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Patrick Clark

Why Relying Solely on Your Workplace Retirement Plan Advisor Can Be Misleading

As you approach retirement, the stakes can be high. You want to seek to ensure that your financial future is secure and that you can enjoy the retirement lifestyle you envision. However, many individuals make the mistake of relying too heavily on the advice of the person who visits their workplace to discuss retirement plans. While they may provide insights into your current investment strategy, they often overlook the bigger picture. In this article, we’ll explore why it’s crucial to take a comprehensive approach to retirement planning, using the analogy of a house in need of maintenance.




House that appears nice

The House Analogy: A Case Study

Imagine you have a lovely home. From the outside, it looks well-kept: the paint is fresh, the lawn is manicured, and the roof appears sturdy. This exterior represents your retirement accounts, which may seem well-structured and on track. However, if you were to step inside, you might discover other issues: leaky pipes, outdated electrical systems, and a lack of insulation. Just like this hidden damage, there can be critical aspects of your retirement plan that aren’t visible at first glance.


The Visible: Investment Performance

When the workplace retirement plan advisor evaluates your investments, they often focus solely on performance metrics—how your 401(k) or IRA is growing. If your investments are yielding satisfactory returns, they may assure you that you are on the right track. However, this narrow focus may fail to account for essential factors such as:

  • Inflation: Is your investment growth outpacing inflation? A nominal return can look impressive until you account for the cost of living.

  • Withdrawal Strategies: How will you access these funds during retirement? Without a sound withdrawal plan, your savings could deplete faster than anticipated.


The Hidden: Comprehensive Financial Planning

Now, let’s delve deeper into the potential underlying issues of your financial "house." Just as a homeowner must consider plumbing and electrical systems, you may need to think about other aspects of your financial health:


  • Investment Accounts Beyond Retirement Plans: In addition to your 401(k) or IRA, potentially consider other investment accounts such as taxable brokerage accounts, Health Savings Accounts (HSAs), or even real estate investments. Each of these can play a role in your overall financial picture and may provide different tax advantages or withdrawal strategies.


  • Annual Spending Assessment: What do you spend in a year? A thorough evaluation of your expenses can be critical. Consider major expenditures like:

    • Education Costs: Do you have a child in or exiting college? Tuition and related expenses can significantly impact your financial strategy.

    • Debt Obligations: Are you managing student loans, car loans, credit cards, or a mortgage? Understanding your debt load can help in planning your retirement cash flow.

    • Family Responsibilities: Are you taking care of a family member? Financial responsibilities for dependents can affect your available resources and retirement timeline.


  • Social Security Optimization: Are you planning what appears to be the best strategy for claiming Social Security? Making the right choices can significantly impact your retirement income.


  • Healthcare Costs: Have you considered the rising costs of healthcare? It’s essential to plan for these expenses including Medicare, as they can take a big bite out of your retirement savings.


  • Estate Planning: Have you thought about how your assets will be distributed? An estate plan can help see that your wishes are honored and that your loved ones are taken care of.


The Importance of a Holistic Approach

In Massachusetts and New Hampshire, individuals within 2-7 years of retirement should seek to take a holistic approach to financial planning. This involves not only reviewing investment performance but also assessing your entire financial landscape. Here are a few steps you can take:


  1. Engage a Financial Planner: Look for a fiduciary financial advisor who can offer comprehensive services tailored to your specific needs. They will assess your entire financial situation rather than just your retirement accounts.


  2. Evaluate All Income Sources: Consider all potential income streams in retirement, including pensions, savings, investments, and Social Security. A diversified income strategy can provide stability and security.


  3. Plan for Contingencies: Life is unpredictable. Consider having a contingency plan for unexpected expenses, whether it's healthcare emergencies or market downturns.


  4. Regularly Review Your Plan: Retirement planning isn’t a one-time event. Schedule regular check-ins with your financial advisor to reassess your goals and make necessary adjustments.


Conclusion


As you approach retirement, it’s vital to recognize that relying solely on the workplace retirement plan advisor for guidance can leave you with a distorted view of your financial health. Just like a house with superficial charm can hide significant problems, your retirement plan may require deeper scrutiny. By taking a comprehensive approach and addressing all aspects of your financial situation, you can seek to build a solid foundation for a secure and fulfilling retirement.

Don’t wait until it’s too late—start your holistic retirement planning today if you haven't had a chance to yet.


Disclosures:

Past performance is not indicative of future results. This material is for informational use only and should not be considered investment advice. Investing involves risk. Principal loss is possible. The opinions expressed are those of Guardian Wealth Advisors, LLC. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Investment advisory services offered though Guardian Wealth Advisors, LLC D/B/A Guardian Wealth Partners. Guardian Wealth Advisors, LLC (“GWA”) is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about GWA’s investment advisory services can be found in its Form ADV Part 2 or Form CRS, which is available upon request. (GWA-24-84)

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