question: I’m 47 years old and will be eligible for a pension after 4 and a half years. If I choose to take benefits before the government’s legal retirement age, my pension will only total $4,300 per month. If you suspend your benefits until IRS retirement age, your benefits can increase to a total of $5,000 per month. My home loan is only $180,000 at 3.25% interest and no second mortgage. I have $419,000 in a high-yield savings account with an APY of 4.9%. All of my credit cards have balances under $25.
I’m pretty healthy, but I have a pre-existing immune disorder that I’ve got under control. However, my condition made it difficult for me to purchase life insurance as an investment. All my children are grown and have left home. My risk tolerance for investing is moderate to very strong as I can comfortably work for another 10-15 years. My employer covers all of my family’s medical needs as long as I am employed with zero out-of-pocket costs. We often hear about REITs, mutual funds that simply reflect the market, CDs, and government bonds. Do you need an actively managed vehicle to help you achieve your goals of outperforming the market? Do you need a financial advisor? (Looking for a new financial advisor?) This free tool matches you with a trusted financial advisor. )
answer: There are a lot of moving parts and what-ifs that complicate the situation. “Optimizing the timing of your pension, considering how many years you plan to work, and aligning your investment portfolio with other goals can help you avoid taking on more risk than you can afford,” says Josh Trubow, a certified financial planner at Sensible. It’s important to do that.” Finance.
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Should I hire a financial advisor?
perhaps. Many of the things you present are arithmetic problems that are objectively solvable and that you could probably solve yourself. “The question is whether you really have the skills. [and/or desire] You have to run through all the different scenarios,” says Robert Perschitte, a certified financial planner with Delagify Financial. “It looks very complicated, so it’s probably worth hiring an advisor. You could probably make the shoes yourself, but you can spend $20 at a store for more reliable results.” If so, it’s not worth your time.” (Looking for a new financial advisor? This free tool matches you with a trusted financial advisor. )
Certainly, you could benefit from a comprehensive financial plan. “The fundamental questions you are asking lie in the vacuum of other financial and personal information for comprehensive financial planning to derive personalized answers,” says Worthwhile Wealth Council Certified Financial Planner. says David Morris. He adds that financial planning “can be empowering.” Have financial confidence and a sense of personal competence in all financial decisions. ”
A fee-only fiduciary advisor is probably a good choice because they only receive compensation from you, the client, and are required to put their client’s best interests ahead of their own. A certified financial planner with extensive training and professional experience may be a good option.
Carefully consider the recommendations you receive from the advisor you consult and get a second opinion from someone with a different philosophy. “Then listen to both sides and get all the facts,” says Blaine Tiederman, a certified financial planner with Progress Wealth Management. “A financial planner with a CFP and enough experience to know what to do next will be helpful,” Tiedermann says. You can ask potential advisors these questions during the interview process.
Would you like to join an actively managed fund?
Another thing to keep in mind is that it is very difficult to outperform the market over a long period of time. (This MarketWatch column focuses on the value of index funds rather than stock picking.)
“Purchasing actively managed investments with the expectation of outperformance is likely to be counterproductive, as active management typically has much higher costs and has not been proven capable of generating excess returns.” That’s why we recommend trying to match the market using low-cost, efficient and well-diversified index funds,” says Trubou.
Joe Favorito, a certified financial planner with Landmark Wealth Management, says he doesn’t believe in active stock management. He says, “A good advisor will manage your overall risk profile for you.”
What about your life insurance, REITs, savings, mortgage, and pensions?
Life insurance is typically purchased as insurance, not as an investment. “If no one else relies on your income, there may not be a financial need for life insurance,” Trubow says. This guide will help you decide if you need life insurance.
Also, you don’t necessarily need a REIT. But “investments like REITs are a viable option for parts of a portfolio and can serve as a good diversifier,” Favorito says.
The fact that you’re willing to work another 10 to 15 years is a huge asset, and to that end, delaying your pension until IRS retirement age is constructive, says Eric Uchida, a certified financial planner with East Horizon Investments.・Mr. Henderson says. .
Regarding mortgages and savings, “3.25% mortgage rate is attractive. Interest rates are not likely to go much lower in the long run. At first glance, high-yield savings seem sufficient for emergencies. However, if you have a moderate to strong risk tolerance, it seems possible to allocate some of your savings to market investments,” says Henderson.
Have a problem with your financial advisor or are you looking for a new advisor? Email your questions or concerns to picks@marketwatch.com.