Question: Hello, I am e-mailing to get advice on my Mother's upcoming retirement. She is 53 and has worked at Publix Supermarkets which is a privately, employee owned corporation for the last 34 years. She is considering retiring early due to the physical demands of the job. She has a little over $500,000 worth of Publix stock and she owns her home in Florida free and clear with a value of about $200,000. My question is how I find a trusted financial adviser/planner that can help her weigh her different options as it pertains to her retirement. I am always nervous about financial planners trying to put you into something that isn't truly in your best interest.
Some of the big questions I would have are:
How much will early retirement truly cost her?
What is the best way to plan for assisted living if the need arises?
Should she diversify her stock holdings?
Sincerely, Rob, Saint Paul, MN
Answer: These are all good questions. I want to focus on your last one: Yes, your Mom should diversify her stock holdings. The most telling example of the risk in having your retirement nest egg in one stock is Enron. Many of the employees in the high-flying energy company put a large percentage of their retirement money in Enron stock. When the Enron boom went bust so did their retirement portfolios. The strategy isn't a knock on the company. It's that the risk of tying up so much money in one company is too great. I would definitely recommend that she diversify..
Another reaction: Right now, your Mom is ready to leave her job. It's time to go. But she's still young and could easily live another 40 years. With that timeframe in mind, a critical part of her "retirement" plan should be how to earn an income during the so-called retirement years. I've called it the "job-tirement." For some people it's a different way to approach the last third of life, a mix of part-time paid work and part-time voluntary work. For others, the embrace of a job-tirement reflects the need for a steady income to supplement savings. Often, it's a mix of the two, a desire for community and a need for income.
Who should you work with to help your Mom with a plan? If you want to work with a professional, it takes time and research but I would definitely look into hiring a fee-only certified financial planner (CFP). The best way to find a planner is by networking. You can also go to the website of the National Association of Personal Financial Advisors. Another resource is the Financial Planning Association. This post goes into detail on what to expect and what to look for in a financial planner.
If you want a more DIY approach, look at Henry Hebeler's Getting Started in a Financially Secure Retirement. His website is Analyzenow.com.