Don’t Wait to Hire a Financial Planner Just Before Retirement

Most people tend to associate hiring a financial advisor only while planning for their retirement.  This is why they often wait until the years preceding their retirement to seek professional guidance. However, if you need the guidance of a professional, a financial advisor should be hired much earlier in life. Not only is it advised to hire professional help early, but also to explore diverse investment strategies and seek advice from financial advisors for all your financial concerns. This will deepen your understanding and empower you to navigate complex financial situations with confidence and create a retirement fund to retire comfortably.

When should you hire a financial advisor?

1. When you start your career

Starting your career can bring with it a wide set of questions, doubts, and dilemmas. A financial advisor can answer your queries and make sure you put your earnings to good use. Some surveys have found that a good majority of employees do not fully understand their workplace benefits.  Do not miss out on opportunities to capitalize on your benefits. Collect all the information from your HR department and seek the help of a financial advisor to make the right decisions and start growing your savings.

A financial advisor can help you understand retirement account benefits, health insurance, stock options, etc., offered by your employer. For instance, many companies offer retirement savings plans like a 401(k) plan, which can be a key tool for building long-term financial security. However, without proper knowledge, you might not be able to take full advantage of the account. Understanding the investment options available within 401(k) plans is crucial when making investment decisions. 401(k)s may offer options like Exchange-Traded Funds (ETFs), mutual funds, stocks, bonds, and cash. Understanding the return and risk profile of all of these options is essential to ensuring your 401(k) portfolio aligns with your long-term goals. 401(k)s also offer matching contributions, where the employer matches a percentage of your contributions. Maximizing your contributions can help you get a bigger match from the company and potentially increase your retirement nest egg. A financial advisor can help you understand these nuances.

Companies may also offer health insurance coverage and stock options. This is another area where you may benefit from expert guidance. Understanding the features and coverage of your health insurance plan can help you make choices that align with your healthcare goals and financial needs. Similarly, navigating stock options can be complex, but with the help of the right financial advisor, you can make well-informed decisions about diversifying your holdings.

2. When you get married, have children, or get divorced

Marriage

These personal events can create a ripple effect on your finances. When you get married, you and your spouse may want to consolidate your assets, open a joint account, or sign a pre- or post-nup. In addition to this, you may also make changes to your estate plan, such as a will or update the beneficiary on your life insurance or 401(k) to add your spouse. A financial advisor can offer guidance on these steps. They can ensure that your financial interests are not compromised and that you and your spouse both blend your finances effectively.

Having Children

Having a child can introduce a set of new expenses and financial responsibilities. From the child’s healthcare and clothing to higher education and beyond, parents need to be prepared for a variety of financial costs. Hiring a financial advisor at this phase can help you streamline your finances and plan well for your child’s future requirements. They can ensure you do not compromise your financial needs and instead plan for both the child’s and your financial goals together. A financial advisor can also assist you in understanding different investment options that can be utilized to save for your child’s future, such as 529 accounts, Coverdell Education Savings Accounts, the  Uniform Gifts to Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) accounts, or Custodial Roth Individual Retirement Accounts (IRAs).

Divorce

A divorce can create a financial stir in your life. Separation of assets, such as bank accounts, real estate, collectibles, cars, and even custodial rights for children, can have financial implications on the lives of both spouses. Divorce can also change your filing status and bring in tax implications. A financial advisor can assist in matters such as alimony, child support, etc., as well as guide you on how to best navigate these changes.

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3. When you are struggling with debt

Debt can hinder your progress toward your financial goals and hinder your ability to invest in your future, making it difficult to save for emergencies, etc. It can also put a lot of mental stress on you. The pressure of making timely repayments can be mentally and financially taxing. Moreover, the more debt you have, the more it impacts your credit score. A low credit score can also come in the way of future loans and mortgages, as employers and renters may  verify your credit score before hiring you or offering you a place on lease.

Eliminating debt can be hard. It requires discipline, consistency, and, in some cases, a shift in your mindset and lifestyle. Therefore, getting a financial advisor on board can help immensely.

Managing debt requires strategic planning and execution. A financial advisor can help you devise a suitable plan to eliminate debt and bring your finances back on track. They can assess your debt situation and create a list of all your debt obligations, ranging from high- to low interest. Based on this, they can help you prioritize high-interest debt repayment. Financial advisors may often recommend debt consolidation strategies or suggest liquidating some of your assets to get rid of debt. They can also help you create a budget to ensure you have firmer control of your expenses and lower your dependence on debt. They can highlight your spending patterns and help you understand the faults in your lifestyle that  fuel your debt. Additionally, these professionals may help you invest and save more to avoid taking on future debt. This can include setting up an emergency fund, investing in different investment instruments, enhancing your cash pool, and more.

4. When you buy a house

Homeownership is a pivotal milestone in anybody’s life, not only because of the significant value of the asset but also because of its remarkable versatility. A house can provide a personal space, offers the potential for generating passive income through rent or leasing, and can be passed down to future generations as a legacy. Therefore, utilizing the help of a financial advisor to benefit from the full potential of the house  is essential.

Hiring a financial advisor before buying a home can be helpful in several ways. Financial advisors can suggest suitable investment options to save for the down payment of a home. They can help you save and invest consistently at a desired rate to ensure you are able to reach your goal at your desired timeline. Additionally, they can help you decide between government-backed loans, conventional loans, fixed-rate loans, adjustable-rate loans, etc., and help you create a suitable repayment strategy to ensure your assets don’t turn into a liability.

Additionally, financial advisors can help you understand the risks associated with buying a house, such as failing to generate income from your asset within a set timeframe, unexpected repairs and renovations, etc. They can recommend keeping an emergency fund dedicated to countering these risks for at least a year after the purchase. A financial advisor can also suggest insurance options, such as life and homeowner’s insurance.

5. When you lose a job

When unemployed, you may need to cut back on your essentials. Moreover, your savings and investments will also stop, impacting your future financial stability. Hiring a financial advisor at this point can help you streamline your finances and avoid further damage to your financial health.

Financial advisors can assist you in prioritizing your needs and focusing on saving more effectively. They can help you utilize your emergency funds to stay afloat until you secure another source of income. For example, even without a job, you may still have ongoing expenses such as insurance premiums and rent. Financial advisors can ensure you do not overlook these essential costs. This can also be a good time to discuss whether you should continue with your old investment strategy or if you need to tweak your portfolio to accommodate changes in your professional life. Additionally, they can help you maximize the use of your severance checks.

Financial advisors can also assist you in applying for unemployment benefits. When you apply for the state unemployment insurance program, it is important to file your claim with the state where you worked, not your home state. Having a professional by your side can help you complete the process with minimal errors, ensuring you can start claiming your benefits promptly.

To conclude

While financial advisors for seniors can indeed provide invaluable assistance pre- and post-retirement, it is essential to start working with a professional much earlier in your financial journey. Professional guidance can significantly improve your financial situation and bring you closer to your goals. If you are concerned about how much it costs to hire a financial advisor, it is important to know that there are multiple arrangements you can opt for when engaging their services. From hourly fees to monthly payments or a percentage of your assets managed by the professional, there are a variety of fee models to choose from based on your financial capacity.

Use WiserAdvisor’s free advisor match tool to get matched with vetted financial advisors who can help plan for retirement and suggest suitable strategies to save enough funds for the later years of your life. Answer a few simple questions based on your financial needs, and our match service can match you with 1 to 3 qualified financial advisors who are best suited to help you.