Which Do You Need: A Retirement Planner Or Financial Planner? The Key Differences

By Kyle Bloyd

“Retirement planning” and “financial planning” are often used interchangeably, but there are significant differences in the terms. Understanding what each means is important to creating a strong financial future.

Financial planners help clients accumulate and invest money in a variety of ways during their working life. They guide you in constructing a framework to help you reach different financial goals over different amounts of time, such as saving money for your children’s college education, getting out of debt or paying off your mortgage, and keeping your long-term retirement plans on track. 

Retirement planners focus specifically on the years after you’ve stepped away from full-time work. Retirement planners are specialists who help you determine how to receive money from various sources in retirement. They also help you look in detail at all the expenses you’ll incur in retirement, and how your assets can generate income that will cover those costs.

Whereas your financial plan is based on your working income and expected income in the future, a retirement plan is devised with the knowledge that when you retire, you will most likely not earn the same income as when you were working. Retirement planning specialists develop a plan that allows you to draw down on retirement income such as Social Security, pension, investments and Medicare. They can answer important questions that are central to a stable retirement: When should you start collecting Social Security? How much of your savings and investments should you withdraw each year? What types of investments are best suited to your retirement needs? 

A financial planner, by contrast, may be excellent at allocating your current income during your working years, but they may not have enough in-depth knowledge to answer questions that are tied to retirement, when you no longer have that level of income.

An experienced retirement planner should be extremely knowledgeable about Social Security, taxation of retirement income, healthcare, withdrawal options, annuities, pensions, etc. Their expertise is particularly valuable when you consider that retirement doesn’t offer much certainty. For example, you can estimate the amount of money you need to set aside each month to reach a certain wealth by the time you retire, but several outside factors can change that plan in a hurry. The stock market could go down. Healthcare costs could increase. Social Security benefits could decrease. Retirement planners need to consider these variables when putting together your plan. 

Here are some other important details retirement planners can help you with as you get closer to retiring:

  • Decisions on retirement accounts. Retirement planners can help you determine whether you have enough to retire now, how much to keep saving, and accounts to use (Roth IRAs, Roth conversions, Traditional IRAs or 401(k)s).
  • Pension distribution options. Planners should go over things like the optimal  age to begin receiving the pension, whether to take an annuity distribution or lump sum, and the type of survivor option to choose.
  • Social Security. Planners will have strategies to guide you regarding what age to begin receiving your benefits and the type of spousal, ex-spousal and survivor benefits that apply to your situation.
  • Tax strategies. Which approach should you take for the lowest amount of taxes in your retirement years? Some make the mistake of thinking their non-working years will provide a sizable drop in tax exposure, but factors like Social Security and Required Minimum Distributions of retirement accounts must be weighed carefully. 
  • Investment approaches. One critical consideration is how to protect your retirement income from being hurt by market downturns.
  • Healthcare. It’s important to understand how Medicare works and how to budget for healthcare in retirement, including long-term care insurance.

Whatever stage you’re at on your journey, the most important thing you can do for your financial future is to have a plan. That’s where a credible planner comes in. And while the two terms, financial planning and retirement planning, should not be used interchangeably, you need both for a healthy financial life. 

About Kyle Bloyd

Kyle Bloyd is a senior financial advisor and vice president of Revolutionary Financial Group, with offices in Bluffton, S.C., and Louisville, Ky. Bloyd focuses on clients’ specific financial objectives and what is in their best interests when crafting investment strategies for retirement.

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