In my last post, we started covering what I believe are the 5 key components of financial advice missing from many pre-retirement financial plans. So far, we have covered:

#1: A Clear Understanding of What the Advice is Costing You

Today we consider:

#2 – Enough Understandable Information to Answer Questions

The approach of many financial service firms is to provide you with a thick, leather-bound financial plan filled with pie charts, spreadsheets, and confusing jargon. It might seem that the sheer weight of the plan should impress you and convince you that the contents are of significant value! However, some plans may exclude what specific actions make sense now, and what you should consider when making critical decisions.

What critical decisions? You may have questions such as:

  • When would it be best for you and your spouse to start collecting Social Security benefits?
  • Should you pay off your mortgage at retirement?
  • What can you do to reduce taxes in retirement?
  • How much guaranteed income should you have?
  • What investments make sense for you right now?
  • What financial protections do you need in place to address your worries and concerns about the future?

A financial plan should enable you, most importantly, to answer the questions on your mind. If your plan merely demonstrates how complicated the answers are, or overloads you with information for the sake of saying, “we told you so!” later, decide whether an approach focusing on what is truly important rather than on every last detail (however inconsequential to the answer) would serve you better.

So what should you do now?

  • Look for opportunities to get simple, clear answers.
  • Would it help to get a retirement “paystub”?
  • Would you like updates that are more frequent (like quarterly) on how you are doing?
  • How would you feel if you received clear and focused action plans?

Stay tuned next week for #3-#5, and thanks for passing this along!

 
 

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