Question: I’m approaching middle age, I’m debt-free and have been maxing out my 401(k) since I got my first job right out of college. That account plus my emergency fund and a small bequest my grandfather left has given me a net worth of $420,000. I plan to keep contributing to my 401(k), but will that be enough for me to retire on? Should I talk to a financial planner?
— Lindsey
Answer: Lindsey, savings-wise, you’re doing very, very well for your age.
A recent survey from the Transamerica Center for Retirement Studies notes that the estimated median retirement savings for millennials is only $50,000. So give yourself a big pat on the back for making savings a priority. It’s a huge part of a successful strategy.
Contributing the max to a retirement plan and staying out of debt is a great start. And odds are that if you keep it up, you’re going to have plenty of savings for your golden years.
But if you want to be sure, and perhaps discover ways to reach your goals even faster (early retirement, anyone?) there’s certainly nothing wrong with talking to a qualified financial adviser.
An adviser offers you an expert second set of eyes. Someone who, for example, can tell you whether your current 401(k) asset mix is the optimal choice. Someone who can suggest additional investing options you might never have found on your own. Someone who can keep you on track.
An ideal planner will do more than just run the numbers. They’ll encourage you to think about what you want from life, then show you the shortest path to achieve your dreams.
Too often we focus solely on the present, forgetting that right now is not forever. What you need and want in your 20s and 30s is probably completely different from what you want and need in your 40s and beyond. Or maybe you know what you want – to start a business, say, or buy a house – but you have no idea how to make that happen.
A qualified financial planner looks at the big picture. Analyzing all aspects of your finances, they show you how to position yourself for the long term. Rather than saving haphazardly and spending aimlessly, you’ll follow personalized, unbiased money advice that’s based on your current needs and future goals.
How does an extra $1.7 million for retirement sound?
The stock market is the foundation of investing for retirement and building a nest egg that will keep pace with inflation.
But the stock market can be complicated. While it’s definitely possible to educate yourself, it’s a lot faster and less stressful to gain knowledge from a qualified adviser.
There’s a lot at stake here. A recent Vanguard study notes that on average, the average investor will turn a $500,000 investment into $1.7 million in 25 years. But with a qualified financial adviser, that same $500,000 could grow to $3.4 million. That’s an extra $1.7 million!
Using an adviser can also be safer than doing things on your own. Plenty of people have learned the hard way they shouldn’t take money advice from just anybody – even from someone they trust.
When you hire a qualified financial adviser, you’re looking at someone who’s a fiduciary; legally required to put your interests ahead of their own. That’s critical if you want to avoid some sleazy sales person eyeing a fat commission for selling products good for their bottom line, but not necessarily yours.
So how can you find someone to trust? One way is SmartAsset’s free tool. Fill out a brief questionnaire and in less than five minutes, you’ll be matched you with up to three vetted fiduciary advisers in your area. Talk to them. Visit them. The first appointment is typically free. If you like what you hear, sign up. If you don’t, you’ll likely still get a little free advice.
The life you want
While you’re doing great, Lindsey, most of us will likely need more than just a 401(k) and Social Security to have the retirement we want. An experienced, fiduciary adviser can help you create a strong financial plan; the blueprint for your future happiness and security.
A good planner will be both coach and cheerleader. They’ll teach you how to strengthen your finances, then support and encourage you every step along the way.
The best time to have started planning was 10 years ago. The second-best time is today. Don’t wait a minute longer to take charge of your future.
Donna Freedman
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