Regrettably, many people today don’t begin early enough to plan their retirements, nor do they fully grasp the principles of growing retirement income. This is due in part to the lack of reputable financial planning for retirement. There’s actually plenty of good free retirement investing advice out there, but payment to a consultant is usually involved if you want custom information. So, many people opt to go it alone, only to find out later that they’re not where they want to be financially. That’s why it’s a good idea to use a financial professional to help you plan your retirement. And since it is your hard-earned money, you should do your homework first so you can ask intelligent questions questions of the financial advisor and understand the answers. Learning the financial ropes a bit in advance will also save you money if your advisor charges an hourly rate.
Here are some of topics you should know before you hire a professional financial advisor:
How life insurance impacts your financial bottom line
Not everyone needs information on term life insurance and other forms of insurance protection because they don’t have anyone depending on them and causing them to need life insurance. But those who do need it should choose wisely. Knowing the difference between cash value, term life and variable universal life (VUL) will help you choose the right option for your circumstances. And I’ll clue you into one fact right from the start: cash value policies, such as whole life and universal life usually provide the worst return on investment and will probably cause your family to have inadequate coverage. So you should bear that in mind when you talk to a financial consultant.
The differences between no-load and load mutual funds
Some financial consultants get commissions on sales instead of an hourly rate, so they only make money if they steer you toward “loaded” funds (funds with service fees). Sometimes you’re better off paying by the hour for financial consulting, so you can get objective advice. If you study the difference between load and no-load funds, you’ll see why.
Have an idea when you want to retire and how much money you’ll need
Before you meet with a financial planner, it would be prudent to know approximately when you want to retire and how much money you think it will take to maintain your lifestyle. That will help them form a plan.
Once you’ve done the homework above, there’s just one more thing to do: ask your friends and family if they have any recommendations before you pick a financial consultant to work with. Once you have that information, see if the candidates have built wealth in their own lives. If they haven’t been able to do it for themselves, they won’t be able to do it for you!
