Retirement Financial Advisors: A Comprehensive Guide (2024)

Affiliate links for the products on this page are from partners that compensate us and terms apply to offers listed (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate products and services to help you make smart decisions with your money.

• It might be a good idea to hire a retirement advisor if you're within 10 years of retiring.
• A retirement advisor can help you refine your goals, develop an income drawdown strategy, and more.
• Above all, look for a retirement advisor who is a fiduciary. They are held to high ethical and legal standards that ensure your needs are met before their own.

What is a retirement financial advisor?

Retirement financial advisors are financial professionals who specialize in — you guessed it — retirement planning. Many financial advisors or financial planners offer retirement planning services, but a retirement financial advisor specializes in helping you prepare for retirement and manage your money in retirement.

Why you need a retirement financial advisor

Many people turn to financial advisors to help navigate the financial aspects of life-changing events like getting married, having a baby, or starting a college fund. Yet retirement can be even more complex, as it can take decades to save and invest enough for retirement; then you need a plan to manage your assets for perhaps several more decades during retirement so you don't run out of money. Because of this complexity, many people turn to retirement financial advisors, rather than trying to figure out everything on their own.

As it stands, 55% of Americans are concerned they will not be able to achieve financial security in retirement, according to the National Institute on Retirement Security. While a retirement advisor can't wave a wand and grant you financial security, working with one can go a long way toward securing your financial future if you follow the plan they help you craft.

You might consider working with a retirement plan advisor if you're within 10 years of leaving full-time work for good, but you might not need one yet if you're in your 20s or 30s and are focusing more on other financial priorities like buying a home. In that case, a more general financial advisor could help. The advisor can still support you in areas like setting up a retirement investing plan, but they might not provide the specialized retirement services that you'd want later in life.

Services offered by retirement financial advisors

Retirement is multi-faceted, as you're balancing lifestyle changes and financial changes. That's why retirement financial advisors often offer a wide range of services that can help you figure out what you want your retirement to look like, how different retirement income sources fit together, and even tackle big questions like what you want your legacy to be.

Specifically, some common services offered by retirement financial advisors include:

Retirement goals planning

Many retirement advisors start with helping you define your retirement goals, like where you want to live and how you want to spend your time. That's because these goals make a big difference on your finances. If you want to move to a new state, for example, that can change your housing costs, taxes, etc. Figuring out how you want to spend your time also matters, such as if you need a retirement plan that enables you to afford significant travel.

Retirement income planning

With your goals in place, a retirement financial advisor can help you create a retirement income plan so that you have enough to support your lifestyle while reducing the risk of spending down your retirement savings too quickly. A retirement financial advisor can help you balance different retirement income sources like your 401(k), IRA, pension, Social Security, and traditional brokerage accounts.

Investment management

Most people can't strictly save their way to a comfortable retirement. You need to invest to have your nest egg grow enough to support you for the rest of your life. Yet your investment needs can change over time, such as how you might take on more risk while saving for retirement in your 20s and 30s, while reducing risk later on so that you can more reliably draw down your retirement assets.

So, a retirement financial advisor can help you put together an investment plan. Some advisors manage your investments directly, while others work with third-party investment managers or simply leave you with a plan that you can implement on your own.

Tax planning

The more you pay in taxes, the less you have to spend in retirement, so it's important to optimize this area. A retirement financial advisor can help with tax planning such as by structuring your investments in a way that minimizes taxes, as well as helping you analyze choices like property taxes in different areas you might move to in retirement.

Some advisors handle tax planning and tax preparation for you, while others might connect you with experts such as Certified Public Accountants (CPAs).

Estate planning

Retirement financial advisors can also help with estate planning, which deals with both financial and personal decisions for when you pass away or if you become incapacitated, such as due to a medical issue. For example, a retirement financial advisor can help you create a will to lay out your wishes for passing on money to family members or charity after you pass away. They can also help you set up documents like health care directives, which specify who will make medical decisions for you if you're unable to.

Note that some retirement financial advisors specialize in estate planning, while others connect you with experts in this area, like estate planning lawyers.

How to choose the right retirement financial advisor

Figuring out how to choose a retirement financial advisor depends somewhat on your goals and needs.

For example, if you're someone who has your own business and wants help designing a retirement plan that can support your retirement and that of your employees, you might want to work with a Chartered Retirement Plans Specialist.

Or if you're primarily looking for help managing taxes in retirement, you might choose a retirement advisor who's a CPA.

More specifically, some factors to consider when looking for retirement financial planning services include the following:

Fiduciary standard

A fiduciary standard can get a bit confusing, in part because the rules differ for individuals vs. workplace retirement plans, and the laws have been changing the past few years as it has become a political issue. In general, though, an advisor held to a fiduciary standard agrees to put a client's best interests first, remove conflicts of interest, and typically has a clear fee structure that avoids commissions and other kickbacks.

While you don't necessarily have to choose an advisor who's a fiduciary, many people think it's logical to pick one who prioritizes clients in this way. Advisors typically explain on their websites if they follow a fiduciary standard, such as the fiduciary duty specified by the CFP's Code of Ethics and Standards of Conduct.

