I recently received a call from a prospective client inquiring about our services stating that he recently had been giving more thought about his retirement savings after watching “a retirement documentary on PBS”.
I was unfamiliar with what documentary he was referring to so I checked my TV Guide to see what had come on PBS the night before he called, but there was nothing related. After a quick Google search I found “The Retirement Gamble” which was shown back in 2013. I decided to give this a watch and I understand completely why he decided to give me a call.
1. The opening 20 minutes or so of this documentary highlights the complexity and confusing nature of retirement savings and investing in your companies’ 401k.
Investors are told that a nest egg of 10, 12 or even 15 times your salary is needed to support you over the length of your retirement. Citing examples of paying for children’s education and market corrections these savings amounts create fear in many investors when they think about when they may be able to retire.
2. “You invest it and it grows.”
This was a comment made by one of the interviewee’s on how they presumed their 401k works…if only it was this easy!
- How much to save?
- Which investment options do I choose? How do I know if I made the right decision? How often should I change what funds I’m invested in?
- Are there any expenses or costs I should be aware of?
- How aggressive should I be? What % should I have in stocks, bonds, and cash?
- What happens to my 401k if I change jobs?
- How do I withdraw the money in an efficient manner when I retire?
The above questions are likely just a few that crossed your mind when you first signed up for your companies 401k and likely you still have those same unanswered questions to this day. No matter how many nice titles the funds use such as growth, balanced, or value do you actually know what that means or how that fund operates?
3. “Shouldn’t I only want to work with a fiduciary?” a question proposed during the documentary.
A fiduciary is a financial advisor who must act in the best interest of their clients.
Not all advisors are fiduciaries as many abide by the suitability standard. In this case the advisor must make recommendations that are suitable for the client based on certain factors which could include the client’s age or risk tolerance among others. However as the documentary points out the suitability advisors can typically be brokers that make recommendations that steer you towards funds administered by their company that are more profitable for the broker. The funds may be “suitable” for you, but are not necessarily the best option for you.
Overall this documentary can be eye-opening and even scary for pre-retirees to see. After watching this video they begin to wonder about their own 401k and other retirement savings.
- I’ve been investing in my 401k for years, but do I really have a financial plan?
- How expensive are the funds I’m invested in?
- Have I been missing opportunities for better tax efficiency?
- How do I protect myself in a falling market?
- When can I realistically retire?
Or maybe you now have questions about your current financial advisor
- How does my financial advisor get paid?
- Are they acting in my best interest?
- What value are they providing me?
If you find yourself asking these questions I recommend contacting a CERTIFIED FINANCIAL PLANNER™ who will act in your best interest to review your financial situation and how best to take action to achieve your financial goals.
Copyright: stockbroker / 123RF Stock Photo
