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Question: “I am a retired, divorced, 61-year-old mom of a 24 year old. My daughter has health issues but did get a college degree, which is paid for except a $5,000 loan she begins paying this month. She works full time for $20 an hour and puts $300 per month in a retirement fund that I match one-to-one. By working in college, she put $5,500 in her savings account. My daughter drives my 2016 car that is paid off. I also help my sister with $300 to $500 per month while she’s fighting a rare genetic disease.
For my part, my home is paid off, I have $500,000 in a 403(b) account, and I owe $24,000 on a 2025 car with a loan of 4.24% for 60 months. Each month I get a taxable $1,600 retirement check which covers my $1,065 health insurance premium (which ends at 65). I also receive a non-taxable disability check for $4,300 per month and my brother pays [me] $250. But I fritter away my check each month and need direction. What kind of professional would agree to work with me and what are the most important things I should have them help me with?” (Looking for a new financial planner too? This free tool can match you to financial advisers, from our partner SmartAsset, as can sites like CFP Board and NAPFA.)
Answer: Based on the numbers and complexity of your case, after the expenses you’ve outlined, it looks like there’s about $4,000 to $4,500 per month left over for other financial needs. “A money system to help guide each of those dollars to the most impactful job it can do for you will be critical to maximize your financial capabilities,” says Andrew Rotz, a certified financial planner at Fruitful. That is certainly something a financial adviser or coach could help you with (more on that later) — but you may want to start with a budget.
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Indeed, the most important thing to do before moving forward is to consider establishing a budget for your monthly spending, says Bill Haydon, a financial adviser at Wells Fargo Advisors Financial Network. “Budgeting helps prepare and smooth out your spending but it also allows you to see expenses and possibly target them for savings and reductions or even elimination entirely,” says Haydon. “A lot of people have expenses they are totally unaware of such as Netflix accounts, subscriptions and gym memberships. These expenses are like little termites in a barn that are undetected but will eat away at your overall structure.” There are several budgeting apps and tools you could use to start streamlining your expenses like Empower, Monarch Money and Mint by Intuit.
If you want a pro to help you do all of this, an adviser should be able to create a realistic monthly budget that aligns with your values and goals, help you plan for rising healthcare costs as you approach Medicare eligibility, develop a sustainable income plan from your 403(b) and other resources, and ensure you’re able to support your daughter and sister without compromising your own security, says Gabriel Shahin, principal and founder of Falcon Wealth Planning. “They should help you set clear financial goals so you stop frittering away your check. You just need a professional who understands your life, not just your numbers,” says Shahin.
There are a few other things to consider too. “Soon you will be eligible for Social Security benefits so you would want to get your award letter to determine the best claiming strategies. Since you’re getting disability, it’ll be important to see the conditions of this benefit and how they may be reduced when you claim. It’s often required that you claim early when on disability, so it’s important to fully understand all the implications which generally begin at age 62,” says Haydon.
Regarding your daughter, congratulations to both of you on her earning a degree. “Depending on the possible term or continuation of health issues, you may want to consider a trust, particularly a special needs trust,” says Haydon. “This would be an account that would be relied upon for her longer-term health needs which can be funded by your estate whereby you would direct certain assets into the trust upon your passing to ensure her care for life.” This is something an estate planning lawyer would help you with. You can consult the Martindale-Hubbell law directory to find a qualified attorney near you.
Should you get a financial planner?
It could be helpful, pros tell us. A fee-only planner who has the flexibility to charge by the hour might be the best place to start, says Michael E. DeMassa, a CFP and chief financial officer at Forza Wealth Management. For reference, fee-only planners tend to cost between $150 and $450 per hour, whereas advisers charging on assets under management (AUM) run about 1% AUM. (Looking for a new financial planner too? This free tool can match you to financial advisers, from our partner SmartAsset, as can sites like CFP Board and NAPFA.)
A certified financial planner might be a good bet to help work out a plan that addresses both your current and future money needs and wants. “While a CFP can be expensive, there are a few lower cost options to get access to a CFP as well as many CFPs who do pro bono work to give back to their community,” says Rotz.
What’s more, there are financial coaches who can help with tactical spending decisions but aren’t typically fiduciaries and don’t have the educational background to help with longer-term and more complex planning needs. “Reach out to family and friends for referrals and do some online research for things like affordable financial planning to see if there are options that fit your needs and style,” says Rotz.
That said, Shahin says most financial professionals would be more than willing to work with you, especially considering you have $500,000 invested and a stable income. “What really matters is finding the right type of adviser for your needs. You’d benefit from working with a fee-only financial planner — someone who offers comprehensive financial planning, not just investment advice. Look for someone who acts as a fiduciary, meaning they are legally required to put your best interests first and who focuses on building long-term relationships rather than selling products for commissions,” says Shahin.
Have an issue with your financial planner or looking for a new one? Email questions or concerns to picks@marketwatch.com.
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