Retirement Planner or Financial Planner – Which Do I Need?

Dana Anspach

May 16, 2024

There is a difference between a retirement planner and a financial planner in the same way there is a difference between a cardiologist and a family practice doctor. They both start with the same basic training, but one has gone on to develop additional specialized expertise.

Financial planners typically focus on helping you accumulate and invest your money during your high-earning years. Retirement planners have additional training to help you figure out how to use this money to generate reliable cash flow in retirement. Retirement planners align your finances for when you will need to live off your acorns.

Like your heart, you need your retirement money to last the rest of your life; if there was ever a time to find a specialist, this is it.

Here’s what an experienced and competent retirement planner can do for you.

Areas of Expertise

Retirement planners must have in-depth knowledge about Social Security, pensions, the taxation of retirement income, annuities, reverse mortgages, Medicare, health insurance options, deferred compensation plans, stock compensation plans, 401(k) and IRA rules, and the pros and cons of different withdrawal approaches.

Specifically, retirement experts will be able to offer customized advice on all of the following:

  • Social Security claiming strategies that show you what age to begin your Social Security benefits, what pitfalls to watch out for, and what type of spousal, ex-spousal, or survivor benefits apply to your situation.
  • Tax reduction strategies that show you which approach will most likely result in the lowest amount of taxes paid cumulatively during your retirement years. This evaluation includes looking at Roth IRA conversions and how that strategy would impact you.
  • Retirement withdrawal strategies that go beyond following a simple rule of thumb like the 4% rule.
  • How to incorporate items like deferred compensation plans, stock compensation plans, and rental property assets.
  • How much to budget for health care in retirement and what to expect from Medicare.
  • Pension distribution options to help you decide when to start your pension, whether you should take a lump sum or annuity distribution, and what type of survivor option to choose.
  • Investment approaches that account for the impact of severe market down-turns.
  • Decisions that help reduce your risk of running out of money in retirement.
  • How inflation is likely to impact you in retirement and how to account for it in your planning.
  • Long term care insurance pros and cons.
  • Annuities, and whether such products would be beneficial to your plan. (Sensible Money does not sell annuity products or receive commissions from the sale of products. We do evaluate the use of annuities and provide objective advice.)
  • Reverse mortgages and when it makes sense to use them.

An experienced retirement planner can help you figure out if you have enough to retire now, what changes you might need to make, how much to save, what types of accounts to use (such as funding Roth IRAs or 401(k)s or Traditional IRAs or 401(k)s), and what mistakes to avoid.

Credentials to Look For

A financial planner with the RMA or Retirement Management Advisor signifies this person has additional training in the retirement income planning process. The RMA is acquired by going through coursework offered by the Investments & Wealth Institute. An RMA learns how to build retirement income plans that focus on minimizing retirement risks while increasing the certainty of the outcome. That’s important. You want reliable outcomes in retirement.

There are two other reputable retirement planning credentials, the RICP and the CRC.

If you’re within ten years of retirement and thinking about hiring a financial planner, make sure they have retirement planning credentials.

Here at Sensible Money, the majority of our financial advisors are both Certified Financial Planners (CFPs) and Retirement Management Advisors (RMAs). The RMA designation has a rigorous academic background, which is why we choose that particular education program over the other options.

Ask About Compensation

Always ask a potential advisor how they will be compensated. Do they get paid only by selling you something, or managing your assets, or in some other way? You are likely to get more objective advice by working with a fee-only retirement expert, meaning they sell no commissioned products, rather than choosing someone paid by selling investment or insurance products.

The analysis and work that goes into creating a retirement income plan is more complex than the work that goes into creating a traditional accumulation-focused financial plan. We run hundreds of retirement plans each year, which makes it easy to spot risks and lay out options. You only retire once, and when you retire, you make a series of irreversible decisions.

As you near retirement, talk to a specialist. It just makes sense.

The retirement planners here at Sensible Money are salaried employees. We are no-commissioned advisors, and we use the process outlined in the 2nd edition of the book Control Your Retirement Destiny. We work with folks in over thirty states by using screen-sharing technology and secure document-sharing services. If you’d like to learn more, fill our our Pre Meeting Questions and we’ll reach out to schedule a complimentary introductory meeting.