What Questions to Ask Your Financial Advisor About Retirement
Questions to bring to a retirement planning meeting, covering the assumptions behind your projection, how income will be produced once the paychecks stop, taxes, healthcare, and how your advisor is paid.
The questions
Open any question for the note
Given what I have saved and what I spend, when could I stop working?
Why ask it
The answer should come with a date and the assumptions attached to it. If you get a year without being told what return, inflation and spending figures produced it, you have been given an opinion rather than a projection.
What annual spending number are you planning around, and where did it come from?
Why ask it
Plans built on a percentage of current income tend to miss badly in both directions. A number built from your actual bank and card statements, then adjusted for a paid-off mortgage or a new health premium, is the one worth arguing about.
What return and inflation assumptions is my plan using?
Why ask it
Small changes here move the answer by years. An advisor assuming steady high returns is showing you the most flattering version of your future, and the useful follow-up is what the plan looks like two percentage points lower.
How are you paid, and what will I pay in total this year in dollars?
Why ask it
Percentages sound small and dollars do not. Ask for the fee in dollars, including fund expenses and any commissions or revenue sharing, and notice whether the answer takes several attempts to arrive.
Are you a fiduciary at all times with me, and will you put that in writing?
Why ask it
Some advisors act as fiduciaries for planning and as salespeople for products, in the same meeting. A written yes is easy to give if it is true, and hesitation tells you which hat is on when a product gets recommended.
Where will my monthly income come from once the paychecks stop?
Why ask it
Listen for a specific order of accounts, not a philosophy. A plan that cannot name which account funds January and what happens if markets are down that month has not been built past the accumulation stage.
How do you decide when I should claim Social Security?
Why ask it
Claiming age changes lifetime benefits substantially, and for couples the two decisions interact. An advisor who has not asked about your health, your spouse's earnings record and your other income cannot have an informed view yet.
What withdrawal rate are you using, and what happens when markets fall?
Why ask it
The interesting part is the rule for bad years, not the headline percentage. Ask whether the plan cuts spending, spends from cash, or simply continues, and how you would be told.
What happens to my plan if the market drops thirty percent in my first two years of retirement?
Why ask it
Losses early in retirement do more damage than the same losses later, because you are selling into them. This question asks whether the plan has been tested against that sequence or only against averages.
How much cash or short-term reserve does the plan hold, and why that amount?
Why ask it
The reserve is what keeps you from selling investments at a loss to buy groceries. A specific number with a reason behind it suggests a plan; a vague answer usually means the question has not been settled.
What order do you draw from taxable, tax-deferred and Roth accounts, and why?
Why ask it
Sequencing withdrawals affects your tax bill for decades, and the right order depends on your bracket, your Medicare premiums and your heirs. An answer of "taxable first" with no further detail is a default, not a plan.
Should I be doing Roth conversions, and in which years?
Why ask it
Conversions usually make sense in the low-income window between retiring and required distributions, if at all. Ask what the conversion would cost this year in tax and Medicare premiums, and what it is projected to save later.
How will required minimum distributions affect my taxes and my Medicare premiums?
Why ask it
Large pre-tax balances can push income high enough to raise both. An advisor who has modeled this will be able to point to the year it starts to bite; one who has not will talk about it in general terms.
What healthcare costs are in the plan, including premiums, out-of-pocket limits and long-term care?
Why ask it
If you retire before Medicare eligibility, the coverage gap is a specific and often large line item. For long-term care, ask what dollar figure the plan assumes and what happens to the surviving spouse if one of you needs several years of it.
If one of us dies, what does the plan look like for the survivor?
Why ask it
Household income usually falls when a pension or the smaller Social Security benefit stops, while the tax filing status changes at the same time. A plan that only models the two of you together has left out the most predictable hard turn in retirement.
How is my money invested now, and how would that change as I get closer?
Why ask it
Ask for the current split in plain terms and the plan for changing it. A glide path described only as "more conservative over time" gives you nothing to hold anyone to later.
If I need a large unplanned sum, where does it come from?
Why ask it
A new roof, helping an adult child, or a car all land at inconvenient moments. The answer should name a source and describe the effect on the projection rather than treating it as a rounding error.
How does the plan handle what I want to leave behind, or that I do not intend to leave anything?
Why ask it
Legacy intentions change withdrawal order, account titling and beneficiary choices. Saying you would rather spend it all is a legitimate answer, and an advisor should adjust the plan rather than treat it as a mistake.
How often will we meet, what triggers a change, and who calls whom?
Why ask it
A plan reviewed once and filed becomes wrong quietly. Ask what event, a market fall, a job loss, a diagnosis, would prompt contact, and whether you are expected to initiate it.
What happens to my accounts and my plan if you retire or move firms?
Why ask it
Advisors change firms often enough that this is a practical question, not a hypothetical. Ask who else at the firm knows your file, and what would happen to your fee and your paperwork in that event.
Getting a usable answer from a retirement meeting
Practical guidance for the conversation itself
Before the meeting
Bring your real spending
Twelve months of bank and card statements, totalled, beat any estimate. Note which costs will stop at retirement and which will start, particularly health insurance if you leave before Medicare eligibility.
Bring the documents that carry numbers
Social Security statements for both spouses, pension summaries with survivor options, recent account statements, and the most recent tax return. Most of the interesting questions cannot be answered without these.
Write down what you want the money to do
Stopping work at a certain age, staying in the house, funding a grandchild's education, and leaving nothing behind are all valid goals that lead to different plans. Say which ones are firm and which are preferences.
What a good answer sounds like
- It contains numbers and dates rather than adjectives.
- It names the assumptions and says how the conclusion moves if they are wrong.
- It distinguishes what is known from what is a guess.
- It answers the question you asked before offering a product.
- It survives the follow-up "what would have to be true for that to fail?"
- It can be repeated back by you afterwards without notes.
Checks worth doing yourself
Ask for the plan in writing
Request the projection, the assumptions and the fee schedule as documents you can keep. Anything that only exists on a screen during the meeting cannot be compared against next year's version.
Look up the registration and disciplinary history
Advisers and brokers are searchable through public regulator databases, which list registrations and any disclosure events. It takes a few minutes and it is worth doing before you move accounts.
Get a second read on irreversible decisions
Pension survivor elections, annuity purchases and large Roth conversions are hard or impossible to undo. A fee-only planner paid by the hour can review the specific decision without wanting your assets.
Common pitfalls
Accepting a projection without assumptions
A single confident number is the least useful output of planning software. Ask to see the plan run again with lower returns, higher inflation and a longer life, and judge the plan by how it behaves in those runs.
Confusing a product pitch with a plan
If the meeting arrives at a specific insurance or annuity contract before your spending, taxes and Social Security have been discussed, the order is wrong. Ask what the commission is and what the alternative would be.
Leaving taxes out of retirement
Withdrawal order, conversions, capital gains and Medicare premium thresholds interact every year. If your advisor does not discuss taxes at all, ask who is doing that work.
Planning for the couple and not the survivor
The survivor's income and tax status are both worse in ways that are predictable now. Ask to see that scenario on paper while both of you can still change the plan.