Happy New Year! We are at the start of another year and I know how a new year can be the jumpstart to new goals and aspirations. One that generally is on the list is putting your financial life in order right behind starting an exercise regime and losing weight or it could be the other way around. Regardless, all three are good goals. I must admit the exercise and losing weight is always on my list. However, let’s focus on achieving your financial goals.
As I was reading a Black Enterprise article “Don’t Run Out of Money in Retirement,” it talks about a woman who is 54 years old and has faithfully contributed 10% of her salary to her 401K since beginning her career at a fiberglass company. The interesting thing is she uses the approach “set it and forget it,” but doesn’t even know how much she has saved or how it was allocated. She admits not knowing if she has saved enough for her desired retirement age of 62.
Now, I applaud her for being so committed to saving but I have to say this is why it is important to hire a professional to help you reach your goal. Here are some questions I have: Does she know the proper asset allocation to maintain in her 401K? Has she been too conservative with her investments whereas she may not have maximized the returns she could have received over time? Will the amount she has accumulated last her throughout retirement? What expenses does she plan to have in retirement? Are there big ticket items she plans to purchase within the next 8 years? And I am just getting started.
This is why I strongly suggest that individuals seek help. A financial planner serves as a voice of reason operating in a fiduciary capacity. By examining your current and future goals and current financial situation, a planner can then help you analyze various scenarios for retirement, college savings and any other financial goals you may have identified, as well as help you identify and manage risks. You can benefit from having an advisor guide you through decisions, helping you identify obstacles, and prepare for the unexpected. It doesn’t matter whether you’re self-employed and have to create your own retirement plan or work for an employer who has retirement benefits. Ultimately, the goal is to help you maneuver the financial minefield by providing objective advice, direction, and accountability so you may get from where you are now to where you want to be.
Now, let’s look at some factors for evaluating a financial planner. While investment returns are important, this should not be the one and only measurement used to measure whether or not a financial planner is good for you. You also must consider the planner’s experience, personality, professional background, regulatory history, communication style, and compensation structure. You may ask why are these things important? Well it helps you get a feel and understanding about her, her practice and if you two are a good fit for one another.
Prior to meeting with a planner, write down some key traits that are important to you. Use this to measure your comfort level with working with her. Does she meet all or most of your requirements? Do you feel comfortable with expressing your opinions? Do you feel she is knowledgeable and can provide an objective viewpoint to your situation? Does she show compassion towards your concerns and opinions? Are you comfortable with conducting business with this person? Do you feel you can trust her?
Just like a trainer helps you achieve your exercise and weight goals, having a financial planner is good for obtaining and maintaining your financial health. The facts below show you why we, as women, need guidance.
Ladies here is the data:
1. Women tend to have lower retirement plan balances. Women often spend more time away from the workforce raising children or caring for aging parents. Women are also more likely to work in part-time jobs that don’t qualify for a retirement plan. As a result, women tend to earn less than men and have lower retirement plan balances and pension benefits.
2. Approximately 70% of the elderly living in poverty are women. (US CENSUS BUREAU, CURRENT POPULATION SURVEY, ANNUAL SOCIAL AND ECONOMIC SUPPLEMENT, 2007)
3. Women are very likely to be solely responsible for financial decision making at some point in their lives. Women have a longer life expectancy than men and most married women will likely outlive their spouses. For this reason, women will need to know how to manage their finances especially during the years that they may find themselves living alone.
4. According to a Transamerica survey, it showed that among women of all ages, only 8% of women are “very confident” that they will be able to fully retire with a comfortable lifestyle while 21% are ‘not at all confident’ and only 11% of women in their 20s are ‘very confident. What’s most surprising is 78% of women said they did not know much about retirement investing.
It’s the new year, so step into your wealthy place.Tags: cfp, financial planning, Personal Finance, women and money