We make $300,000 a year, but only saved $5,000. Do we need a financial adviser?
Question: My husband is 48 and I am almost 40. We have two young children. For many years we barely got by. I have college student loan debt, although my husband recently finished repaying his loans. At the end of each year, our savings are eaten up by taxes or unexpected expenses like a move or medical debt incurred by the birth of our children. We only have about $5,000 in savings for retirement. A few years ago we moved to a city where our expenses were very low. Recently, due to an unexpected career success, my husband’s income doubled and last year he earned nearly $300,000. Is it too late to build a solid retirement portfolio? And if not, would it help us to hire a financial advisor? (Are you also looking for an advisor? You can use this tool to be matched with a financial advisor who might meet your needs.)
Answer: The good news is that it’s not too late to build wealth for retirement, but you’ll need to save and invest some of your earnings and possibly work longer, pros. “You might be pleasantly surprised to find out how much you can accumulate if you commit to saving over the last ten or two years of employment,” says Brenda A. Morris, Certified Financial Planner at Humane Investing. Bridget Venus Grimes, president of Wealth Choice, adds: “These people may have to work longer, save more and spend less, but [should] be a plan.
And that plan may need to be worked out by a financial advisor, because this couple may want and need help figuring out where to start and how to get where they need to go. You can use this tool to be matched with a financial advisor who might meet your needs. Of course, not everyone needs to hire an advisor to get on the right track financially, and this guide will help you determine whether or not you need a financial advisor.
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This couple might be best served with a financial advisor who will help them come up with an overall savings and budgeting plan and advice on where and how to invest it so the money will grow, the pros say. Grimes notes that while many financial advisors don’t help with budgeting, there are plenty that do; ask if they do, upfront. Here are 15 questions to ask any advisor you might hire, including questions about how an advisor gets paid, and here’s a guide to what those new to hiring a financial advisor might want to know.
As Grace Yung, Certified Financial Planner and Wealth Advisor at Midtown Financial Group, recently told MarketWatch Picks in this column: Typically, a financial planning engagement has many parts: financial planning, implementation, and follow-up. continuous, and “many CFP professionals do all of the above.” She added, “There are CFPs who can be hired on an hourly or flat-rate basis to come up with a comprehensive financial plan,” says Yung, who adds that it can often cost an average of $3,000 to $6,000. “The reason for this is that it can take at least 10 hours to create a proper plan. Plans generated at this level are typically initiated with an engagement agreement and should include a baseline snapshot, overall asset allocation, scenarios with general recommendations and action steps with a written summary,” Yung explains. As for the specific recommendations on strategy investments, Yung says they are usually completed separately.
Whether you hire a professional or not, start gathering your finances now
Start now, with a solid plan that will finally help you retire. And be prepared for speed bumps along the way. Morris recommends focusing on things you can control, like how much you spend, how much you save, and when you want to retire. Markets will naturally fluctuate, but a good way to stay focused is to stick to your immediate goals. To help you do this, try to imagine things you will do in your golden years, whether it’s golfing all day, traveling to visit the pyramids in Egypt, or simply spending time resting after so much of years of struggle to get by.
* Questions edited for brevity and CLarity