4 Steps that a Retirement Planner Utilizes to Help You

You might be at the point in your life when you want to start some retirement planning. Even if you feel like you’re too young, and it’s many years off, you should still consider it. The quicker you begin planning, the sooner you can have the groundwork for retirement when the time is right.

You can approach a financial institution and enlist their help. Many banks, credit unions, and other companies have financial planners on staff, and some of them work with retirement planning specifically.

We’ll break down what these individuals usually do for you. Once you understand their methodology, you might decide the time is right to take this critical, life-changing step.

What You Want from a Retirement Planning Entity

Before we describe the four retirement planning steps that the typical company or person takes, we should lay out what you want from such an entity or individual. You want a company or person who will specifically tell you that they have a high ethical standard. They will definitely act in your best interest, and profit alone does not motivate them.

They will act with integrity and honesty, and they will never steer you in the wrong direction for any reason. They will always be transparent and frank about what your options are and why they’re advising you to make a particular decision.

Now, let’s go over the first step that will get you started on your retirement journey.

Identifying the Client Lifestyle

Let’s say you’ve located an individual or entity who you feel confident can handle your retirement planning. You have a rapport with them, and you think they’ll give you sound advice.

The first thing they’ll want to do is look at your financials. You have to trust them to do that. That means they’ll look at how much you make, how you make it, how much you spend, and of what your usual expenditures consist.

They will undoubtedly need to look at your last income tax return or even the last several ones. The more financial information they can accrue, the better they can advise you on what to do moving forward.

They Will Look at Guaranteed Income Sources

Next, they will try to determine your guaranteed income sources versus the nonguaranteed ones. Regrettably, you can’t often regard your current position and salary as a guaranteed income source. You could always lose your job.

In this context, your social security or pension would be a guaranteed income source. In theory, these are monies that will come to you regardless of what happens in the interim.

They’ll Look at Lifestyle Spending vs. Guaranteed Income Sources

The retirement planner will next look at how much your guaranteed income sources will bring you versus how much you spend during a given period. If you are spending more, either willfully or through necessity, and that spending exceeds your guaranteed retirement income, the planner can work with you to fix that.

That means evaluating possible investment risk so you can start or continue to put money away while still meeting all of your spending necessities, such as bills, mortgage or rent payment, etc. You can talk about ways to modify your spending that is more savings-conducive.

They’ll Help You Invest

The last thing they’ll usually do is figure out what investment tools will best serve you. The planner will steer you toward investments that will satisfy your lifestyle spending but still allow you to conserve money that can be there for you when the time comes.

They might look into CDs, mutual funds, or IRAs. If your work offers you a 401K with matching payments up to a certain amount, they will probably push you in that direction.

They can talk to you about the stock market and inherent risks. They’ll talk to you about portfolio diversification and what that means.

Virtually any retirement planner will say the same thing when you first meet them: it’s never too early to start planning. You might feel like you can only afford to put away a few dollars every week, but even that is better than nothing.

This is a time when a lot of people are hurting financially, but that’s no reason you can’t plan for the future. Market growth and even recessions ebb and flow, and there’s no reason to think better times are not ahead if you’re in a tight spot right now. Getting professional financial help is always a smart idea.