Also, one of the best questions to ask a retirement financial advisor is simply "Are you a fiduciary?"

Credentials and certifications

There are many different financial advisor credentials and certifications, so it can get a little confusing. But if you see that an advisor has letters after their name, like CFP or CPA, look up what that designation means and see what others have to say about it.

For example, many financial planners have CFP (Certified Financial Planner) certifications, but if you're looking for a retirement financial advisor, you might prefer someone who's both a CFP and a CRPC (Chartered Retirement Planning Counselor). That could clue you into the advisor's specialty and background education, although don't assume that just because someone has certain credentials and certifications that they're the right advisor for you. It's just one factor.

Experience and expertise

Another factor is an advisor's experience and expertise working in different areas of retirement planning. Some might have a background as an accountant, for example, which might help if you're looking for someone who can optimize your taxes in retirement. Or, you might prefer someone with more experience and expertise in investment management, such as if you don't know how to structure your retirement portfolio.

Note that advisors with less experience aren't necessarily a worse choice, as you might get the benefit of more personalized attention if you're working with an advisor who's just starting to build out their client base. Still, you'll have to weigh how much experience and expertise matter to you, just like you would when choosing other services, like finding a real estate agent or contractor.

Fee structure

Financial advisors, including retirement financial advisors, can have different types of fee structures, although most fiduciaries are fee-only advisors, meaning they only make money from client fees, rather than payments like mutual fund commissions.

Most fee-only advisors charge an hourly fee between roughly $100 and $300, or an asset under management (AUM) or assets under advisem*nt (AUA) fee that's usually somewhere around 1% of your total investment portfolio. Or they might charge a single, flat fee to create a comprehensive plan.

You'll have to do the math to see which fee structure makes the most sense for your situation. Sometimes paying more upfront with a flat-fee or hourly model ends up saving you money in the long run, as you might then no longer need the advisor, compared to paying a percentage of your assets every year, which can eat into returns over time.

Note that these fees are generally separate from other costs, like the fees that investment funds charge, which your advisor might not benefit from but you still pay.

Client reviews and testimonials

Lastly, look for client reviews and testimonials, much like you would for other service providers. Start an online search like "best retirement financial advisors near me" and see what results pop up — on Google, for example, you'll often see advisor names or the names of their companies, alongside Google reviews. Yelp is another option for finding reviews of the best financial advisors in your area.

Benefits of working with a retirement financial advisor

Hiring a retirement financial advisor can easily pay for itself and more by helping you save more for retirement, grow your investments, figure out a retirement income strategy, and more.

Some of the top benefits of working with a retirement financial advisor include getting support in areas like:

• Defining your retirement goals, including what you want your lifestyle to look like
• Calculating how much money you need in your retirement accounts by the time you retire to support your annual income needs
• Explaining the pros and cons of different types of retirement accounts or products and which are best for your needs
• Selecting an appropriate mix of investments such as stocks and bonds, based on your risk tolerance and time horizon
• Rebalancing your investments when the market changes to avoid deviating too much from your asset allocation strategy
• Claiming Social Security at the optimal time
• Developing a plan for drawing an income in retirement
• Reevaluating your goals, if needed
• Minimizing taxes
• Planning for long-term care and healthcare costs
• Establishing an estate plan
• Running alternative scenarios and developing a Plan B for reduced retirement stress

Common mistakes to avoid when planning for retirement

While retirement financial advisors can be a big help, that doesn't make you immune from retirement planning mistakes. Some top pitfalls to watch out for include the following:

Underinvesting

A retirement advisor might suggest investing a percentage of your salary into your workplace retirement plan, such as 15%. But if you're not following through with that, or if you change jobs and don't set up new automatic deductions, you could end up underinvesting for retirement.

Overspending

While retirement advisors might have a little more control in terms of setting you up on an automatic investment and withdrawal schedule, it's more so up to you what you do with your money. If you end up overspending, you might have to draw more from your retirement savings than you and your advisor planned for, which could hamper your ability to enjoy a comfortable retirement later on.

Ignoring risk

Another mistake can be taking on too much risk as you enter retirement. When you're young, you have plenty of time to recover from market downturns. But if your portfolio craters during the years you're drawing from your retirement portfolio, that could make it difficult to have enough to last your remaining years. A good retirement advisor can help you structure your portfolio based on your risk tolerance and what seems appropriate for your situation.

Ignoring your options

Lastly, don't assume that you have to go with the first advisor you meet with or someone a family member uses. That could mean overpaying or working with someone you don't mesh well with. Many advisors offer free consultations to help you get a sense if it's a good fit.

If you don't want to meet with someone in person, online financial advisors are available through phone or video, which could expand your options. Robo-advisors — i.e., digital tools that automatically help you manage investments — are often the cheapest option for building and managing an investment portfolio. However, they aren't usually available for other services like budgeting or retirement planning, so you'll have to weigh what's important to you.

Retirement financial advisor FAQs