Many people start working with a financial advisor in the decade leading up to retirement, if not sooner. They want to have a solid investment strategy in place that will help them earn passive income and leave a sizable nest egg for family members in the future. However, it is better to begin working with an advisor many years before your retirement. Financial advisors can take the lead when you’re in the “retirement red zone” (commonly referred to as the ten years before you want to retire) and are thinking about retirement planning for the near future.
The “retirement red zone” years can be some of the most stressful in terms of financial planning. You need to get all of your affairs in order, including:
- How much you’ll be receiving in social security and other passive income streams
- What your living expenses will look like post-retirement
- What you want to provide for your family during these years (college funds, monthly income, etc.)
- What you’ll leave behind in your estate
A financial advisor is there to guide you through these things, so you can feel confident in your financial legacy before you retire.
Reasons to Start Retirement Planning Early
While retirement planning is a must once you reach the “red zone,” you can start to prepare for your financial future as soon as you graduate college or start a family. It is smart to begin thinking about your retirement as early as your 30s and 40s, since these are typically the years when you’ll be working the hardest. Here are some reasons early retirement planning is beneficial:
- The average life expectancy in the U.S. is rising – Life expectancy in the U.S. has risen to 80 years or older, meaning you’ll need to secure your finances for many more years than your parents or grandparents did. It is also advisable to consider the costs of any medical bills you may have later in life, and the costs of an assisted living or retirement home for when you are much older.
- You’ll have different expenses – In retirement, you may not have to provide for children anymore, but you will likely have higher medical expenses and might want to have a higher disposable income for traveling and other hobbies.
- You’ll give your family peace of mind – The earlier you prepare for retirement, the less you’ll have to worry and rely on others later in life. Planning ahead of time will give you peace of mind later in life and allow you many more opportunities to provide for the people you love and participate in activities you enjoy.
The Benefits of Retirement Planning with a Financial Advisor
Regardless of when you start, working with a financial advisor can provide greater satisfaction during your retirement and beyond. A financial advisor will offer:
- Advice from seasoned professionals – Financial advisors support people in the retirement process every day. They know the ins and outs of retirement planning and will help ensure you don’t miss a single step.
- Tax benefits – A financial advisor can potentially help you save on taxes once you retire. Working with a more limited income means every dollar you save is important. An advisor can help you set up the best tax strategy during your retirement years.
- Long-term management of your estate – Your retirement plan should include an estate plan, long-term medical care, and allocation of assets. Advisors help you ensure your money and assets are secure, and help you reach your long-term goals.
OneAscent advisors are ready to assist with your retirement planning, allowing you to provide for yourself, provide for your family, and achieve your financial goals with our values-based investing approach. To learn more about retirement planning for your future, contact us today.