January 12th, 2012

4 Things You Don’t Want to Hear From Your Financial Advisor

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**Today’s guest post is contributed by Jeff Rose of Good Financial Cents.**

With today’s financial challenges, more and more people who are approaching retirement age are getting news from their financial advisor that they don’t want to hear. Earmuffs alert!

As a financial advisor, some of my hardest meetings with clients or prospective clients are those where I have to “speak the truth” to them. It’s never fun, but I realize it’s a necessity if they ever want to retire successfully.

Here is a look at the top four things you really don’t want to hear from your financial advisor.

1. “You may think you’re saving enough, but you’re not.”

If you are approaching retirement, but aren’t quite there yet, your financial planner may advise you that you need to start saving more. With the cost of everything from groceries to medical care on the rise, saving more needs to become a top priority if you want to retire on time and with a comfortable nest egg.

Hunker down and reevaluate your current budget to find extra funds to invest each month. You may need to cut back on vacations, eat out less, start bagging your lunch every day, and make other smart-money moves.

The X and Y generations need to capitalize on this more than ever with pensions and social security becoming become more of a fairy tale than a reliable source of income.

2. “You have to take more risks.”

You might think your financial advisor has walked off the deep end, but as we approach retirement, oftentimes our natural instinct is to pull back from riskier investments. While it is wise to consider reallocating some funds, it is still important to maintain a diverse portfolio, including taking some risks.

Even at retirement you will still want to make sure you have a portion of your funds where they can make more money than the cost of inflation. People don’t want to lose money, and 2008 has made us all gun shy. But with bank savings accounts paying less than 1% in interest, you have to get return somewhere. That somewhere is the stock market.

3. “You need a lifestyle check.”

Many soon-to-be retirees are realizing that they will not be able to live with the same lifestyle they did when they were working. Many simply do not have the nest egg to do so. Think you can spend as much per year as you did when you were working? Think again.

Some are still trying to recover their portfolios from the stock market crash a few years back, and with the cost of living constantly on the rise, it will be impossible for them to keep up.

This is why it is critical to revisit your retirement plan each year to reevaluate where you should be and to determine any shortcomings. The sooner you make changes, the more likely you will be to live closer to your current standards.

4. “I hope you like your job, because you’re going to be there awhile.”

If you were planning to retire in the near future, the reality is that you may not be able to at the age you had originally planned. If you did not start saving soon enough, have not been re-evaluating your retirement needs, or if your portfolio took a substantial hit over the last several years, you may need to work longer before you can retire.

The sad truth is that too many people keep putting off meeting with a retirement planner only to have to deal with it at a time when they should be dreaming of warm sunny beaches, tropical cocktails, or spending time with grandchildren.

Bottom line, if you are not yet at retirement age, doesn’t procrastinate for even one more day. Take the time now to sit down with a financial advisor and make a plan so that someday in the near future you can hear the words that you have been waiting for: “You are ready to retire.”

Jeff Rose is an Illinois Certified Financial Planner who authors the blogs Good Financial Cents and Soldier of Finance. He is a father of 3 awesome boys, husband to the coolest chick on the planet, In-N-Out Burger junkie and Crossfit addict..

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2 Comments

  1. I must be aware to that statements. :) Thanks for these reminders.

    Hayden @ Ed Butowsky Dallas at 12:20 am on August 22, 2012
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