Transitioning to retirement — no matter your age or your financial situation — entails many changes. Whether it’s around taxes, income streams or Social Security benefits, there are a lot of things to consider and decisions to make.
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That’s why working with a financial advisor can help you navigate this new landscape to get a better understanding of what can be more beneficial for a comfortable retirement.
And the numbers speak for themselves: The recent Northwestern Mutual’s 2024 Planning & Progress Study found that Americans “who work with a financial advisor expect to retire two years earlier and feel significantly more confident about their financial preparedness for the future.”
What’s more, a whopping 75% of them said they will be financially prepared to retire, compared to 45% who don’t have an advisor. In addition, 62% who have an advisor say “they know how much they need to save in order to retire comfortably,” while this decreases to 34% for those who don’t have an advisor, the study found.
Here’s a look at some of the best advice retirees have received from financial advisors.
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Stick To Your Budget
Gene Caballero, co-founder of GreenPal who is in his early 40s, said that one of the best pieces of advice he received from a financial advisor when he retired “seems pretty easy.
“Strictly adhere to my set budget,” he said. “He said that establishing a budget is crucial, but the real challenge and benefit come from not exceeding it.”
Caballero explained that this discipline ensures that your retirement funds are managed efficiently, reducing the risk of financial strain in the years when income might not be as predictable.
“Sticking to your budget helps maintain a lifestyle without compromising future financial security,” he added.
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Have a Comprehensive Financial Plan in Place
According to Michael Collins, CFA, founder and CEO of WinCap Financial, the best advice retirees could get from their advisors is to have a comprehensive financial plan in place.
He explained that this means taking into account all sources of income, expenses and future goals.
“A solid financial plan can help retirees understand the potential risks they may face and how to manage them,” Collins said, noting that it can also provide a clear picture of their financial situation and help them make informed decisions about budgeting, investing and withdrawing funds for retirement.
By having a plan in place, he added, retirees can feel more confident about their financial future and have peace of mind knowing that they are taking the necessary steps to reach their goals.
Understand That It’s a Major Transition
Collins also said that the best tip he has given is that retirement can be a major transition for many individuals, both financially and emotionally.
“I often offer guidance on how to adjust spending habits, find fulfilling activities or hobbies and maintain a healthy work-life balance,” Collins said.
He said he educated them on the various retirement accounts available and how to maximize benefits from Social Security or pensions.
In addition, he advises new retirees on any potential tax implications or unexpected expenses that may arise during this stage of life.
“Transitioning into retirement smoothly requires proper planning and support from an advisor can help make this transition easier for new retirees,” Collins said.
Create Income Buckets
Creating income buckets is another great tip new retirees can glean from financial advisors.
For instance, losing the flexibility to earn and save can be scary, which causes many retirees to make emotional investment decisions out of fear, said Tyler End, CFP, co-founder and CEO of Retirable.
“Retirees can mitigate the impact by putting their investments in different buckets and only investing money in the markets that they will not need to spend for more than five years,” said End, adding that having five years of income needs in safe and secure assets can provide peace of mind as you leap into retirement.
Last, but not least, End said having a plan to fill your time is key as “the dollars and cents are only part of the equation to a fulfilling life in retirement.
“Plenty of people end up returning to the workforce or not spending the money they’ve saved because they don’t have a plan for how to spend their time,” he said. “Creating goals for the first year (hobbies, travel, volunteer work, etc.) can be hugely beneficial after a big life change.”
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This article originally appeared on GOBankingRates.com: 4 Best Retirement Tips Retirees Receive From Financial Advisors
