Boomers Seek Fresh Insight Into Managing Retirement Finances

As the youngest of the “Baby Boom” generation turn 50 this year, retirement planning has never been more critical. A recent study finds that Boomers face a dramatically changing retirement paradigm, and old standards no longer apply.

As a growing number of Americans born between 1946 and 1964 head toward retirement, many are becoming increasingly concerned about maintaining the level of comfort and financial stability they’ve attained after almost a half-century in the workplace. Jay Donohue, founding partner of Diversified Wealth Strategies, LLC says that all eyes are on the “Baby Boomer” generation, the youngest of whom turned 50 in 2014, as they face complex financial challenges that even the most prepared pensioner may not be expecting.

According to a recent study from Transamerica Center for Retirement Studies, Baby Boomers will be establishing a new retirement standard, one that blurs the proverbial line drawn by previous generations between working to age 65 and then retreating to a leisurely old age, and working in retirement while devoting more time to leisure activities.

Planning for retirement involves anticipating changes in the economy and moving savings from higher risk, higher return investments into lower risk, lower return vehicles. Planning for the financial future depends on economic factors that have evolved and continue to change, as investment markets of the next 30 years may bear no resemblance to the investment markets of the past 30 years, which is why Donohue says an independent financial planner who specializes in retirement, investments and estate planning may be critical to managing a portfolio tailored to a particular lifestyle.

Most Boomers were mid-career when the country’s retirement model shifted from a defined benefit to a 401(k) or similar plan. Many have not yet fully recovered from the hit their retirement portfolios took from the 2008 market crash and subsequent recession, much less benefitted from the positive effects of the long-term compounding on investments.

The TCRS study found that people need to become more proactive in financial planning to ensure adequate resources in retirement. However, financial literacy at a time when economic models seem to change with the wind can be lacking among Boomers who try to manage their money on their own.

Creating and maintaining a properly-funded retirement portfolio involves getting answers to a lot of questions about income sources, how long a person plans to remain in the workforce, desired lifestyle after retirement, life expectancy and much more. And while it is impossible to predict every element accurately, finding the right financial planner to help navigate the process is crucial, especially for those close to entering retirement.

Donohue offers the following tips to make sure a professional that is most suitable for each unique financial situation can be found:

Request an explanation of fiduciary as it applies to each financial planner under consideration.

A fiduciary is legally appointed and authorized to manage the assets of another person. The fiduciary’s responsibility is to benefit the asset holder, rather than focus on his or her own gains or profit. It is important for Boomers to understand that not all financial planners are required to adhere to this fiduciary standard that places the client’s interest first. While independent advisors work exclusively with their clients’ best interests in mind, other advisors are only required to uphold a minimum suitability standard requiring that recommendations provided are simply suitable and consistent with a client’s risk tolerance and time frame. Boomers need to request a potential financial planner’s policy on fiduciary responsibility before work begins.

Confirm services provided by financial planner.

Services provided by financial planners can vary greatly, depending on the client’s needs and budget. Some adhere to a goal-based approach, focusing on matching risk and time frames of investments to the client’s goals. Others prefer a holistic approach managing every aspect of their client’s financial profile, while another group prefer that clients take an active role, working as committed partners to follow through with financial and investment plans.

It’s crucial for clients and financial planners to establish these specifics before entering into a formal relationship. If there is a particular need, like tax planning or estate planning, make certain advisor has connections with other experts like tax professionals and attorneys in order to  keep things integrated.

Determine fees.

Financial planners work under various payment models. Some are commission based, which means their compensation is based on the financial product the client purchases.  Others are fee based, usually charging a percentage of the assets they manage. Still other financial advisers charge a flat fee or an hourly rate. Boomers should be sure they understand how the financial planner they choose can help them achieve their financial goals, and how they will be compensated.

Licenses, credentials and other certifications.

There are various designations that a professional financial planner can earn relating to their level of education, experience and commitment to ethics.

Some designations are the Certified Financial Planner (CFP®), which represents professionals supported by the Financial Planning Association (FPA)—the standard for all areas of financial planning. Additional credentials to look for include Chartered Financial Consultant® (ChFC®), Certified Public Accountant/ Personal Financial Specialist (CPA/PFS) and Chartered Life Underwriter (CLU).

The most important step Boomers need to take is to select a financial planner or advisor who understands the best ways to achieve the work-to-retirement transition, ensuring sources of income that will stay with them for the rest of their lives.

Contact Info:
Name: Jay Donohue
Email: Send Email
Organization: Diversified Wealth Strategies, LLC
Phone: 866-323-9686

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Release ID: 71719