4 non-investment questions to ask an advisor before retiring

Using a financial advisor for your investment needs is 100% on brand, but what about the other parts of your retirement life? For example, a third of people ages 64 and up have a financial advisor, but only 2% of them asked their advisor to help with their Medicare choices, according to a report f rom health care consulting firm Sage Growth Partners.

But Medicare and other non-portfolio topics 鈥� like travel and long-term care 鈥� can affect your finances.

鈥淲e are actively bringing these ideas to our clients, but there are still plenty of advisors out there that are not,鈥� says Crystal Cox , a certified financial planner in Madison, Wisconsin. 鈥淭hey鈥檙e still focused just on the investments and the portfolio.鈥�

Here are some questions to ask at your next meeting.

1. WHAT RETIREMENT DECISIONS DO I NEED TO THINK ABOUT?

Your life in retirement may not continue as it has in the past. Do you plan to travel? Do you intend to move to a different state or downsize? How often will you want to buy a new vehicle?

鈥淢ost people just think, 鈥業 need a certain amount of money to live on,鈥欌€� says Daniel Lash , a CFP in Vienna, Virginia. 鈥淲hat about all the ancillary things that come along with living? All the things you want to do?鈥�

Mapping your retirement plans can help you and your advisor pinpoint when and how you鈥檒l need cash.

鈥淒o you have an idea of where you鈥檙e going to move, and what does real estate look like in that general area?鈥� Lash says. 鈥淭hey鈥檝e thought about retiring, not 鈥榃hat am I going to do when I retire?鈥欌€�

2. WHAT SHOULD I KNOW ABOUT MEDICARE?

Although you generally can鈥檛 until you鈥檙e closer to 65 years old, your income in the years beforehand will affect what you pay for coverage. Each year, both Medicare Part B and Medicare Part D base their premiums on your reported modified adjusted gross income from two years prior. So if you filed individually making more than $91,000, or filed jointly making more than $182,000, you鈥檒l pay additional amounts each month.

鈥淏ecause there鈥檚 a lookback on earnings for Medicare expenditures, we鈥檒l adjust plans accordingly, because they might be paying considerably more the first couple of years in retirement than later in retirement,鈥� Lash says.

It鈥檚 also wise to consider guidance on Medicare choices in general, because you sometimes can鈥檛 change coverage later if your health situation shifts 鈥� and Medicare is complicated. 鈥淲e do an annual meeting with somebody that specializes in Medicare,鈥� Lash says. 鈥淎ll clients are invited to attend.鈥�

3. CAN I AFFORD TO SELF-INSURE FOR LONG-TERM CARE?

A person turning 65 now has about a 70% chance of needing some kind of long-term care, and costs are steep: It鈥檚 $54,000 a year for an assisted living facility and nearly $95,000 for a shared room in a nursing home, according to insurance company Genworth鈥檚 2021

鈥淪ome people are well enough off that they鈥檙e comfortable self-insuring,鈥� says Kevin Brady , a CFP in New York City. 鈥淥thers have more limited assets.鈥�

No matter what is the case, it鈥檚 crucial to discuss potential costs and whether you have the savings to manage them. If you don鈥檛, you鈥檒l need to run the numbers on products like long-term care insurance or a hybrid policy that combines permanent life insurance with a long-term care rider.

鈥淲e鈥檙e always working with an expert to do projections and see what makes sense,鈥� Brady says.

4. DO I HAVE ENOUGH MONEY TO HAVE SOME FUN?

A successful retirement isn鈥檛 always about the tangibles. For many, it鈥檚 a time to realize dreams of travel and other experiences, but spending too frugally can get in the way.

鈥淥ften clients are overly conservative for fear of running out of money, but in the process they shortchange the retirement experience,鈥� says Kevin Lum, a CFP in Los Angeles. 鈥淏y the time they realize their abundance, they鈥檙e too old to spend it.鈥�

Talk to your advisor about your big-ticket wishes and whether you have enough money to splash out a little before you settle into quieter spending.

Actual retirement spending looks more like a smile than a straight line, Lum says, with more spending at the beginning on things like travel and more spending at the end on long-term care needs.

鈥淚鈥檓 not saying people should spend irrationally,鈥� Lum says. 鈥淏ut thinking about retirement spending as a fixed calculation that doesn鈥檛 change across the retirement life isn鈥檛 a smart idea.鈥�

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This article was provided to The Associated Press by the personal finance website NerdWallet. The content is for educational and informational purposes and does not constitute investment advice. Kate Ashford is a writer at NerdWallet. Email: [email protected]. Twitter: @kateashford.