Not that long ago, I underwent that procedure no one my age likes to talk about. Doing all the necessary prep to get ready for the exam was bad enough. Then, I wanted to cut and run when I saw those words on the office door: certified financial planner.
But we did it. My husband and I spent several hours planning our estate with a professional, which is a pleasant way to say we talked about getting old and dying.
Actually, it wasn’t that bad. In fact, now that it’s over, I’m so glad we did the hardest thing of all: We showed up. We took those first difficult steps required to create a realistic plan that will allow us to live the second half of our lives with joy and peace instead of fear and dread. We know specifically what we have to do in the next 10 years, and as our son often quotes that great philosopher G.I. Joe, “Knowing is half the battle.”
Here’s the question that got the ball rolling: “When would you like to have the option to stop working?” Selecting a date in the future gave “Planner Bill” a frame of reference to begin creating a plan that will allow us to do that. We pulled out the documents he asked us to bring to our appointment. He did not gasp in horror or even chuckle. This was all business for him, and that was exactly the non-emotional approach we needed.
We left with a sizable homework assignment. Our venerable living trust is in need of an overhaul. We have no disability or long-term care insurance. Our investments need reallocation, as we’ve been using that ever-popular hit-and-miss approach of self-directed investing. Unlike before, when I couldn’t have held a conversation about these things, I’m ready to roll because Planner Bill is a valuable addition to our team.
Fee-Only
This type of financial planner charges a set fee, either by the hour as an attorney would, or a single flat fee. You will have your initial meeting and then a follow-up appointment in which the planner will hand you your own customized estate plan. Then, the planner walks away, and it’s up to you to implement the plan, which can be daunting.Fee-Based
This type of planning is the same as the fee-only arrangement, except for the part about having to implement it yourself. With a fee-based plan, the up-front fee is usually less, and the planner is compensated through commissions earned on financial products the client purchases. This is the arrangement we have with Planner Bill.Product-Based
In this arrangement, the planner doesn’t charge an upfront fee, but receives all compensation through commissions on the financial products he or she recommends.Get Out of Debt
If you are carrying unsecured debt, this is the first thing any planner worth his door plaque will tell you: Get rid of your credit card and all other unsecured debt. Easier said than done? Maybe not. Read my book, “Debt-Proof Living,” and I will teach you how to get out of debt quickly and relatively painlessly.Start Saving
You will need a savings account with at least six months of living expenses in it. Start saving now, even if you are in debt and even if you think you can’t. You can. You have to!Know Your Benefits
The Social Security Administration updates a projection of your retirement benefits every year. You can find this at SSA.gov/mystatement. Lock eyeballs with those projected figures to keep you motivated to save, plan, and invest. Don’t plan to live on Social Security.Keep Good Records
Figure out a simple filing system where you can keep your important papers: your mortgage, insurance policies, wills, and investment statements. It will be a real pain to try to find all of these important documents on the day of your appointment.There was a time not so long ago when I would’ve preferred to shove toothpicks under my fingernails than meet with a financial planner, but I’ve changed my mind. In fact, I'll take a meeting with Planner Bill any day over one of those appointments that involves weight scales, blood pressure cuffs, and the snapping of rubber gloves!
