2 Common Questions Retirees Ask Advisors

Today we’re going to talk about two of the most common questions that retirees ask advisors. In fact, we’re going to break this down to make it really basic. Now, don’t tune out because for most people, they make things way too complicated. People over-complicate things in life, right? They tend to make simple decisions way too complicated, become overwhelmed and can’t move forward.

Go Back to The Basics With Financial Planning

Let’s go back to the basics of Financial Planning. What I’ve found is that whether you’re already retired or getting close, two basic questions need to be answered. In my experience, if people get these two questions answered it takes away a lot of financial uncertainty.

What Are the 2 Most Common Questions Retirees Ask Advisors?

  1. Will I Be OK?
  2. What Rate of Return Do I Need?
Question 1: Will I Be OK?

For most people, this question means one of two things:

  • Am I going to have enough income to last for the rest of my life?

Or, people that are more well-off, answer a different version of that question. These folks people will just say they want to make sure that their money can support their lifestyle. There’s a little subtlety in there, which is that those are both basically the same answer.

  • Will you be able to have income from your savings, investments, etc. to maintain the lifestyle that you want? Can you reach those goals?
Question 2: What Rate of Return Do I Need?

What rate of return do you need on your investments to help make sure you’ll be OK? Any projection that goes out several years assumes a certain rate of return. Does it assume zero, 4% or 8%? Do you need 12%? If you need 12% to be OK, you’ve got a problem. You’ll have to possibly dial back on your expectations. It’s very hard to get 12% over a long period of time, and you may run out of money. Especially when your emotions get in the way when the stock market jumps around.

Both Questions Go Hand-in-Hand

We help people answer these two questions all the time. Our income projections that will show you if you have enough money to retire. We base it on a certain rate of return to last for the rest of your life. Again, pick up on the second part of that question. If an advisor tells you that you’re going to be OK, what rate of return are they assuming for that to be true?

How Johnson Brunetti Answers These Questions

When Johnson Brunetti does an income analysis for somebody, we take you through:

  • What rate of return you will need
  • If you have saved enough money or not
  • What could happen when the market is acting like a roller coaster
  • What could happen if we just put all of your money into something more long-term

All in all, how do those things factor in?

Think About Your Situation and Income Plan

I want you to think about your situation. If have high confidence, can you say you’re absolutely going to be OK based on:

  • The money you’ve saved?
  • Your future income?
  • Have you factored inflation in?
  • What if what you can buy with $10,000 a month today costs $20,000 in the future?

A good income plan will factor all these considerations in. If you can answer that question as “yes”, then based on what rate of return? A good financial advisor will tailor your investments to this rate of return. In fact, way too many so-called financial advisors or stockbrokers get so obsessed with what investments you own. Then they help you get obsessed with those investments and forget about the big picture.

Different Rates of Return

I will tell you this. If Johnson Brunetti does this analysis and we find out a client only needs to get a 4% rate of return and another client needs to get an 8% rate of return, the investment strategies to get there will be very different. One person doesn’t have to take nearly as much risk as the other. If you’re counting on that 8% rate of return, you might outlive your money. Or maybe we need to have a very tough conversation about ways to modify spending.

Conclusion

It’s very important to go through that exercise. The advisors at Johnson Brunetti can help you go through that exercise, and so can other financial advisors. The key is to leave that meeting with confidence and less fear than you came in with. However, keep in mind that it’s hard to have 100% guaranteed certainty.

Although some of this has been basic, even the smartest people mess this up because they make things way too complicated. They start focusing on the wrong things, especially when times are uncertain.

If you haven’t had these two retirement questions answered…

We can help you answer them. Request your free 15-minute call with one of our financial advisors today to get started. In all this confusion that’s going on – the uncertainty, the noise in the media, and the different information coming from various sources – you’ve got to find a way to clarify things. I would suggest you go back to the basics and make sure you’ve got these two retirement questions answered.

If you liked this topic, but aren’t ready to request a call just yet, you will enjoy my Virtual Financial Workshop which I made to give you some basic financial concepts to think about. You can also attend one of our free educational workshops to learn some of these concepts in-person at a location near you.