It’s always scary to think that the regular paychecks we get at work will stop coming. But three Rochester financial advisers explain that with planning and preparation, the work-retirement transition can be a lot easier. They offer tips for ensuring your retirement is a happy one.
By Deborah Jeanne Sergeant
Adam Mark, partner and certified financial planner with Wealth Management Group in Rochester
1 “Get organized. Get all your ducks in a row. Review where your current financial status is, as well as the potential income stream that would produce over the long term. How your current investments will carry forward into retirement. Which pieces will work well and which will need to be adjusted to produce additional income.
2 “Clarify what you’re retiring to. A lot of times people focus on what they’re getting away from, but that distracts from what they want to do next. Is it grandkids, golf, moving, traveling more, giving back? Helping clients align their goals with their financial position is a critical part of talking with an adviser.
3 “It comes down to cash flow planning and how you’ll pay the bills and what the income and expenses look like.”
Diana Apostolova, financial consultant with AXA Advisors, LLC in Rochester
4 “Don’t leave your 401(k) on auto pilot. It is the worst thing you can do! Most people set up their 401(k) and then every once in a while they glance at how it is performing. What’s worse is that most never make any material changes to their 401(k) plan. The typical mutual fund options in a 401(k) plan are the target or lifecycle retirement funds. The general assumption of using these funds is that the mutual fund company will do the work, and adjust the allocation on your behalf. A common mistake people make with their current or old 401(k) accounts is failing to customize their investments and going in with the masses rather than building a strategy that’s unique to them and their own goals.
5 “Think about the possibility of making work optional. This means having the ability to do what they want, when they want it, irrespective of money. The mistake that we see in many financial plans is that the assumptions that were made by the clients or their financial advisers, are way too aggressive. Making a set of aggressive assumptions can often make it appear that you will be able to retire comfortably, when in reality the sum of all of those assumptions may leave you grossly underfunded.”
Jeff Feldman, certified financial planner and owner of Rochester Financial Services
6 “If you have a $100,000 mortgage but have a low interest rate, there’s not a compelling reason to pay it off. If you have enough cash flow to pay your debt monthly, you don’t necessarily have to pay it off, especially if you’re getting higher returns than the interest rate. If it’s just sitting around, paying it off is to be consider.
7 “If you’re 10 to 15 years from retirement, sock away as much money as you can during your peak earning years. Take advantage of the maximum amount you can save under a 401)k) plan, $24,000 a year. Every dollar you put away, you save the taxes on it.
8 “When I prioritize financial goals, No. 1 is saving for retirement. You can always find a way to pay for college, whether a home equity loan or other loans, but you never get a second chance to save for retirement. You’ll lose out on tax savings and accumulation of your nest egg. You’ll find a way to pay for college.
9 “I tell clients to keep their debt low. Don’t incur too much debt when you buy your new cars. People during their peak earning years say they can afford a nice car, but focus on putting money away for retirement. You need to put as much money in your retirement plan.
10 “Don’t get divorced five to 10 years before retirement. It can devastate people’s retirement.”