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10 Ways Professional Financial Advice Can Help You Reach Your Goals

Fifth Third Bank


According to a 2015 CFP Board survey, only 40% of Americans use a financial advisor, but it’s probably wise to think twice before joining the ranks that don’t as you plan for retirement. Though you may not yet have a good idea of what your lifestyle or needs will look like during those golden years, a seasoned investment professional has the experience to help you avoid common pitfalls and shepherd you through a variety of frequently complex scenarios—from preserving and growing your net worth to helping you prepare for potential health needs.

Here are a few of the advantages of seeking out a financial advisor:

An outside, expert perspective

You know you should be putting money away for retirement, but even the most committed savers can be tempted by a hot stock tip or the potential upside of redirecting a bit more money into a brokerage account. There are, however, several reasons why you should resist the urge to dive into investing before you max out your retirement accounts.

There are tax benefits. Many types of retirement savings—401(k)s, IRAs—can be funded with pre-tax money allowing every dollar you invest in retirement savings, which may lower your taxable income as well as your ultimate tax bill both in the short- and long-term (if you withdraw the money later in life when you’re in a lower tax bracket).

An advisor can help you determine the retirement account mix that yields the greatest tax savings for your circumstances and income bracket.

You’re probably underfunded. Most people simply haven’t saved enough for retirement. Fifty-six percent of Americans have less than $10,000 saved, according to a GoBankingRates survey.

You’re less likely to take the money out. The money you contribute to your retirement accounts is not easy to withdraw on a whim (and penalties are involved), creating a powerful incentive to allow the funds to grow and compound over a longer timeline. And if you have a legitimate reason to borrow from a retirement account—a down payment on a house, for instance—you should do your best to pay yourself back, with interest.

Risk Tolerance for Retirement Investing

All investing involves some level of risk, but when it comes to retirement planning the stakes for your future are significantly higher. With that in mind, here’s what you need to consider:

What’s your risk tolerance—really? If you’re focused solely on investing for retirement, ask yourself how profoundly your ability to retire comfortably would be affected if your portfolio lost a substantial chunk of value and then speak with your advisor about setting a risk ceiling under which you can maintain your peace of mind.

How will your portfolio change as you age? The closer you get to retirement, the fewer risks you should be taking with the money that’s meant to fund those years. An investment advisor can help you move your money into more conservative investments as you get older.

Budgeting for Retirement

The more you can avoid spending trip-ups, the better prepared you’ll be to make your nest egg last for the duration of your retirement.

Plan for bumps. Although you’ll have a fixed income in retirement, your lifestyle will not be similarly preordained. There will be spending surprises along the way. When an unexpected expense comes up, an advisor can help you determine the best way to tap your assets to cover it.

Diversify. If you’re pulling from a mix of pre-tax and post-tax investments, you’ll be able to strategically tackle large expenses—say, alleviating the college tuition burden for a grandchild or financing health care costs. Money taken from a pre-tax account will be taxed upon withdrawal—something you may want to avoid for certain high-earning tax years. A post-tax retirement savings plan, such as a Roth IRA, can provide a great deal of flexibility.

Planning now for what you’ll need in 40 years can be a complex process. A financial professional can help you build a plan for how much to save, where to invest it, and how to withdraw it around your own unique set of personal and financial circumstances.