Retirement Planner or Financial Planner – Which Do I Need?

Dana Anspach

June 10, 2021

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 become a specialist.

Financial planners are trained to help you accumulate and invest your money. Retirement planners have additional training to help you figure out how to use this money to generate reliable paychecks in retirement.

Just 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 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, health care options, 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 which tell 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.
  • Pension distribution options that project the optimal age to begin your pension, whether you should take a lump sum or annuity distribution, and what type of survivor option to choose.
  • Retirement withdrawal strategies that go beyond following a simple rule of thumb like the 4% rule.
  • Tax reduction strategies that show you which approach will result in the lowest amount of taxes paid over your retirement years and help you evaluate whether Roth IRA conversions can benefit you.
  • Investment approaches that can help protect your income from becoming decimated by a severe market down-turn.
  • Decisions that help protect you from running out of money in retirement.
  • How inflation is likely to impact you in retirement and what you can do about it.
  • Long term care insurance pros and cons.
  • Annuities, and whether such a product would be beneficial to your plan.
  • Reverse mortgages and when it makes sense to use them.
  • How much to budget for health care in retirement and what to expect from Medicare.

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 401ks or Traditional IRAs or 401ks), and what mistakes to avoid.

Credentials to Look For

A financial planner with the RMA or Retirement Management Advisor designation has the equivalent of a Master’s Degree in the retirement decumulation 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, our financial advisors are both Certified Financial Planners (CFPs) and Retirement Management Advisors (RMAs). The RMA designation has a more 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 (what we call the decumulation phase) is far more complex than the work that goes into creating a traditional accumulation-focused financial plan.

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

The retirement planners here at Sensible Money are salaried employees. We are all no-commissioned advisors, and we all use the process outlined in the 2nd edition of the book Control Your Retirement Destiny. We work with folks in over twenty-six states by using screen-sharing technology and secure document-sharing services. If you’d like to learn more, give us a call to set up a complimentary introductory meeting via the web, phone, or in-person.

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