The Benefits of Using a Financial Planner to Plan for Retirement
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of the most significant personal financial responsibilities that all people have is properly preparing for retirement. Since saving and investing for retirement is such a daunting and important task, many people would benefit greatly by working with a financial planner or advisor when they are planning for their financial future. When working with a personal finance planner, an investor will receive a number of different services
Why should you use a financial planner? The
first reason why you should use a financial planner when you are planning for retirement is that they can provide you with an estimation of what you will need to save when you are in retirement. The advisor will be able to take a look at your personal expenses and your estimated expenses to determine what you will need to live on in retirement. They will then be able to use a few more estimations to determine what the total amount of money that you will need to have saved will be. From there, and based on your expected retirement age, they will be able to figure out how much you need to save each year and what rate of return you will need.
Why should you use a financial planner? Working
with an advisor is also beneficial because they will help to keep your investments held appropriately. When most people handle their own retirement accounts, they do not really know where to invest their money. Financial advisors will be able to review your particular situation and allocate your investments appropriately based on your age, years until retirement, required rate of return, and overall risk tolerance. This will ensure that your investments stay diversified and that you will reach your personal financial goals.
Why should you use a financial planner? The
third advantage of working with a financial advisor is that they could help you develop a tax plan for the future. Taxes are one of the most significant expenses that face people in retirement. Because of this, people should always try to set up a plan ahead of time, which could be used to reduce future tax liability. For example, the advisor could attempt to diversify your investments between tax-deferred and post-tax retirement accounts. This will help to minimize the tax burden that you will face in the future. Also, if you are hoping to leave an inheritance, the planner could help you to set up a trust for your dependents, which will help to reduce the taxes they receive through their inheritance.
Why should you use a financial planner? Quite
possibly the most important service that a planner could provide is that they will constantly re-evaluate your personal situation. The advisor will be able to track the progress of your investments and the re-evaluate your progress on a regular basis. Based the evaluation, the planner will be able to re-allocate your investments to ensure that you stay on track for meeting your long-term goals. For example, as you approach retirement and have less time to earn back any losses, the financial planner will be able to transfer your money from stocks and mutual funds into bonds, cash, and low risk funds.