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Learn why consulting a financial advisor before retirement can safeguard your future. From avoiding costly mistakes to ensuring a smooth transition, here are seven key reasons to seek expert guidance

Retirement is a significant life event that typically needs financial planning. While many attempt to prepare on their own, speaking with a financial advisor can make the process much easier.

Financial advisors have specialized knowledge that can help ensure a smooth transition into retirement. They can also help you avoid common mistakes that could hurt your financial security. Below are seven reasons to speak to a financial advisor before retiring.

1. Planning for Healthcare and Long-Term Care Costs

Healthcare costs in retirement are one of the biggest financial concerns for many retirees. With the rising cost of healthcare and the complexity of Medicare, a federal healthcare program for older adults, failing to plan for these expenses can be risky. Financial advisors can help estimate potential healthcare costs in retirement, including Medicare coverage, supplemental insurance options, and out-of-pocket expenses.

Additionally, advisors can provide resources for Medicare to help address potentially confusing processes, such as preparing for the 2025 Medicare annual election period.

2. Customized Financial Planning

Retirement planning isn’t a one-size-fits-all approach. Every individual has unique financial circumstances, goals, and risk tolerance levels. Financial advisors create customized strategies to fit your specific situation.

They do this by examining your assets, debts, income, and long-term financial needs to develop a personalized plan. Whether looking at how much to withdraw from retirement accounts each year or deciding when to start taking Social Security, a financial advisor can provide advice that fits your needs.

3. Creating a Tax-Efficient Withdrawal Strategy

One of the most common risks in retirement planning is mismanaging your withdrawals from different accounts, which could lead to unnecessary taxes. Different types of retirement accounts, such as 401(k)s, IRAs, Roth IRAs, and taxable investment accounts, are taxed differently. A financial advisor can help guide you with your withdrawals tax-efficiently, reducing the taxes you owe and helping your savings last longer.

For example, an advisor might recommend drawing from taxable accounts before tax-deferred ones. Tax planning in retirement is often more complicated than during working years, and a financial advisor’s knowledge can help avoid unnecessary tax issues.

4. Managing Investment Risks

As you approach retirement, your tolerance for risk may change. The aggressive investment strategies that might have been suitable during your working years may no longer be fitting. A financial advisor can help adjust your portfolio to match your new risk tolerance while meeting your retirement goals. However, it all depends on your specific situation.

Advisors also employ diversification strategies to spread risk across asset classes such as stocks, bonds, real estate, and other investments. This can help protect you from market volatility and ensure that your money continues to grow throughout your retirement.

5. Ensuring Legacy and Estate Planning

Estate planning is another way professional guidance can be helpful. A well-planned estate plan helps make sure your assets are distributed how you’d like, can minimize estate taxes, and can simplify the process for potential heirs. A financial advisor will work with you to create an estate plan that covers everything from wills and trusts to powers of attorney and healthcare directives.

Additionally, financial advisors can help set up charitable giving strategies if philanthropy is part of your goals. They can recommend tax-efficient ways to give while still maintaining financial security in retirement.

6. Maximizing Social Security Benefits

Social Security benefits are an important factor in retirement income for many people. However, it’s not always easy to know how to maximize them. The difference between claiming Social Security benefits at 62 and waiting until your full retirement age can be significant.

For example, delaying benefits increases your monthly payments, but not everyone may know that. A financial advisor can help you evaluate your situation and guide you toward the most beneficial timing. Working out Social Security for couples can become even more complicated, so using an advisor may be the right way to go.

On top of all this, Social Security benefits and Medicare enrollment can be connected sometimes. For instance, you will automatically be enrolled in Medicare if you receive Social Security benefits for at least four months before your 65th birthday month. Working with a financial advisor can help navigate this as well.

7. Adjusting for Inflation and Longevity Risk

Retirement lasts many years for most people, which can bring the risk of outliving your money. Longevity risk, the risk that you’ll live longer than your savings can support, can be a real concern, especially with inflation as a factor as well. A financial advisor helps plan for these possibilities, creating a withdrawal strategy that accounts for rising costs over time.

Conclusion

Retirement can be one of the biggest transitions in your life, requiring careful planning and preparation. Speaking to a financial advisor before retiring can give you peace of mind that your finances are secure.

A financial advisor’s guidance can help ensure that all aspects of retirement are covered, from personalized planning and tax-efficient withdrawal strategies to managing healthcare costs and protecting against inflation.