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Parents near retirement (early 60s) and are lost about how to plan for next steps

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  • Parents near retirement (early 60s) and are lost about how to plan for next steps

    Hi,

    My parents (one is a still practicing emergency physician) are in their early 60s and are ready to start taking steps to retire. I'm not sure of their total savings/investments, but know they have always maxed out the retirement contributions since paying off medical school debt and have been fairly hands-off otherwise. They used to have a broker they worked with for years who mostly left their accounts alone, but have retirement accounts with every single hospital they've ever worked for. (No consolidation whatsoever.) I'm not even sure they could tell you where all of their accounts reside.

    But in the last year, they've decided that they need to start transitioning to a pre-retirement asset allocation and find all of their accounts. I am not qualified to give them the advice on what this allocation should be or to really do any of their financial planning. Although not a physician myself, I started listening to White Coat Investor last winter. I've suggested that they reach out to some of the fee-only financial planners on https://www.whitecoatinvestor.com/financial-advisors/, but many of them charge 1% of all assets, which at retirement age will be a very large fee. A caution about this is even listed on this blog post: https://www.whitecoatinvestor.com/fi...omment-page-2/.

    Should they be seeking a financial planner that specializes on actually retiring? I heard an interview with a lady that started a company specifically focused on advising those about to retire, but I can't remember on which podcast. (Possibly White Coat Investor, possibly Afford Anything, but I can't find reference to this interview on either website.)

    Any tips on where to direct my parents on advice at the stage of actual retirement?

    Thanks.

  • #2
    Sounds like they would benefit from meeting with a fee only financial advisor. I just went through this with David Graham and found the experience quite helpful.

    At the very least, it will force your parents to gather up all of their financial information for this review.

    Comment


    • #3
      I was expecting your parents to really NEED help from you. Sounds like they’ve done a great job saving throughout the years and should have a pretty sizable retirement portfolio. I’d imagine that they can figure out next steps on their own. If they have asked for your help then surely you can help them with things.

      Comment


      • #4
        Originally posted by Mitchel674 View Post
        Sounds like they would benefit from meeting with a fee only financial advisor. I just went through this with David Graham and found the experience quite helpful.

        At the very least, it will force your parents to gather up all of their financial information for this review.
        You also need to track down all of your accounts to make a will and trust. If your parents don’t know where all of their accounts are, they probably haven’t done proper estate planning and financial planning recently (or ever).

        Surprisingly, blowing off estate planning does not actually make you immortal.

        Comment


        • #5
          Originally posted by Mitchel674 View Post
          Sounds like they would benefit from meeting with a fee only financial advisor. I just went through this with David Graham and found the experience quite helpful.

          At the very least, it will force your parents to gather up all of their financial information for this review.
          Thanks Mitchel674. I'll suggest that they reach out to David Graham as well.


          ​​​​​​​

          Comment


          • #6
            Originally posted by Huggy View Post
            I was expecting your parents to really NEED help from you. Sounds like they’ve done a great job saving throughout the years and should have a pretty sizable retirement portfolio. I’d imagine that they can figure out next steps on their own. If they have asked for your help then surely you can help them with things.
            Huggy They have indeed reached out to me for help and that is exactly what I'm providing by reaching out this forum. They know that I've been doing a deep dive into learning about personal finance in the last year and have reluctantly listened to me talk about the things I've been learning. While I know that they can figure this out on their own, I've also learned that there are lots of financial advisors out there that are preying on docs. I don't want that to happen to my parents and they wanted help finding someone to help and/or references to read (books, blogs, podcasts, etc). There is lots of information out there for planning and saving for retirement, but less on actually retiring. I've pointed them to this episode on the podcast so far: https://www.whitecoatinvestor.com/ne...nt-podcast-82/ as well as the list of financial advisors recommended by White Coat Investor: https://www.whitecoatinvestor.com/financial-advisors/ Any other resources for setting up a good asset allocation for pre-retirement and then the actual transition to start drawing down from those savings?

