Are you a “Lone Ranger” investor, or do you lean heavily on a trusted financial advisor? Maybe you even take a hybrid approach. No matter what your approach is, we can all benefit from a periodic financial checkup. That’s why we took an in-depth look at independent financial advisors in the February issue of Miller’s Money Forever.
In order to give our subscribers the most bang for their buck, we called in Jeff White of American Financial Group, Ltd. to help teach us the best way to choose a financial advisor and how to get the most from their services. Some of our subscribers asked for more information on annual financial checkups, so I asked Jeff to do us a favor and teach us more on that topic. His reply is a must-read, in my opinion.
I should mention that we have no financial connection with Jeff and his firm. He has gladly given his time as a true expert in these matters, and we thank him for doing so.
Is It Time for Your Financial Checkup?
By Jeff White
Most of us schedule periodic medical checkups to monitor our blood pressure, cholesterol, and other signs of health. Preventive medicine lets us know where we stand against the grim reaper, and in some cases can even help us renegotiate life’s final chapter. Most insurance companies pay for annual physicals, knowing that they help people to adopt healthy habits and avoid major expenses.
It makes equally good sense to have periodic financial checkups. Broadly speaking, we all face three possibilities in our golden years, each with its own risks:
- We will live to retire, but risk running out of money before running out of breath.
- We will die before we retire, leaving our family with inadequate resources.
- We may be disabled before or after retirement, leaving ourselves in dire straits.
How long has it been since you had a financial checkup to see if you are prepared for each of these possibilities?
Just as we shouldn’t remove our own appendix because we don’t have the skills, most of us likely don’t have the tools or skills to perform an objective, thorough financial exam either. There are plenty of services available for this, both online and with a financial advisor. An independent financial checkup with a professional can go a long way toward making our money last so we can enjoy retirement. Just choose whom you listen to wisely.
When picking a financial advisor for your annual checkup, find one who’s a member of a team of specialists. In medicine, an internist who finds a lump will refer you to an oncologist to determine if it is malignant, who will refer you to a surgeon if it is.
A financial advisor should work in concert with investment, insurance, tax, and legal experts to create an accurate picture of where you stand and give independent advice on how to correct any problems.
Hot Dogs and Beans, or Lobster and Caviar
Let’s be optimistic and assume you will live long enough to retire, as most of us will. There are four levels of retirement lifestyles:
- Subsistence lifestyle, where you must live on Social Security and welfare.
- Have-to-have lifestyle, in which you have adequate income and resources for the basics, but not much else.
- Comfortable lifestyle, which includes travel, visiting family, pursuing hobbies, and whatever else turns you on, within limits.
- Luxurious lifestyle, which may include multiple residences, extensive travel, fine dining, charitable giving, etc.
I will focus on the have-to-have and comfortable lifestyles today, as this is where most of us fall. The subsistence lifestyle is not relevant, because it is likely too late for people in that category. If you fall in the luxurious lifestyle group, you have probably been receiving good professional help already.
In other words, what will be on your retirement menu? Hot dogs and beans, lobster and caviar, or something in between?