Tuesday, October 22, 2013

Getting a professional into the act

Getting a Professional into the Act

Do you see planning for your retirement as your responsibility or something someone else should do for you? That is a pretty shocking question isnt it? It is the kind of question that makes it sound like if your retirement funds are under the care of your employer, that you are not being a responsible person.

Of course that is not the purpose of the question. If you have taken the step of participating in your employers retirement program or 401K, then you are definitely showing plenty of personal reasonability for your retirement planning. But when you think about it, what happens to your 401K funds once they are given to your employer? Most of us dont know. We know that we get statements that show that what we invest is gaining in value and that the principle is safe and for us, that is often enough.

But it is easy to trust your employer that the funds are being managed well and that it all will be there when the time comes for you to use that 401K for retirement. The truth is that your employer probably has nothing to do with how well your retirement portfolio performs once the funds are taken out of your paycheck. In most cases, your employer hires a professional retirement planner who invests those funds to give you at least a modest return on investment. And that service is also taking a fee from your funds which is something that is done without giving you the chance to evaluate if they deserve the money they are making.

You have some rights when it comes to your retirement funds. So part of your rights is to see that people that work for you, such as a retirement planner, know what they are doing and are held accountable on a regular basis for the outcome of their financial management of your retirement funds. At the employer level, you probably wont fire the financial planner. But you can demand to meet with them and communicate your financial plans. You can get a name of is responsible for what happens with your money. And if you find out who they really are, you will have more success in getting them to be accountable to you.

But you may also find yourself engaging a financial planner for funds that fall outside of employer 401K plans. For example if you leave a job, you can roll your 401K into a private IRA account and engage a financial planner to invest that money so it continues to grow steadily until you need it at the time of retirement.

Develop some standards by which any retirement planner you engage must be judged. A good way to pick a good financial planner is to use people you know and trust to give you guidance. If family members or close associates already are using a good financial planner, get that persons name and phone number and schedule an interview. You can also find out if your bank, insurance company or credit union provides this service. They already work for you the good reputation of these trusted financial services people can pay off when you use them for financial planning for retirement.

Put some time and effort into researching if the retirement planner you are considering is capable and has a good reputation. They should have no trouble giving you references and documenting their success to show you that they can be trusted to take good care of your retirement funds. And if you do some up front due diligence, in the end you will be able to entrust this important resource to them knowing they are good stewards of the money that is going to give you a happy and peaceful retirement life.

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