Risky Move: 31% of People Nearing Retirement Don’t Seek Out Retirement Advice
The years leading up to retirement are among the most consequential in any person’s financial life — and nearly one-third of people choose to go it alone.
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A new GOBankingRates of more than 1,000 American adults found that 31% of 55- to 64-year-olds are not seeking retirement advice.
Considering the stakes, it’s a risky approach.
“Without the expertise and guidance of a qualified planner or advisor, you may be at risk of making costly mistakes or overlooking important aspects of your retirement plan,” said Kami Adams, retirement income specialist and founder of Creative Legacy Group. “Overall, working with a qualified retirement income planner or advisor can provide a range of benefits and help you avoid potential risks in your retirement planning journey.”
When You Hire an Advisor, You Buy Priceless Experience
If you go it alone, yours will be the first retirement you plan — why would you trust something so important and complex to someone who has never done it before, even if that someone is you.
“Advisors have the advantage of being able to say, ‘Been there, done that,'” said Matt Rowley, founder and president of Freedom Private Wealth in Boise, Idaho. “They’ve worked with hundreds of clients, all with unique situations and goals, so they have extensive experience to draw from.”
Rowley, for example, has worked with more than 700 clients in all phases of life — and those who hire him buy all the insight he’s gained from the hundreds who came before.
“Someone trying to do their own retirement planning may not know the potential roadblocks ahead, but all of my clients have given me the knowledge and experience to know what may come down the road. I can use that knowledge to set people up for a better financial future.”
Advisors Offer Access to Special Products and Services
Anyone with a brokerage account can invest in an index fund, but when you hire a professional advisor, you buy access to a whole new menu of previously unavailable options.
“A proper financial advisor can connect you with investments that everyday people can’t get on their own,” Rowley said. “We are a private wealth firm, which means I have access to money managers that are not public. Everyday people can’t go on Fidelity or Edwards Jones and have access to those managers. With this kind of accessibility, advisors can better protect people’s investments during market volatility.”
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Professional Help Brings Peace of Mind in Uncertain Times
One of the cardinal rules of retirement planning is to keep your emotions out of your investments — but for those who encounter turmoil as retirement approaches, that’s simply too much to ask.
“Not many people seek out a financial advisor for emotional and psychological help, but that is one of the biggest benefits of working with a professional,” Rowley said. “People panic during economic instability or volatility on Wall Street, which causes them to sell when they shouldn’t or hold on to stocks when they should have sold. People tend to let their emotions run their decision-making processes.”
But a financial pro brings a neutral third-party perspective to the process.
“Although a good advisor cares for your financial well-being, they are not as emotionally invested as you are so that they can make clearer, more logical and less emotional decisions. This is helpful for everything from navigating the stock market and making legacy planning decisions to income planning and tax planning.”
They Can Bridge Knowledge Gaps Left by Deceased Partners
Widows and widowers often face complex financial decisions they’ve never had to make before during a time of grief — and financial professionals can walk them through it.
“For most couples, there’s one partner who is involved and has an intimate knowledge of the finances, and there’s one who does not,” Rowley said. “If the knowledgeable spouse passes away, it can be overwhelming for the surviving spouse to make decisions. But if a couple has a financial advisor, there will always be someone who can help them carry their plan forward. An advisor will know the reasoning behind past decisions and understand the terms of investments. Having a financial advisor can help protect a surviving spouse from making potentially harmful financial decisions.”
Retirees Can’t Afford To Learn From Their Mistakes
Without professional help, you’ll almost certainly learn lessons about the complexities of retirement planning the hard way — by making mistakes that there’s not enough time to correct.
“Hiring a qualified planner or advisor helps retirees optimize their investment strategy, minimize taxes, and create a sustainable income stream,” said Danny Ray, founder of PinnacleQuote Life Insurance Specialists. “By going it alone, they risk overlooking crucial aspects of their financial plan, which may lead to insufficient savings or unforeseen expenses, ultimately jeopardizing their retirement security. In short, professional financial advice can significantly impact retirees’ long-term financial well-being and peace of mind.”
It Doesn’t Have To Be Expensive
Some people never even entertain the idea of hiring a professional because they assume they can’t afford it. But a single session can make all the difference and more than justify the relatively modest expense.
“Many people don’t realize that they can sit down with a financial advisor or CFP for an hour and simply pay them their flat hourly rate,” said Brian Davis, founder of SparkRental. “For a few hundred bucks at most, you can verify that you’re on the right track with your financial planning and investments. You don’t have to hire an investment advisor and surrender a percentage of your portfolio each year. If you meet with a financial advisor once every few years for a financial checkup, you can sleep at night knowing that your portfolio is appropriate for your goals.”
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Methodology: GOBankingRates surveyed 1,045 Americans aged 18 and older from across the country between May 1 and May 4, 2023, asking thirteen different questions: (1) Have you ever followed money advice from a well-known expert?; (2) What is your primary source for money (personal finance) advice?; (3) What would be your LEAST likely source for money (personal finance) advice?; (4) In the past year where have you sought out money (personal finance) advice? (Select all that apply); (5) Would you ever follow money advice you found on Social Media?; (6) Would you ever follow money advice from a popular mogul/influencer? (i.e. Mark Cuban, Dave Ramsey, Suze Orman, etc.); (7) What would you like to learn the most about in order to improve your personal finances?; (8) What do you look for in your sources for personal finance information? (Select all that apply); (9) Have you bought a book on personal finance/money advice in the last year?; (10) Have you subscribed to a podcast on personal finance/money advice in the last year?; (11)In an economic downturn where do you invest your money? (Select all that apply); (12) Where do you feel most comfortable investing your money?; and (13) Where do you get retirement advice from? (Select all that apply). GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
This article originally appeared on GOBankingRates.com: Risky Move: 31% of People Nearing Retirement Don’t Seek Out Retirement Advice
