4 non-investment questions to ask an advisor before you retire

4 non-investment questions to ask an advisor before you retire

Kate Ashford, CSA®

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Using a financial advisor for your investing needs is 100% on the mark, but what about the other parts of your retirement life? For example, a third of people aged 64 and over have a financial advisor, but only 2% of them have asked their advisor to help them with their health insurance choices, according to a July 2022 report from the healthcare consultancy Sage Growth Partners.

But Medicare and other non-wallet topics — like travel and long-term care — can affect your finances.

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“We actively bring these ideas to our clients, but there are still a lot of advisors who aren’t,” says Crystal Cox, a certified financial planner in Madison, Wisconsin. “They still only focus on investments and the portfolio.”

Here are some questions to ask the next time you meet.

1. What retirement decisions should I think about?

Your retirement life may not continue as it once did. Do you plan to travel? Are you planning to move to another state or downsize? How often will you want to buy a new vehicle?

“Most people just think, ‘I need a certain amount of money to live,’” says Daniel Lash, CFP in Vienna, Virginia. “What about all the incidental things that come with life? All the things you want to do?

Mapping your retirement plans can help you and your advisor determine when and how you’ll need cash.

“Do you have any idea where you’ll be moving to and what the real estate looks like in that general area?” Lash said. “They thought about retiring, not ‘What am I going to do when I retire?'”

2. What should I know about Medicare?

Although you generally can’t enroll in Medicare until you’re 65, your earnings from previous years will affect what you pay for coverage. Each year, Medicare Part B and Medicare Part D base their premiums on your reported modified adjusted gross income from the previous two years. So if you individually deposit more than $91,000 or jointly deposit more than $182,000, you will pay additional amounts each month.

“Because there is a return on income for Medicare expenses, we will adjust plans accordingly, as they could pay significantly more in the first two years of retirement than later in retirement,” Lash says.

It’s also wise to consider advice on Medicare choices in general, because sometimes you can’t change coverage later if your condition changes — and Medicare is complicated. “We do an annual meeting with someone who specializes in health insurance,” Lash says. “All customers are welcome to attend.”

3. Can I afford to self-insure for long term care?

A person who turns 65 now has about a 70% chance of needing some kind of long-term care, and the costs are high: it’s $54,000 a year for an assisted living facility. and nearly $95,000 for a shared room in a nursing home, according to insurance. Genworth Corporation 2021 Cost of Care Survey.

“Some people are well enough off to feel comfortable self-insuring,” says Kevin Brady, CFP in New York. “Others have more limited assets.”

Whatever the case, it’s crucial to discuss potential costs and whether you have the savings to manage them. If you don’t, you’ll have to crunch the numbers on products like long-term care insurance or a hybrid policy that combines permanent life insurance with a long-term care rider.

“We always work with an expert to do projections and see what makes sense,” says Brady.

4. Do I have enough money to have fun?

A successful retirement is not always about tangible assets. For many, it’s a time to fulfill dreams of travel and other experiences, but spending too sparingly can be a hindrance.

“Often, clients are overly conservative for fear of running out of money, but in doing so, they’re cutting back on the retirement experience,” says Kevin Lum, CFP in Los Angeles. “By the time they realize their abundance, they’re too old to spend it.”

Talk to your advisor about your most important wishes and whether you have enough money to spend a little before settling into calmer spending.

Actual retirement spending looks more like a smile than a straight line, Lum says, with more spending at the beginning on things like travel and more spending at the end for long-term care needs.

“I’m not saying people should spend irrationally,” Lum says. “But viewing retirement expenses as a fixed calculation that doesn’t change throughout life in retirement is not a good idea.”

This article was written by NerdWallet and was originally published by The Associated Press.

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