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Main Street Money: Does the common man really need to see a financial adviser?

People often express doubts to me about how much impact a financial adviser can have on a “regular” person. Many believe advisers are the sole province of the wealthy, and that one with modest means would be wasting their money.

Thinking about what I wanted to say about this subject, my mind traveled back in time to a few years ago when we hosted a client appreciation event at the Boston Pops Christmas program. It was a great evening. We rented a big bus, secured box dinners and wine from a local gourmet sandwich shop, and drove from our office to the program. We had seats right in the middle of the orchestra section, enjoyed desserts, after dinner drinks, and the show.

However, as we were all getting situated, I noticed something. All these wonderful musicians were playing discordant notes that sounded a lot like a menagerie. Everyone was doing it. Percussionists played the sounds of horses galloping. Seagulls spoke for the mouths of clarinets. Strings emitted the sounds of buzzing bees and cats. Tubas emulated whales and flutes spoke as birds. A duck was heard quacking in the oboe section. This went on for a good 10 minutes.

Then, everything went quiet as the conductor moved to his position. The baton rose, and then came down. It was magical. All those discordant sounds were suddenly blended into the most beautiful sound as the symphony spoke with a single, coordinated, beautiful voice.

Now, think about your retirement plan. Is it really a plan? I mean, does each piece fit with each other? Do you know when to begin Social Security, and if lucky enough to have one, your pension? Do you know how to structure your pension so it can provide maximum lifetime income to you and your spouse, and provide a wonderful benefit for your beneficiaries?

How about your IRAs, 401(k)s, etc.? Do you know which accounts to draw from first? When and how you should structure your required minimum distributions (RMDs)? You probably know you are supposed to begin them at age 70.5, but do you know the best way to minimize taxes and maximize payouts? How about leaving your retirement accounts to your beneficiaries? Is there a way to handle the taxes so both you and they receive the maximum amount, rather than giving it all to Uncle Sam?

What about converting to a Roth? Does that make sense? How can you leverage the bargain-basement prices currently being held on taxes? You do know they are going up, right? It’s in the new tax law; they are scheduled to increase in about five years. What will that mean going forward, and does it present a passing opportunity? If there is an opportunity, how much is it worth to you? Can you save money? What will be the impact on other taxes, like on Social Security?

What will you do about long-term care? Is there an alternative to buy long-term care insurance that doesn’t involve Medicaid? And if you need Medicaid help, is there a way to receive that without first having to spend down all your assets and leaving your spouse a pauper?

Do you have a plan in place to handle inflation? At its historical average of 3%, prices double about every 20 or so years. What will that mean to you during a 30-year retirement?

And what about that 30-year retirement? Will your money last? Is there a way to grow it safely so you can keep up with inflation, make it last as long as you and your spouse need it, and avoid losing much or most of it during the next market meltdown? Do you remember 2008? What would happen to you if that happened just before or right after you retire? How will you deal with that? Will it mean having to take a job as an in-store greeter or a fast food cook? Is that really what you want for your retirement years?

I deal with dozens, sometimes hundreds, of retiring couples and individuals every year. Never have I had someone come in and tell me they wanted to pay the maximum in taxes and fees, take the maximum amount of risk, become destitute because of long-term care, and run out of money before they die. Yet most of them have no plan in place to deal with any of these issues, even though there are multiple things we can do for each of these potential dangers, without negatively impacting cash flow and lifestyle. In fact, since we are reducing fees and taxes, eliminating risk of market losses, planning for inflation, and protecting assets from long-term care, we are actually improving lifestyles and cash flow.

All of these issues are pertinent whether you have $200,000 or $2 million saved for retirement. Or $20 million. No one wants to take more risk or pay more taxes than necessary. No one wants to miss the opportunity to keep as much of their wealth as possible in their families. And no one wants to run out of money before they die.

Yet, statistics show that 80% of retirees will guess wrong on one or more of these issues without help from a planning professional. Which side do you want to be on? For a complimentary second opinion about your own circumstances, give us a call. We will be happy to run a threat analysis on your situation, which is also free of charge. What do you have to lose, other than a career in a fast food restaurant?

Stephen Kelley is a recognized leader in retirement income planning. Located in Nashua, he services Greater Boston and the New England areas. He is author of five books, including “Tell Me When You’re Going to Die,” which deals with the problem unknown lifespans create for retirement planning. It and his other books are available on Amazon.com. He can be heard every weekend on the “Free to Retire” radio show on WCAP and WFEA, and he conducts planning workshops at his New England Adult Learning Center, located in Nashua. Initial consultations are always free. Steve can be reached at 603-881-8811, or at www.FreeToRetireRadio.com.