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  • I am 60 and plan to retire in March. I have $113K in my 401(k) and no other savings, but I will get an early retirement package of 9 months salary. Should I get a pro to help me? 

    I am 60 and plan to retire in March. I have $113K in my 401(k) and no other savings, but I will get an early retirement package of 9 months salary. Should I get a pro to help me? 

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    Question: I am accepting an early retirement offer from my long-term employer of 24 years. In March of 2023, I will retire and receive nine months of salary as well as my benefits. During this time I will be looking for another job that’s 30 or 40 hours per week. I would like to do this in order to invest some of the stipend I will be receiving. I have approximately $113,000 in a 401(k) that I will also be looking to invest. I have no other savings or checking, and I am 60 years old. I need advice as to whether it would benefit me to hire a financial advisor outside of the one I have with a large investment company through my current employer. (Looking for a financial adviser too? This tool can help match you with an adviser who might meet your needs.)

    Answer:  While it may benefit you to work with a financial adviser outside of your employer, that’s not always the case. “It really depends on what the employer-adviser costs, what their fiduciary obligations may or may not be and how well-credentialed they are. If they’re low cost, act as a fiduciary, have a preeminent planning designation, then it may be a great fit, but if not, you may wish to find an adviser elsewhere,” says certified financial planner Philip Mock at 1522 Financial. 

    Have an issue with your financial adviser or looking for a new one? Email picks@marketwatch.com.

    For his part, certified financial planner Joe Favorito at Landmark Wealth Management says he recommends meeting with the current adviser and going over your situation along with your longer term goals to see if they’re competent and have done a good job up to this point. “If they aren’t, and you’re looking elsewhere, then I would suggest using whoever you choose exclusively because you want your financial plans to be one cohesive strategy and having two competing advisers can sometimes create more problems than you can solve,” says Favorito. (Looking for a financial adviser? This tool can help match you with an adviser who might meet your needs.)

    No matter which adviser you choose — or if you go it alone — you have a number of things you will want to consider here. “I’d want to know what your net monthly expenses will be in retirement in today’s dollars, whether you have any pensions expected in the future, and if not, what Social Security will look like at 67 and 70. I’d also want to know when you’d like to have the choice to quit working, but all of these questions come with assumptions, and my biggest concern is that you haven’t saved enough to quit working when you’d like,” says certified financial planner Adam Koos at Libertas Wealth Management. 

    Indeed, Koos says there are two possible scenarios here. “My guess is that either you’re going to need to save as much as you can between now and full retirement, or I would hope that you’re a relatively frugal individual. Case in point, if your Social Security comes out to $3,500 per month and your total retirement savings grows to $150,000 between now and retirement at 65, you can only expect a $500 per month gross check from your retirement portfolio, which puts your monthly gross retirement income at around $4,000 per month,” says Koos.

    The good news here is that that may be enough for you, and you plan to keep working and earning money that you can use to boost your retirement funds. And if you decide to go the financial adviser route, that person can help you invest your earnings and come up with a solid plan to ensure a smooth retirement. Make sure that whoever you work with has the ability to handle — or knows someone they can recommend — not just the investment advice, but all the other issues that become paramount as you get closer to your senior years. “This means estate planning, insurance planning and tax planning,” says Favorito.

    Something else to consider: Advisers say you should plan to have some liquid emergency savings on hand. “Your question about not having any other savings means you’re definitely in need of an emergency fund,” says Mock. Pros advise having between 3 and 6 months of living expenses in an emergency fund, regardless of whether you’re approaching retirement.

    You should also think about when you will take Social Security. If you retire at full retirement age (66 if you’re born between 1943 and 1954 and 67 if you’re born between 1955 and 1960), you’ll receive the maximum benefit. It’s best to delay taking Social Security as long as possible because benefits are increased by a percentage each month you delay starting after your full retirement age.

    If you can’t find a job you like because of a looming recession, it may make sense to enter the gig economy and work wherever you can to earn extra money. 

    Looking for a new adviser? Consider checking out professional planners using the National Association of Professional Financial Advisors (NAPFA) online tool since hiring a personal financial planner is highly recommended in your case, as the individual helping with your retirement plan at work likely doesn’t have the capabilities, license or legal ability to provide the kind of advice you’re going to need. (Looking for a financial adviser? This tool can help match you with an adviser who might meet your needs.)

    Questions edited for brevity and clarity.

    Have an issue with your financial adviser or looking for a new one? Email picks@marketwatch.com.

    The advice, recommendations or rankings expressed in this article are those of MarketWatch Picks, and have not been reviewed or endorsed by our commercial partners.

