Episode summary
Before you retire, it can help to re-interview your financial advisor with specific questions about income, taxes, investments, and the advisor relationship. In Episode 14 of the Thrive in Retirement podcast, host David Bezar of Thrive Financial Services explains why, and shares the questions he suggests asking.
Many retirement plans focus on investment management. Yet key retirement decisions sit outside the portfolio: Social Security timing, tax planning, healthcare and Medicare costs, and estate planning. When those areas are left to the client, a plan can become fragmented.
David explains how a fragmented plan can lead to surprises, such as a single unplanned distribution that pushes a retiree into a higher tax bracket or triggers an IRMAA surcharge on Medicare premiums. He also addresses the loyalty many people feel toward a longtime advisor, and how to ask these questions without feeling disloyal.
Opening question: When was the last time your financial advisor brought up your taxes before you did?Key takeaways
Asking questions is not disloyalty. Re-interviewing your advisor is a way to confirm your plan covers all five critical areas of retirement, which David explains through Thrive’s ROUTE framework.
Investment management is only one part of a retirement plan. Social Security timing, taxes, healthcare, and estate planning also shape retirement outcomes.
Social Security timing deserves a deliberate strategy. Many people choose a claiming age without a plan, and “just call Social Security” is not a complete answer.
Uncoordinated withdrawals can raise taxes and Medicare premiums. One surprise distribution may push income into a higher bracket or trigger IRMAA.
Required minimum distributions (RMDs) can grow over time. RMDs may increase even while you are taking withdrawals, so they are worth planning for early.
Year-end is a key tax planning window. Many retirees miss planning opportunities before December 31.
A written income plan is the starting point. The first question to ask your advisor is whether you have one.
Frequently asked questions
What should I ask my financial advisor before retiring?
Start by asking whether you have a written income plan, tax plan, and investment plan. Then ask where your retirement income will come from, how your withdrawals will be taxed, how your plan handles inflation and healthcare costs, and how your advisor is compensated.
Why re-interview a financial advisor you already trust?
The planning that helps you save for retirement is not always the same planning that helps you live in retirement. Re-interviewing your advisor helps confirm your plan covers Social Security, taxes, healthcare, and estate planning, not only investments.
What is IRMAA?
IRMAA stands for Income-Related Monthly Adjustment Amount. It is a surcharge added to Medicare Part B and Part D premiums for people whose income is above certain thresholds. A large or unplanned retirement account withdrawal can raise your income enough to trigger it.
How can one withdrawal affect my retirement taxes?
Withdrawals from traditional retirement accounts generally count as taxable income. A single large distribution may push you into a higher tax bracket, increase how much of your Social Security is taxed, or trigger IRMAA.
What are required minimum distributions (RMDs)?
RMDs are the minimum amounts the IRS requires you to withdraw each year from most tax-deferred retirement accounts once you reach a certain age. RMD amounts can grow over time, so planning ahead can help manage their tax impact.
Is it disloyal to question my financial advisor?
No. Asking thoughtful questions is part of being an informed client, and a good advisor should welcome them. In the episode, David Bezar explains how to use these questions without feeling disloyal.
What does a fiduciary financial advisor mean?
A fiduciary is legally obligated to act in your best interest. Ask your advisor directly whether they have a fiduciary obligation to you and how they fulfill it.