What are two things retirees are fairly certain to be worried about these days?
Death and taxes.
Or maybe that should be three things: life, death and taxes. Because retirees and pre-retirees usually say what they’re most concerned about is outliving their money. But they also tell us they’re mighty anxious about what will happen to their loved ones when they die, and what taxes could do now and in the future to damage their nest egg.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Baby Boomers have had to become savvier about preparing for retirement than past generations, as the onus of providing future income has shifted from employer-sponsored pensions to employee 401(k)s. They know there are issues they should be addressing — sometimes they just aren’t sure how.
Unfortunately, after decades in savings mode, many still haven’t made the leap from their accumulation and growth mindset to preservation and distribution planning. Often, they may continue working with a broker instead of a financial adviser, which means they may not be getting truly comprehensive advice on issues such as how to optimize Social Security, how to plan for required minimum distributions, how to time distributions and how to help protect a surviving spouse so she can continue living a comfortable lifestyle. It’s no wonder they’re feeling nervous.
Did I mention that all these concerns tend to overlap?
A Widow’s Dilemma
Take, for example, a woman who loses her husband. Right away, she’ll lose the lower of the two Social Security checks that were coming in. No way around it. And possibly her husband’s pension — if he had one. And because she and her husband were doing fine until he died and didn’t take any money from her 401(k), when she turns 70½ and has to start taking required minimum distributions, she’ll have to do it as a single taxpayer instead of married filing jointly.
These common concerns, and others like it, could be defused with solid retirement planning. And one of the best ways to do that may be to hire a dually licensed financial professional who can provide both investment advice (diversifying your portfolio, making sure you’re not in over your head with risk) and insurance advice (transferring some of that risk to life insurance or maybe an annuity that would provide consistent income for life).
Insurance Options
Investment accounts aren’t the only things that have changed for the Baby Boom generation. Life insurance carriers have created products that can help address this generation’s fears about longevity, long-term care and taxation. They’ve made life insurance an asset class for retirees, instead of simply offering traditional death benefits. A dually licensed adviser can help bring it all together in one plan.
When you’re building a house, you don’t go to the plumber to talk about the electrical work, and you don’t go to the electrician to talk about the pipes. You talk to the licensed contractor, who can get you answers to all your questions. Same thing here.
What too many people are trying to do is leave it all up to the securities guy, or leave it all with the insurance guy. And then they wonder why they have a fear of running out of money or why they’re not getting any growth. While having someone who is dually licensed isn’t going to eliminate all your fears or concerns, it can help to have someone who can evaluate these components together.
The right adviser can go right down the middle and work to create a strategy that can help address all your concerns holistically.
Kim Franke-Folstad contributed to this article.
Investment advisory services offered through AE Wealth Management, LCC (AEWM). AEWM and Retirement Solutions Group are not affiliated entities.
Investing involves risk including the potential loss of principal. Insurance and annuity product guarantees are backed the strength and claims-paying ability of the issuing insurance company.
-
Stock Market Today: The Dow Adds 15 Points To End Its Losing StreakEquity indexes opened higher but drifted lower as markets priced in new Fed forecasts.
-
What Is a Qualified Charitable Distribution (QCD)?Tax Breaks A QCD can lower your tax bill while meeting your charitable giving goals in retirement. Here’s how.
-
10 Ways Your 1031 Exchange Can Go Horribly WrongDon't let your tax-saving strategy become a financial nightmare — discover the hidden pitfalls that could turn your 1031 exchange into a costly disaster.
-
From Entrepreneur to Retiree: Boosting Your Business' ValueWhen business owners contemplate retirement, their first step should be maximizing the value of their biggest asset. Here are a few steps that could help.
-
You've Got a Trust: Now Who Should Be the Successor Trustee?You've set up a trust to protect your assets and your beneficiaries, but you still must choose the right person to execute your wishes. Here's how to do that.
-
Three Ways Fiduciary Financial Planners Put You FirstFiduciary financial advisers are required by law to work in your best interest. Here's how they are key to intentional and efficient financial management.
-
How Long-Term Care Insurance Has Become More FlexibleToday's long-term care insurance offers retirees more appealing options, which can preserve assets and protect the financial stability of a healthier partner.
-
Your Loved One Fell for a Romance Scam: What Not to DoConfronting them probably won't work, but asking them some key questions and urging them to take certain actions could.
-
Three Ways to Help Create Financial Stability for a WidowLoss of a spouse often leads to financial insecurity in retirement. These strategies can help ensure financial stability for the surviving spouse.
-
How to Embrace Personal Growth After a Gray DivorceDivorce at any age is a traumatic event, and resetting psychologically, especially after a late-in-life divorce, is more important than ever.
