What comes to mind when you think about replacing your roof? Spending money you’d rather spend elsewhere? Tedious decisions such as tile versus shingles or metal? Now think about remodeling your entire home. Are you picturing yourself in a comfortable new oasis that suits your every need? We thought so.
When it comes to retirement planning, many people take the “replacing the roof” approach. It’s something painful to get out of the way, check off a list and move on. They hired someone to help with rollovers and manage investments, but now, a few years down the line, questions are coming up about whether to pay off your mortgage, how to best claim Social Security, minimizing taxes and how to handle rising health care. The investment manager isn’t handling these pressing issues, much less any additional planning and legacy questions that are at the front of people’s minds now that they’re a few years into retirement.
Many retirees in this situation are hesitant to get a second opinion or hire a full service financial planner, and often wait until they’ve hit the maximum pain threshold to make a change. When they first retired, they were more focused on getting rollovers done, and are now realizing they should have taken the time to complete a full financial plan. With no one to quarterback the situation, many people find themselves back to managing these big decisions on their own.
For those of you starting to panic because you “replaced your roof” instead of “remodeling your home,” don’t. It is true that the longer you wait to get that second opinion, the less we can do to help, but we can help. The projections made about your portfolio when you retired were based on certain assumptions based upon a number of variables – think shifting sand! Some of those projections may have panned out, while others were further off the mark. Perhaps life has gotten in the way and you need to adjust your cash flow because of unforeseen expenses. You’re probably starting to feel a little pain and realizing that it’s time for a change.
Lots of folks at this point fall into thinking “I just need x more dollars a week/month and then I’ll be fine,” but that’s just putting on a Band-aid instead of addressing the real issue. You’ll need someone who is more than simply an investment manager, but someone who can help you organize your financial life. Our team can help you adjust and tweak your plan in a way that helps address your underlying financial issues.
And remember, every plan that we put in place for any client will need tweaking three to five years down the road. These tweaks aren’t just about market ups and downs. We know that life happens to each of us and that your needs and expenses in retirement are changing.
Although very few people get a new roof just for the fun of it, remodeling a home, while a huge undertaking, is usually entered into more enthusiastically. So if you are early in your retirement or just about to retire, start your financial “remodel” with a trusted advisor who will maintain an ongoing discussion with you about your financial blueprint. We find this is more beneficial than hiring someone to create a one-time plan who then says “call me with any questions.” At Family Financial Partners, many clients come to us after taking the “roof replacement” approach with questions and issues that could have been resolved if we’d just met them a few years earlier.
We understand that any good plan – or home remodel – will need to be tweaked. We’ve all heard the story about the staircase that moved in the middle of a remodel, right? And while it’s funny when it happens to someone else, remember – it’s easier to tweak an existing plan than create a blueprint midway through the project.
Article by David Smyth, Senior Partner at Family Financial Partners — a financial services firm in Lexington, Kentucky.
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