As highlighted in a New York Times article, hiring a financial planner can be one of the smartest moves you make as you approach retirement. Once the domain of the wealthy, financial planning has become increasingly accessible to the average person, offering professional and holistic advice that can guide you through the complexities of retirement planning. However, it’s essential to tread carefully in this space, as not all advisors operate with your best interests in mind.

Navigating the financial landscape as you approach retirement can be daunting. With so many factors to consider—social security, healthcare costs, investment strategies, and potential risks—it’s easy to feel overwhelmed. This is where a professional financial planner can make a significant difference. Here are key reasons why seeking professional help is beneficial:

1.  Manage Complexity

As you approach retirement, your financial affairs often become more intricate. You may have multiple income streams to manage, such as retirement savings, pensions, and possibly income from investments or part-time work. Additionally, you might have various debts, including mortgages, car loans, or credit card balances. A financial planner can help you navigate this complexity by developing a comprehensive plan that aligns with your financial goals and lifestyle needs.

A 2019 study by the Center for Retirement Research at Boston College highlighted that individuals who work with financial planners tend to have more diversified investment portfolios and feel more confident in their financial decisions. By helping you organize your finances, a planner can ensure that your money is working as efficiently as possible.

Apps and Websites: Tools like Personal Capital and Mint can provide a snapshot of your financial situation, but a planner can help you interpret this information and take strategic actions.

2.  Manage the Transition to Retirement

Transitioning from full-time work to retirement is not just a lifestyle change; it’s a significant financial shift as well. This phase involves making critical decisions that can have long-term implications. For instance, when should you start taking Social Security? What type of Medicare coverage is right for you? Should you consider purchasing long-term care insurance?

A financial planner can guide you through these decisions by providing personalized advice based on your unique situation. The timing of Social Security and Medicare benefits, in particular, can significantly affect your retirement income. A 2020 study by the Employee Benefit Research Institute found that improper timing in claiming these benefits could lead to substantial income loss over the course of retirement. A financial planner can help you optimize these decisions to maximize your benefits.

Apps and Websites: Resources like Social Security’s Retirement Estimator and Medicare.gov can provide initial guidance, but a financial planner can help tailor these options to your specific needs.

3.  Create a Sustainable Retirement Income Plan

One of the most critical aspects of retirement planning is ensuring that your savings will last throughout your retirement years. This involves developing a sustainable withdrawal strategy, managing investment risk, and planning for potential expenses, such as healthcare and long-term care.

A professional financial planner can help you create a withdrawal strategy that balances the need for income with the preservation of your principal. They can also assist in choosing the right mix of investments to provide growth potential while managing risk. A 2018 study by the National Bureau of Economic Research found that retirees who worked with financial planners were more likely to maintain a sustainable withdrawal rate and less likely to run out of money in retirement.

Apps and Websites: Consider using tools like Fidelity’s Retirement Score to get a rough estimate of your retirement readiness. For more personalized advice, a financial planner can create a tailored plan based on your unique situation.

4.  Minimize Tax Burden

Taxes can significantly impact your retirement income, especially if you’re not strategic about withdrawals from tax-advantaged accounts like IRAs and 401(k)s. A financial planner can help you develop a tax-efficient strategy to minimize the amount of taxes you pay in retirement.

They can advise on whether it makes sense to convert a traditional IRA to a Roth IRA, how to sequence your withdrawals to stay in a lower tax bracket, and other strategies that can help you keep more of your hard-earned money.

Apps and Websites: Tools like TurboTax can help you manage your taxes, but a financial planner can provide more advanced tax planning strategies tailored to your retirement situation.

5.  Protect Against Cognitive Decline Risk

As we age, our cognitive abilities can decline, making it more challenging to manage finances. Unfortunately, this can leave older adults vulnerable to financial fraud and poor decision-making. The Journal of the American Medical Association (JAMA) published a study in 2019 indicating that more than half of Americans over 85 suffer from some level of cognitive impairment.

A financial planner can act as a safeguard, helping you set up protections such as powers of attorney, trusts, and monitoring systems to ensure your finances remain secure as you age.

Apps and Websites: Consider tools like EverSafe that monitor accounts for unusual activity and help protect against financial abuse. Pairing these tools with professional advice ensures comprehensive protection.

6.  Peace of Mind

One of the most significant benefits of working with a financial planner is the peace of mind that comes from knowing you have a well-thought-out plan. Retirement can be a time of uncertainty, but with a solid financial plan in place, you can focus on enjoying your retirement years rather than worrying about finances.

A planner can use sophisticated software to model your financial future, providing valuable “what-if” scenarios that help you make informed decisions. For instance, they can project how retiring a few years earlier or later might impact your overall financial security, how different investment strategies might perform under various market conditions, and how much you can afford to spend each year without running out of money.

Apps and Websites: While there are several retirement calculators available online, such as Vanguard’s Retirement Nest Egg Calculator, the personalized insights provided by a financial planner go far beyond what these tools can offer.

Financial planning for retirement has never been more accessible, but navigating the landscape requires careful consideration. By understanding the benefits of professional help and selecting a trustworthy advisor who acts in your best interests, you can ensure that your retirement years are financially secure and fulfilling. Whether you’re just beginning to think about retirement or you’re already in the transition phase, professional financial guidance can be an invaluable resource in helping you achieve your goals and enjoy peace of mind.

Have you worked with a financial planner, or are you considering it? We’d love to hear your experiences, tips, and questions. Join the conversation in our Age Brilliantly Forum and connect with others who are navigating their retirement journey.