4 Non-Investing Questions to Ask an Advisor Before You Retire |  personal finance

4 Non-Investing Questions to Ask an Advisor Before You Retire | personal finance

Kate Ashford, CSA®

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Using a financial advisor for your investment needs is 100% brand name, but what about the other parts of your retirement life? For example, one-third of people age 64 and older have a financial advisor, but only 2% of them asked their advisor for help with their Medicare options, according to a July 2022 report from health care consultancy Sage Growth Partners.

But Medicare and other non-wallet items like travel and long-term care can take a toll on your finances.

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“We’re actively bringing these ideas to our clients, but there are still a lot of advisers who don’t,” says Crystal Cox, a certified financial planner in Madison, Wisconsin. “They are still focused only on the investments and the portfolio.”

Here are some questions to ask at your next meeting.

1. What retirement decisions should I think about?

Your life in retirement may not continue as it did in the past. Do you plan to travel? Do you intend to move to a different state or downsize? How often will you want to buy a new vehicle?

“Most people just think, ‘I need a certain amount of money to live on,’” says Daniel Lash, a CFP in Vienna, Virginia. “What about all the ancillary things that come along with life? All the things you want to do?

Mapping your retirement plans can help you and your advisor identify when and how you’ll need cash.

“Do you have an idea of ​​where you’re moving to and what real estate is like in that area in general?” Lash says. “They have thought about retirement, not ‘What am I going to do when I retire?’”

2. What should I know about Medicare?

Although you generally can’t sign up for Medicare until you’re closer to age 65, your income in earlier years will affect what you pay for coverage. Each year, both Medicare Part B and Medicare Part D base their premiums on your reported modified adjusted gross income for the previous two years. So if you filed an individual return earning more than $91,000, or filed a joint return earning more than $182,000, you will pay additional amounts each month.

“Because there’s a look back on earnings for Medicare spending, we’ll adjust plans accordingly, because they could be paying considerably more the first two years of retirement than later in retirement,” says Lash.

It’s also wise to consider counseling about Medicare options in general, because sometimes you can’t change coverage later if your health situation changes, and Medicare is complicated. “We do an annual meeting with someone who specializes in Medicare,” says Lash. “All customers are invited to attend.”

3. Can I afford to self-insure for long-term care?

A person turning 65 now has about a 70% chance of needing some form of long-term care, and the costs are steep: $54,000 a year for an assisted living facility and almost $95,000 for a shared room in a nursing home, according to the insurance company Genworth’s 2021 Cost of Care Survey.

“Some people are well enough to be comfortable self-insurance,” says Kevin Brady, a CFP in New York City. “Others have more limited assets.”

No matter what the case, it’s crucial to look at the potential costs and whether you have the savings to manage them. If you don’t, you’ll need to calculate the numbers for products like long-term care insurance or a hybrid policy that combines permanent life insurance with a long-term care rider.

“We’re always working with an expert to make projections and see what makes sense,” says Brady.

4. Do I have enough money to have fun?

A successful retirement is not always about tangible things. For many, it’s time to fulfill dreams of travel and other experiences, but spending too frugally can get in the way.

“Clients are often too conservative for fear of running out of money, but in the process they let down the retirement experience,” says Kevin Lum, CFP in Los Angeles. “By the time they realize their abundance, they are too old to spend it.”

Talk to your advisor about your big wishes and whether you have enough money to spend a little before deciding on a more sedate expense.

Actual retirement spending looks more like a smile than a straight line, Lum says, with more spending up front on things like travel and more spending down the road on long-term care needs.

“I’m not saying people should spend irrationally,” says Lum. “But thinking of retirement expenses as a fixed calculation that doesn’t change over the life of retirement is not a smart idea.”

This article was written by NerdWallet and originally published by The Associated Press.

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