            Comment


            • #7
              Originally posted by Hank View Post

              You also need to track down all of your accounts to make a will and trust. If your parents don’t know where all of their accounts are, they probably haven’t done proper estate planning and financial planning recently (or ever).

              Surprisingly, blowing off estate planning does not actually make you immortal.
              Hank Thanks for the excellent reminder! I have recently set up my own estate plan and was very surprised to learn (in casual conversation) that they haven't updated their estate plan in 25 years! With so many life changes that happen over the course of 25 years, I need to remind them to get this updated as well. They have each lost their parents in the last 5 years and thus know firsthand the impact a good estate plan can have. Thanks again for the reminder.

              Comment


              • #8
                Welcome OP to the forum.

                Have them join the forum themselves and dive into some of the threads and ask questions. Indeed, a good start would be to a fee-only advisor to review and setup a plan.

                To aid to that success, getting them read up on baseline knowledge and goal setting would help the advisor tailor the advise.

                Comment


                • #9
                  Welcome:
                  You actually have three challenges before you even get to the planning part:
                  1) Find all the property
                  2) Consolidate the property
                  3) Annual living expenses now and in retirement along with their assets and liabilities now.

                  These are suggestions for item 1)
                  Retirement accounts
                  Brokerage accounts
                  Pension accounts
                  Financial institutions
                  Unclaimed property (note that all of the above have their own processes before remitting to their state which sometimes is different than the state of residence) Insurance companies and utilities use this as well)
                  https://www.usa.gov/unclaimed-money Read this. You can run this for them. "Dormant accounts" typically remain open and eventually are remitted to the state.

                  Suggestion for item 2) is to pick one of each type of account and use a trustee to trustee transfer to consolidate the accounts. They need to do the legwork of calling a former employer HR and make the inquiry (yes, privacy laws will limit anyone from giving you the information). The HR can give them the contact info and set up and then they need to setup online access. Different types of retirement accounts can be consolidated to active accounts (with some restrictions)
                  https://www.irs.gov/pub/irs-tege/rollover_chart.pdf
                  Once you identify the assets it is only a matter of picking the destination and then executing the rollover (you can sell all assets in retirement accounts without incurring a tax liability. The goal is to roll over cash to one account and have it invested as desired.
                  If you identify the assets and post, you can post your consolidate plan or questions and get free answers here.

                  I will bet you a "beer" that you will find unclaimed property in excess of the price of the beer!

                  You can rough out an AA( keep it simple and post it here). Conceptually, 60/40 (stock/bond) with a 3-5 year efund (cash equivalents )of living expenses in retirement is a starting point.
                  Start with their current accounts and work backwards, giving priority to the employment that might have significant balances.

                  All of the above is legwork that you don't need to pay an advisor to do. At that point, use a fee only advisor such as David Graham that charges an hourly fee.
                  The point is pay the advisor for advice, not being the bookkeeper or hand holding.

                  You can post on behalf or your parents or they can dive in.

                  Good luck, it will take some time and effort. Pass on to your parents that they did a good job raising their daughter.

                  Comment


                  • #10
                    I would hope they at least know all the different hospitals they worked at. Presumably they get statements also. Not generally all that difficult to do a transfer to consolidate into one pot. Wonder what they're actually invested in given the broker you mention.

                    You are correct though, the information on actually retiring is somewhat more difficult to find and more complicated / individualized. I agree a cash-pay advisor / planner may be invaluable. They also will need to calculate/estimate their spending.

                    Comment


                    • #11
                      Originally posted by childay View Post
                      I would hope they at least know all the different hospitals they worked at. Presumably they get statements also.
                      This raises a great point! Depending on how many times they’ve moved, a past employer may have lost contact with your parents.

                      Escheatment sounds like a dirty word, in large part because it is. If a previous retirement or pension plan wasn't able to get in touch with your parents for a long enough time, they may have handed money over to your state government. At that point, the clock starts ticking for the money to go into the state treasury, potentially with no recourse to get it back out. Go to the National Association of Unclaimed Property Administrators (https://unclaimed.org) to see if they're owed any money. If your parents are in private practice, they might find a few payments from insurance companies in there as well.

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