financial advisor, get recommendations from people you trust, ask for references, and interview possible candidates. You may prefer to hire a fee-based advisor, such as a fee-only financial planner, instead of one who receives commissions in return for selling or recommending certain financial products.
Managing a portfolio requires a lot of work, however. But if you don't want to do it yourself, you do have some options. First, you could work with a retirement advisor who can do that heavy lifting for you. Be sure you work with a fee-only advisor – one that you pay – to give you the best advice for your situation.
- Top financial advisor firms.
- Vanguard.
- Charles Schwab.
- Fidelity Investments.
- Facet.
- J.P. Morgan Private Client Advisor.
- Edward Jones.
- Alternative option: Robo-advisors.
The CFP designation is the highest professional standard in the financial planning industry. CFP denotes that a financial planner has extensive training and knowledge, as there are rigorous education requirements and a lengthy certification exam to earn the certification.
Should I trust a financial planner?
Ultimately, whether or not a financial advisor will be worth your money depends on your specific situation and the financial advisor you choose to team up with. If they align with your goals, listen to your needs and act in your best interests, they will most likely be a good financial investment.
The Bottom Line
Anyone can manage their own assets, but that doesn't mean you should. Most people will benefit from the knowledge and experience of a professional financial advisor, especially if they have a substantial amount of assets.
67-70 – During this age range, your Social Security benefit, if you haven't already taken it, will increase by 8% for each year you delay taking it until you turn 70. So, if your benefit will be, say, $2,500/month if you start at your full retirement age, it would be more than $3,300/month if you can wait.
SCSS is arguably the first choice for most retirees.
1. Saving Enough Money: Perhaps the top retirement concern is the idea that without steady employment, it might be difficult to have enough resources to maintain your preferred lifestyle. The cost of living can be high, and Social Security benefits may not be enough to cover all your living expenses.
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