As my husband approached Social Security eligibility, our mailbox filled with offers for “free” lunches from financial advisors and planners. The invitations all included some version of the statement that it is still not too late to plan for retirement. Except for the first one, he declined the invitations. The first one confirmed our suspicions and what we already knew – there is no such thing as a free lunch.
Now that I am approaching that same age, the invitations have started arriving again. A recent arrival made its pitch this way:
Learn how to:
- Determine the amount of money you need to retire
- Create your own goals for a “successful retirement”
- Eliminate debt and improve cash flow
- etc., etc., etc.
No matter what the invitations say, at this point it is too late for those lessons. We don’t need them. We have already done the saving and goal setting. We have no debt. And since I have never heard of the people offering these lessons, I have a hard time taking them seriously. It feels like an offer that will result in the loss of my time and money. So I have ignored them.
But I have to admit that some of the etc., etc., etc. points are relevant, such as:
- Select the retirement plan distribution choice that is right for you
- Plan your retirement income (emphasis is mine) to preserve a comfortable standard of living
- Transfer the risk of potential financial losses before or during retirement
- Reduce or eliminate taxes, expenses, delays and legal challenges with estate planning
Of course, I didn’t recognize the relevant ones because of my skepticism at the outset about why they were pushing the first set. I had already followed all the advice from financial advisors to ensure I have funds put away for my retirement years. I was focusing on the savings phase of retirement planning. And the financial advisors we had been doing business with weren’t getting in touch with us to consider the future.
Well, most of those financial advisors weren’t getting in touch with us. Thankfully, one did – Greg Roemer of Thrivent. If it hadn’t been for Greg, someone we came to know and rely on very late during the retirement savings phase, I am not sure I would have realized the importance of the retirement income phase. We would have stumbled along allowing events to cause actions and that might have worked out OK. Thankfully, our persistent advisor didn’t give up on us. Greg invited us to review our financial situation to see if adjustments are advisable. When we couldn’t connect because of family emergencies – he is on the east coast and we are on the west – he still didn’t give up. He continued to recommend that we meet and arranged with another Thrivent advisor on the west coast, Don Neff, for us to meet in Don’s office where we were able to connect via video conference. Here is some of the information he provided to help us – in our situation, not yours – consider options.
- Waiting until I am 70 to begin collecting Social Security is a way to ensure an 8% per year increase. And that makes sense even if I stop working before I reach 70. It would have applied in my husband’s case, too, but we were so eager to begin collecting those Social Security benefits we didn’t stop to ask anyone about it. Sometimes it really is too late.
- I understand the difference between a qualified and a non-qualified financial instrument. I have both, and I knew how each affected me during the retirement savings phase, but not the retirement income phase. Just the name – qualified – made those plans sound advantageous and therefore better somehow. But now that I know the difference, I am glad not all our retirement savings went into qualified plans with their required minimum distributions once we reach the age 70 1/2.
- That age – 70 1/2 – is nipping at my husband’s heels, so we need to find a ways to minimize the tax consequences of those distributions. We plan to begin making contributions to a 529 plan for our grandchildren. Unfortunately, since we live in California, we get neither tax deductions nor tax credits for these contributions (so says About Money), but not every good action pays off immediately. The payoff will be the future education of our grandchildren. And there are other ways to get those deductions and credits.
- We also now have a plan to consolidate our many different retirement accounts. Each one made sense at the time we opened them. But there was no overall plan involved. Serendipity brought us to this one for that reason and that one for another reason. We have pockets of our savings here and there, some very small, some more significant. I considered it diversification. Keeping track of just two or three in the same place instead of the nine or ten we have with many different institutions is the kind of simplification we need in the future.
Had our financial advisor not been so persistent, we would likely have made decisions that could significantly complicate the income distribution phase of our retirement planning. We already made one other decision – in addition to my husband beginning to collect Social Security at the earliest possible time – that we might have avoided had we consulted with an advisor sooner. My husband is a both a U.S. and a British citizen and has worked in both England and the U.S., making contributions into both social security systems. But since he has been following me around the world for the past 20 years, he hadn’t fully contributed to the U.K. system. Thinking it was a prudent step, he made the catch-up contributions so that he would qualify for both pensions. Once he did that, his Social Security was reduced by a percentage of his U.K. pension. He paid for the benefit and because he did, he gets less of the other.
Sometimes it really is too late.