It is always beneficial if we have extra credits for surprises. We must consider the inflations when we really want to enjoy life when we get old. What we earn now no matter how big it might be, could just be enough when our time to retire comes. Focusing on this plan would require intensive process and wise planning for years. Many people know that taking this plan seriously means being persistent with the process as well. Managing a retirement is a continuous obligation even until it is already attainable. It would require the planner’s patience and wise management.
For example one advisor had both a father and son as clients. The father died leaving his IRA to his son. The advisor promptly transferred the IRA from the father’s name to the son’s name? Sounds o.k. to you? But it isn’t o.k. If you transfer an inherited IRA to a non-spouse beneficiary without a special designation like “inherited IRA of Dad for the benefit of Son” you cause immediate income tax acceleration for the IRA beneficiary. So rather than having the ability to stretch an IRA or defer taxes for forty years, the son had to pay the taxes on the entire IRA distribution the year after his father died. Using reasonable assumptions, this mistake cost the son one million dollars over his lifetime.
Another time, a 55 year old retires from his company with a million dollars in a retirement plan. The advisor recommends using an IRC Code 72(t) election for the entire million dollars. Only a fraction of that money was needed for cash flow between ages 55 and 59. The result of the faulty advice was unnecessary massive acceleration of income taxes between ages 55 and 59. The appropriate response would have been to make an IRC 72(t) election for part of the IRA, not all of it.
Neither of these advisors is a bad person. As far as I know they might be wonderful spouses and loving parents. In fact, they could even be excellent money managers or product experts who have given excellent investment advice to hundreds of their clients. Where they failed, however, is not taking the time to become educated about IRAs and retirement plans or not seeking any additional help when they were confronted with issues related to IRAs and retirement plans.
It also grieves me to say that these types of mistakes are all too common and that terrible advice regarding IRAs and retirement plans is routinely provided to millions of clients.Avoid These Costly IRA & Retirement Planning Mistakes – Do Your Research.If you are an advisor reading this, my suggestion, would be to read, study and attend some good seminars that will bring you up to speed on IRAs, Roth IRAs, and other retirement plans–with good information you can really add value for your clients. Excellent sources for information include books by Seymour Goldberg, Ed Slott, Robert Keebler, Natalie Choate, Gregory Kolojeski, and of course my own book Retire Secure!.
The basic information for all your bank, brokerage, retirement and other financial and investment accounts. This includes the name of the institution, the institution’s contact information, the account numbers, passwords and user names for online account access and the addresses of any websites used to access or monitor the accounts.The location of all paperwork related to retirement planning including wills, legal documents, insurance policies, annuity policies, prospectuses, checkbooks, etc.How to access all of the investment and bank accounts. If you have an IRA, 401k, money market account, brokerage account or CD both spouses should know how to access it and withdraw money. If you have a life insurance policy with cash value both spouses should know how to access it and borrow money.
You turn 50, what’s the big deal? It’s just a number right? Perhaps, but when you go to your mailbox and you find that retirement association envelope inviting you to join their club and enjoy discounts only reserved for, well, those in their declining years. It’s a rude awakening; a kick the gut.If this sounds familiar, don’t despair, you’re in good company. Thousands are waking up to this reality every day. So what do you do now? Well, for starters, make darn sure that you have a good plan for getting to retirement with a decent nest egg to be able to enjoy your golden years. For those of you that need the professional help of a retirement planner, this article is for you. Everyone else, take a look at my other article titled “The “do it yourself” retirement planner”.
So what should you expect out of a retirement planner? According to Investopedia, a retirement planner is “A practicing professional who helps individuals prepare a retirement plan.” That’s pretty straight forward. Two certifications to look for are the Certified Financial Planner (CFP) and the Chartered Financial Analyst (CFA). The CFP certification requires a college degree, passing a 10 hr exam, 3 years of experience in the financial planning field and an extensive background check. The CFA requires a bachelors degree, passing 3 6 hr tests and 4 years of work experience.
Baron’s recently published an article identifying the top financial advisors for 2010. When looking at which companies held the top spot for each of the states the outcome was as follows:Merrill Lynch (Top position in 20 states) Morgan Stanley Smith Barney (Top position in 7 states) Wells Fargo (Top position in 6 states) UBS (Top position in 5 states) Raymond James (Top position in 2 states).So if you want the help of a reputable retirement planner you can’t go wrong with any of these companies. Alternatively, if you don’t need such high-end advice then look for a local advisor with the right certifications and check as many references as you can.By the way, don’t forget to sign up for those retirement club benefits. Even if you don’t want to admit you’re getting old those grey hairs can get you some serious discounts!
It’s Not Early For Retirement Planning
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