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  • ‘I’m paycheck to paycheck.’ I make $350K a year, but have $88K in student loans, $170K in car loans and a mortgage I pay $4,500 a month on. Do I need professional help?

    ‘I’m paycheck to paycheck.’ I make $350K a year, but have $88K in student loans, $170K in car loans and a mortgage I pay $4,500 a month on. Do I need professional help?

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    I’m the first of my generation to own a home and the first to earn this much annually and don’t want to mess this up. How, specifically, can a financial adviser help me?


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    Question: By the end of 2022, I will have made $350,000 before taxes as the sole breadwinner and head of household. This is a great starting point and I’m very aware how blessed we are to be in this position, but I’m always looking ahead on how to improve. I currently have $88K left in student loans (originally close to $150K) and very little credit card debt (less than $2K with more than $25K available). I have two auto loans totaling $170K for two electric vehicles at 5% interest.

    I’ve recently been offered a $200K HELOC at 9%, which would help me bring down some of my monthly payments and do some small home repairs and improvements, but I want to make the right moves. And I’ve also been presented with a few long-term real estate investment opportunities that are rental properties out of state and are currently bringing it 10-12% ROI.  But my biggest concern is that after taxes, 401(k) contributions, bills, savings and mortgage ($4,500), on paper I’m paycheck to paycheck. I’d like to use this HELOC to consolidate debt while also participating in some of these investment opportunities. I’m the first of my generation to own a home and the first to earn this much annually and don’t want to mess this up. How, specifically, can a financial adviser help me? (Looking for a new financial adviser too? This tool can help match you with an adviser who might meet your needs.)

    Answer: You have a few questions to tackle here, so let’s go one by one. The first being the HELOC. Yes, HELOCs can be a good way to consolidate debt, but the rate you’re being offered isn’t favorable, as average HELOC rates are a little over 6%. “I would ask if 9% is the best rate you can get, because it appears a bit high,” says Chris Chen, certified financial planner at Insight Financial Strategists. What’s more, “I would like you to consider the potential impact that our Fed policy and inflation are having on interest rates, as HELOCs usually have variable interest rates and we’re in an environment with rising rates. You may start at 9% and end up significantly higher,” says Chen. 

    What’s more, your student loans, car loans and mortgage are all likely less than 9%, so it’s not likely that consolidation via a HELOC would save you money. “You may want to start somewhere different, like the snowball method, where you focus on one loan, usually the smallest one, and direct all of your resources to pay off that loan while maintaining payments on the others,” says Chen. This method could work to finish off your student loans and maybe one of your car loans, to start with. 

    Have an issue with your financial adviser or have questions about hiring a new one? Email picks@marketwatch.com.

    As for those real estate investments, what do you really know about those returns? “With regards to real estate investments, I assume that the 10% to 12% ROI you speak of is the income that you would be getting from the investment. If so, that’s very high and often when you get a return that is significantly higher than the norm, there’s something else that makes the investment less desirable. Be careful,” says Chen. (Looking for a new financial adviser too? This tool can help match you with an adviser who might meet your needs.)

    Certified financial planner Kaleb Paddock says you may actually want to work with a money coach before you work with a financial adviser. Whereas a financial adviser assists with developing investment strategies and long-term financial plans, a money coach offers a more educational experience and focuses on shorter term goals for money management. “A money coach will help you with paying off all of your debts, maximize your cash flow and help you create systems and processes to direct your money proactively,” says Paddock. 

    While having a high income is great, there’s a concept called Parkinson’s Law, which essentially states that your spending will always rise to meet your income no matter how high that income rises, explains Paddock. “Working with a money coach will help you defeat Parkinson’s Law, eliminate your debt and then enable you to supercharge your investing and life planning with a financial adviser,” says Paddock.

    A financial adviser could help too, and Danielle Harrison, certified financial planner at Harrison Financial Planning, says to look for one who does comprehensive financial planning and can help you create a more holistic plan for your money. “They can assist you in the creation of both short and long-term goals and then help you by giving guidance on the financial decisions and opportunities you are presented with,” says Harrison.

    A financial adviser would also help you take a long-term approach to your money and help you create a spending plan where you don’t feel like you’re living paycheck to paycheck on a $350,000 salary. “Everyone has blind spots when it comes to their finances, so finding a competent financial partner can be invaluable,” says Harrison. (Looking for a new financial adviser too? This tool can help match you with an adviser who might meet your needs.)

    Have an issue with your financial adviser or have questions about hiring a new one? Email picks@marketwatch.com.

    *Questions edited for brevity and clarity.

    The advice, recommendations or rankings expressed in this article are those of MarketWatch Picks, and have not been reviewed or endorsed by our commercial partners.

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