By Dr. Keisha Chambers
Faculty Member, Business Administration
As a youngster growing up in South Central Los Angeles, I thought I was rich if someone gave me $100 for a birthday or graduation present. I had money to burn. I would set my plans in motion for the things I was going to buy and off I went to the mall to spend my newfound fortune.
The value of a dollar or of savings was not discussed in our household. Both of my parents were on disability most of their adult lives, but they made do when it came to raising three active kids.
Unfortunately, they did not have any savings when they reached their retirement years. Seeing them rely solely on Social Security instilled in me a sense of fear about money, unlike any other fear I’ve ever experienced.
If You Haven’t Started Saving for Retirement, You Are Not Alone
Have you begun saving for your retirement? Have you considered getting help in planning and preparing for retirement? Are you stressed that you will outlive your savings? Concerned that Social Security will not be available when you retire? Are your investment allocations in your 401(k) plan suitable for your current age group?
If such questions and or thoughts about money cause your heart to palpitate, you are not alone. A Harris Poll survey conducted for American Psychological Association found that 72% of Americans are stressed about money.
If you are among that 72%, you might want to consult a certified financial planner (CFP). A CFP can offer a variety of services and products to get you on the right path, including drawing a comprehensive “road map” of what you will need to get to your ultimate goal.
You and your planner will work together on:
- Investment planning
- Retirement planning
- Income taxes
- Long-term care
- Risk management
- Budget planning
- Estate planning (to include trusts, wills, health care proxy, power of attorney and other needed documents)
If you think it is too late to start planning, think again. The Maryland financial planning firm WeberMessick states, “Planning your retirement in your 50s can help you make sure your plans go off without a hitch. But that doesn’t mean that you shouldn’t see a financial planner earlier.”
The overall market consensus is that you should first sit down with a Certified Financial Planner when you are in your early 40s to determine where you stand financially and what is missing from your retirement plans.
Find a Certified Financial Planner Who Is Experienced across a Spectrum of Situations
Keep in mind that everyone’s financial situation is different. These differences run the gamut from personal investments and type of employment to work-based retirement plans (i.e. the 401(k) or the 403(b), etc.). Those differences also include any rental properties you own, the number of children you have, if you’ve been divorced or if you have no savings at all.
As a result, you will want to work with someone who has experience across a broad spectrum of situations and scenarios.
If you are 40 or older, take the next step and set up a free initial consultation with at least three to four CFPs and interview each one of them. Ask each planner specific questions, as if you were planning to “date” for years to come.
You Must Be Open to Accepting the Planner’s Candid Advice
This relationship must have a foundation of trust that goes both ways. Most importantly, you have to be open to accepting the planner’s candid advice, whether you think it’s good advice you have to be open to accepting the good, the bad and the ugly. Be willing to listen without emotion and make the necessary adjustments to reach your retirement goals.
You are probably thinking, “It costs too much to hire a certified financial planner.” However, the majority of financial planners offer free initial consultations. They will provide a high-level review of your situation and explain their fees according to your situation.
You also want to consider the planner’s fee structure – commission, fee-based or an hourly rate. If you are just getting started and your planning needs are simple, starting with a planner who charges an hourly rate is usually best. The average cost for an hourly advisor ranges from $150 to $300, which can be costly in the first couple of years.
Many CFPs will create a personalized comprehensive plan for about $1,500 to $2,000. They will require annual reviews during the first few years to make sure you and your plan are meeting expectations.
Yes, $2,000 might seem costly. But keep in mind the goal is to receive the guidance you need to save money in the long term and make good investment decisions, so your money will grow and work harder for you.
Get the help you need; schedule an appointment with a certified financial planner today.
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