Work toward financial goals with the aid of an adviser

Question: What do financial advisers do?   

Answer: Financial advisers help individuals, families and business owners to implement a financial game plan. Whether it’s creating a reliable retirement income or protecting their business from unforeseen crisis, we help clients to identify their financial goals, aligning their financial situation and risk tolerance with available investment options and strategies.

We help our clients to navigate the complex and sometimes overwhelming world of personal finance by simplifying industry jargon, providing an honest assessment of each unique financial situation and presenting the best solutions for success. For example, if a client is approaching retirement age, we may look to reallocate his portfolio as he transitions from asset accumulation to retirement distribution. 

Q: What are some questions that I should be asking my financial adviser?

A: 1. I just got my first job. How do I start investing? 

2. If I want a certain lifestyle or X amount of income when I retire, how much money should I be putting away each month, and what rate of return should I shoot for?

3. In addition to growing my wealth, what are some ways I can reduce my taxes? 

4. How can I ensure that the assets I have accumulated can be converted into a secure, lifetime income stream when I retire?

5. How can I protect my family from financial devastation should something happen to me? 

6. What is the most tax-efficient way to pass down my estate to my family?

Q: When should I start saving for retirement? 

A: Now. You are never too young to start investing. Hypothetically, say you’re 25 years old. Investing $200 a month (automate it so you can set it and forget it), earning an average annual rate of return of 10 percent consistently, will turn into $1 million at age 65. The power of compounding is astounding and the key is to start as early as possible. But remember, you are never too old to start investing either. However, you’ll have to put away much more to achieve that $1 million. For example, if you are 50 years old and invest $250,000 today, you will have $1 million at age 65, assuming a 10 percent annual rate of return. In comparison, a 25-year-old would only need to invest $22,094 today to get to $1 million at age 65.  

Q: What is one area of financial planning that people often overlook?  

A: Social Security planning — many people are unaware of the various options they have when it comes to collecting Social Security and consequently, could potentially be leaving thousands of dollars of benefits on the table. Implementing the right strategies to maximize your benefit could drastically change your retirement outlook. One strategy that can benefit both married couples and single individuals is called "File and Suspend."

For example, Kimo and Lani, both age 66, are married. Throughout his career, Kimo has been the higher wage earner. Kimo, at full retirement age (between 65 and 67 depending on year of birth), opts to "File and Suspend" — this allows him to delay his retirement benefit until age 70 and earn the 8 percent delayed retirement credit, which then increases his monthly Social Security benefit. It also enables Lani to file for a spousal benefit and begin collecting 50 percent of Kimo’s benefit. Furthermore, since Lani delayed claiming her benefit, she will also accrue delayed retirement credits until she switches from spousal benefit to her own benefit. 

A single person can also utilize the "File and Suspend" strategy; however, the benefit of the strategy is different from that of a married couple. Keoni, who is single and just turned 66, decides he wants to wait until he is 70 to start collecting Social Security because longevity runs in his family and would like to get the maximum benefit amount. Three years later, he is diagnosed with a medical condition and needs money to pay for care. If he "Filed and Suspended" at age 66, he now has the option to receive all the payments he would have received as a lump-sum check. It is one way to hedge against an uncertain future.

Go to ssa.gov to find your full retirement age, the age at which you can receive full Social Security benefits.