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Wife and I have saved over our careers and planning now for calling it quits from our jobs and going into retirement (or take time off to recharge our batteries and maybe go back to work part-time later). We'll each have 401K's and cash balance pensions that will be distributed. We have other investments too. I'll be turning 55 and look then to take advantage of the IRS 72(t). We'll have to cover our own medical insurance so consideration to how to handle HSA is also probably good to include in the overall planning.
Given the amount of the overall investments, and planning for SEPP, I want to be sure we get this properly structured to minimize tax impact. I'd probably like to get some longer term investment planning to maximize our returns. I've therefore started to look for professional advise on this. It's been a bit confusing as to what's the right professional. Thought I'd reach out to those here who may have been in similar situation and get recommendations. So with that, is the right person to contact a CPA, Financial Planner, Financial Adviser, Retirement Adviser or ??? What is your input on the right credentials to ensure the professional has? Given your experience, what did you learn and maybe do differently if you had to do it all over again?
I went to see a fee only CFP, and (at Mathjak's suggestion) an Ed Slott educated Master Elite IRA Advisor. I also spoke to a CPA. For me, I think it was a good idea to speak with all 3. Mostly I liked my CFP the best as we were able to discuss and create my financial/retirement plans. The Master Elite IRA Advisor pretty much confirmed what my CFP suggested. Seeing that he wasn't going to be able to sell me anything he lost interest in me pretty quickly.
Of the 3 professionals, I thought the CPA was the least helpful as she focused on current tax situation and was unable to project anything into the future... as we don't know future tax law. She was also the most conservative of the group.... which I would expect. She felt that I should defer income as long as possible to push taxes as far into the future as I could. When I mentioned that this would adversely affect the taxes I paid on my Social Security as a result of RMD, she told me that we don't know tax brackets in the future and tax planning is about paying less now.
It took a couple of years for me to find people I felt comfortable with. I saw 6 different CFPs. Some of them worked on commission basis. I also spoke to 3 different CPAs.
an ed slot tax adviser is a good place to start . we are working with our team at fidelity right now .
they are running all kinds of simulations for us as far as when is best to take ss , which type of account to draw income from initially and whether to spend dividends directly or reinvest .
we meet again in a few weeks so i will report back .
I went to see a fee only CFP, and (at Mathjak's suggestion) an Ed Slott educated Master Elite IRA Advisor. I also spoke to a CPA. For me, I think it was a good idea to speak with all 3. Mostly I liked my CFP the best as we were able to discuss and create my financial/retirement plans. The Master Elite IRA Advisor pretty much confirmed what my CFP suggested. Seeing that he wasn't going to be able to sell me anything he lost interest in me pretty quickly.
Of the 3 professionals, I thought the CPA was the least helpful as she focused on current tax situation and was unable to project anything into the future... as we don't know future tax law. She was also the most conservative of the group.... which I would expect. She felt that I should defer income as long as possible to push taxes as far into the future as I could. When I mentioned that this would adversely affect the taxes I paid on my Social Security as a result of RMD, she told me that we don't know tax brackets in the future and tax planning is about paying less now.
It took a couple of years for me to find people I felt comfortable with. I saw 6 different CFPs. Some of them worked on commission basis. I also spoke to 3 different CPAs.
Thanks for your response. Anything you would have done differently knowing what you know now? Do you feel you got real value from your advisers? Did they come up with anything that was creatively different than what you would have done on your own? Do you feel your CFP is adding at least as much value to you as the fee they charge? And lastly, do you feel the fee was reasonable as to the value they provided? Thanks again.
an ed slot tax adviser is a good place to start . we are working with our team at fidelity right now .
they are running all kinds of simulations for us as far as when is best to take ss , which type of account to draw income from initially and whether to spend dividends directly or reinvest .
we meet again in a few weeks so i will report back .
We have accounts as Fidelity and E-Trade for my self managed accounts. Will be interesting to hear back if you find Fidelity useful or more of a sales team. Thanks
Thanks for your response. Anything you would have done differently knowing what you know now? Do you feel you got real value from your advisers? Did they come up with anything that was creatively different than what you would have done on your own? Do you feel your CFP is adding at least as much value to you as the fee they charge? And lastly, do you feel the fee was reasonable as to the value they provided? Thanks again.
Hi bobandsherry,
I feel I got tremendous value from my CFP. She did not come up with anything "creatively different" than what I proposed because I did not ask her to. What she did was plug my information into her computer program to determine whether or not on a year by year basis I would be able to follow my plan or whether it was better to purchase something in a different year or start withdrawals in a different year. That was something I wasn't able to do for myself. And we were able to change scenarios on the fly, which I wouldn't have been able to do for myself. We were able to look at best and worst case scenarios so that I could formulate plans for the worst case. I felt her fees were very reasonable and worth paying to get my answers.
Had I been willing to purchase an indexed annuity I would have gotten exceptional value from the Ed Slott educated adviser. However, he is the only Ed Slott educated adviser within 200 miles of my home and he works on a commission basis selling insurance products and accounting services. Since I didn't want to purchase a product and since he was not willing to charge me a fee for his time, I didn't get as much out of our meeting as I otherwise might have. He was generous enough to answer my questions and if there was an Ed Slott educated person who was willing to work on a fee basis, I would definitely employ him.
The CPA is good for tax-related questions. They are not financial planners. They are tax experts. I feel that a CPA working in combination with a CFP can help to reduce or delay income taxes.
What would I do differently?: I wasn't fully cognizant of the fact that retirement planning is a combination of lifestyle and finances. I think in the beginning I focused too much on finances. It is more a balancing act between what you want to do with your life in retirement, how much that is going to cost you, what you are going to be bringing in income-wise and working back and forth with all the numbers and plans to see what is realistic and to plan timing... which is why using a CFP who can change the numbers concurrent with new revelations works so well.
I'm not sure I am explaining this well. It is like the Sesame Street song Roosevelt Franklin do you know your numbers? In the song the mother asks Roosevelt Franklin what he will do when he is 3. And he says he will look at his daddy's knees. Then she asks what will you do when you are 4?
I needed to started with the date I plan to retire. What will I do when I am 62? What will I do when I am 63? and so forth until I am dead. I needed to plan out each year for expenses and income. What age will I buy my next car? How will my medical insurance costs change when I am 65 and on medicare? At what age will I sell my home? At what age will I enter a CCRC and pay rent? Am I going to move? At what age will I move? Where will I move? Will I pay higher or lower property taxes? Will I pay higher or lower state income tax? What will be the cost of the move? Every year there are going to be increased and decreased costs and income will change too. At what age will my annuity start? At what age will my Social Security Retirement Benefit start? At what age will my Long-Term Care insurance start paying out?
I think if you can go into your CFP with a list of your current expenses, know what your plans are for your retirement life, have a general idea of your income streams at different ages, and know what questions you want answered, you will get the most out of your planning sessions.
Minimum of 7 figures with fidelity puts you in a different catagory .
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