People tend to assume that I have all the answers to their financial questions just because I am an accountant. They think I can crunch some numbers on my calculator and it will spit out the “right” answer. Unfortunately that couldn’t be farther from the truth. More often than not, my answer to these questions is “It depends”. There is no “one size fits all” in real world financial planning because everyone has unique facts and circumstances. Let’s take a look at some common questions we are asked and some of the follow up questions we would ask after telling you “it depends”:
When should I take social security?
Are you retired yet? Do you need the cash flow? What does your family history say about your life expectancy? Are you married? How old is your spouse? What are both of your projected benefit amounts at full retirement age?
How much do I need to retire?
What are your current cash flow needs? What will your cash flow look like in retirement? What other goals do you have for your money? Are you married? How old are you?
What kind of asset allocation should I have?
What is your risk tolerance? What is your time horizon? What are your financial goals? What is your risk capacity?
Should I use excess cash flow to pay down my mortgage or invest?
What is your tax benefit from the mortgage interest deduction? How long do you plan on staying in your home? How comfortable are you with having debt? What are you earning on your investment portfolio?
Should I take a lump sum payment or a pension?
What does the rest of your portfolio look like? What are your expenses? When do you plan to retire? What is your risk tolerance? What does your family history say about your life expectancy?
These questions are just a sampling of what we hear from clients every day, for which we do NOT have an easy answer. The answers are unique to the person asking the question so what is right for one person might not be right for another. Rather than trying to determine the “right” answer to the question, we help you determine the “right” answer for YOU. We need to understand your situation and your goals before we can help you.
Some people might be more comfortable in retirement receiving a monthly pension, while others would rather see that lump sum invested. Some people don’t mind cutting their expenses in retirement so they can retire earlier, others don’t want to change their lifestyle at all. We can help you determine YOUR right answer to any of these questions. Just contact us and ask away! But don’t be surprised if our first response is “It depends!”