Financial Planning Helps Seniors Fund Their Retirement Using Investments
Financial planning is always important, but it can be particularly important for seniors who are retired or soon to be retired. There comes an age that you want to stop working, but you want the money you have saved to last as long as possible. Proper planning can make that happen.
Getting Financial Planning Advice
There’s an abundance of financial planning advice out there. You can learn financial planning yourself or you can pay a professional to plan your finances. Learning financial planning on your own means studying material that’s available. You can find financial advice in books from both the bookstore and your local library. If you have limited mobility, you can purchase books from an online retailer like Amazon.com or BarnesandNoble.com. Magazines like Smart Money, Kiplinger’s, and Money Magazine have financial planning advice you can use during retirement.
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Hiring a professional financial planner is also an option. These paid professionals have been trained and are experienced in planning finances including budgeting and investing money.
Choosing a Financial Planner
If you’re going to pay a financial planner, it’s important for you to choose one that will work for you. Technically, one does not need to have any certifications to be a financial planner. In many states, planners don’t even have to be licensed. Fortunately, the most reputable financial planners become Certified Financial Planners through the Certified Financial Planner Board of Standards, Inc.
Look for a financial planner who has experience working with seniors. This will help ensure the financial planner you choose will be able to help you meet your specific financial needs.
Financial planners are not allowed to sell insurance, mutual funds, or stocks, or even give financial advice without being licensed and registered with the U.S. Securities and Exchange Commission (SEC) and state licensing agencies.
Checking For Complaints
One of the easiest ways to find out whether a financial planner has complaints is to ask. Of course, double check your answer with the property authorities, described next.
You can find out about complaints on a financial advisor who gives investing advice from FINRA’s Broker Check program.
You can call 1-800-289-9999. If the planner works for a firm, you need to know the firm’s name.
If a financial planner doesn’t have a clean record, it’s in your best interest to move on to another planner.
Know Your Risk Tolerance Level
Part of financial planning (not all of it) is investing. If you want your current retirement savings to grow, talk to your financial planning about your investment options. Before you have the conversation, make sure you know how much risk you’re willing to take. The riskier your investments, the more you stand to gain, but the more you can lose. Less risky investments don’t gain as much, but don’t lose as much either. Seniors are safer choosing low risk investments.
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Types of Investment Products
Here are a few types of investment products you might be interested in that you can discuss with your financial planner.
Bonds are debt securities loaned to the government or a company. They pay a certain amount of interest in addition to the money you invested. Bonds are low risk investment instruments and are therefore, low yield. Typically, they’re the lowest of all.
- Stocks are part ownership in a company. Investing in stock allows you to receive payments, or dividends, on profit allocations. Stocks are extremely risky, unpredictable and continuously fluctuate. You only make money if and when a stock increases in value.
- Mutual funds are made up of both stocks and bonds. A group of investors pool together in a mutual fund and are managed by a fund manager. You can invest your money without having to put in a lot of research about the particular stocks and bonds in mutual funds. Mutual funds come with fees and aren’t guaranteed to increase in value.
A certificate of deposit (CD) is type of savings account that pays a higher interest rate in exchange for you leaving your money in the account for a certain period of time. CD rates are higher than savings accounts but lower than stocks. You may receive a penalty if you withdraw your money before the CD matures.
Money market accounts typically have a higher interest rate than savings accounts. These accounts have higher minimum balance requirements and only allow a certain number of withdrawals in a month. You can also write a limited number of checks against the balance.
Before you put your money into an investment, make sure you thoroughly research it and understand the benefits and risks associated.