By Jessica Lanning, JD, CFP®

July 5, 2022

There’s a line from the 1964 film Zorba the Greek, where Zorba (played by Anthony Quinn) upon asked if he is married, replies, “Am I not a man? And is not a man stupid? I am a man, so I’m married. Wife, children, house – everything. The full catastrophe.” It’s intended as a joke…. Laugh.

If you’re engaged in your own “full catastrophe,” it’s now time to tackle the grown-up checklist that comes with it: financial planning, taxes, estate planning, buying insurance, perhaps running a business.

Sure, you can do it all yourself, most likely to your own peril. Or, hire help.

Who To Hire and When

The following is a list of experts who can assist you with making sure your bases are covered, your affairs are in order, and confirm along the way that things are running smoothly. In most cases, the adage that you get what you pay for is true. Don’t overpay, and certainly hire wisely.

Hazard insurance agent

What this person does: They help you find homeowners’, renters’ or auto insurance. They also insure boats and RVs. They can also help you determine how much of an umbrella policy you need.

When to hire: You probably already have an agent if you’re a licensed driver with a car. Then, add on more policies as life changes and you need them — when you’re buying a home, after your first child is born (or when you become a pet parent/custodian), when you buy that boat or RV, or when you start using your car for business purposes.

Why you want a professional: Advertising suggests that you should choose your insurance agent based on the premiums (price) of the policy. Wrong. What’s more important is hiring an agent/company who is going to be there during the claims process should you have a loss.

Those people are truly worth the price differential. They will lower your anxiety and hold your hand along the way.

Also, if you have most/all your policies with one agent/company, you will get a multi-policy discount, and even more importantly, that agent can identify any gaps in coverage. The last thing you need is to think you’re adequately covered and not be.

Tax Preparer/CPA

What this person does: This person helps you with your taxes, including preparing and filing your tax return. This person should also do tax planning with you to minimize taxes both now and in the future.

When to hire: You can probably do your own taxes if you are simple — that is, you have a salaried job with a bonus, own a home, and have a spouse and kids. Once you get more complex — have stock options, investment property, own a business, etc. — you need to hire help. You will work with this person at least twice a year and probably more often.

Why you want a professional: Being successful financially is about making and saving money but it’s also about not losing money. Taxes are typically the biggest line item in a household spending plan (budget). Preparing taxes is as much of an art as it is a science. Lowering your tax bill means having more money to save or spend on other things. Staying within the good graces of the IRS is a good practice. Having an advocate should the IRS come calling is critical.

Life insurance agent

What this person does: This person helps you choose a life insurance policy and/or annuities that meet your needs

When to hire: When you have people depending on you financially, such as a spouse or child. You may also want to consider buying life insurance if you have significant debt, such as a mortgage or student loans.

Why to hire a professional: When you’re getting started in life, a simple term policy may be all that you need and can afford. You need someone who can determine how much that should be and explain to you other options as your income increases and your life gets more complex.

Permanent life insurance allows you to build an asset that you can use for a variety of reasons in a cost-effective and tax-efficient way that can be of a huge benefit to your family. It’s going to look pricey.  Someone is going to tell you to “buy term and invest the rest.”  Careful.  Do not overlook its opportunities.

Estate planning attorney

What this person does: This person helps you plan for the distribution of your assets should you become incapacitated and after you die. This might include creating a will, living trust, health care directive or powers of attorney. There’s no worse intersection on this planet than death, family, and money. Having the proper documents in place will save your heirs time, money, and anguish. It’s a great act of love to your family to get this done.

When to hire: After you’ve accumulated assets (a house, savings, retirement accounts, investments), gotten married, or if you have minor children. You should also consult with an estate planning attorney if you’re in a second marriage and have children from a previous marriage.

Why you want a professional: Sure, you can do this online or use your company’s legal support benefit. Nothing, however, will replace personalized attention and making sure these documents reflect the most recent laws, conform to your wishes, and actually get completed.

Business attorney

What this person does: This person helps you with the legal aspects of running a business, such as incorporation, contracts, and leases, preparing a business for sale, and keeping employment and legal issues to a minimum. These people typically work with lots of other business, and the “cross-pollination” of advice from one to the others is invaluable. They can keep you out of trouble and in a creative, profitable trajectory.

When to hire: When you’re starting a business. If this person cannot scale with you as you grow, you’ll need to hire another one who can handle more complex issues as the business gets bigger.

Why you want a professional: Again, you can do business formations yourself, but you will learn little from the process that will need to be repeated, the cost to set up a business is not that high, and you want to build the ally. Business owners tend to see their attorney as a partner in their success. Don’t deny yourself that support.

Financial planner

What this person does: This person helps you plan for your financial future, which might include saving for retirement, investing, buying insurance or paying down debt.

When to hire: When you have specific financial goals you want to achieve, such as saving for retirement or college, or when your finances get so complex that you need the additional set of eyes and brain cells.

You might also want to consult with a financial planner if you receive a windfall (inheritance, bonus, etc.), or experience a major life change.

Why you want a professional: Unless you want to spend your free time becoming a financial planner so you can do everything yourself, get someone in your corner to help. A financial planner can also be your “general contractor” to hire all these other experts as “sub-contractors.” Financial planners are excellent at identifying who you need to hire and when. As your assets grow, that person can be making mid-flight corrections with you and increase the chances of your financial success.

Social Security and Medicare specialist

What this person does: This person helps you understand how Social Security and Medicare work, and how to make the most of these government programs.

When to hire: If you become disabled, when you’re 60 years old and probably again at 64 years old. and want to know how to maximize your benefits under both programs that makes sense for your particular situation.

Why you want a professional: The rules for Social Security and Medicare are Byzantine, ever-changing, and there are lots of ways to “game” the system. You want someone who knows how to do that so you don’t have to and can get the most out of these programs. This is particularly true if you are married.

Elder care/long-term care specialist

What this person does: This person helps you plan for the care of your or an elderly family member, which might include in-home care, assisted living or a nursing home.

When to hire: When you have an elderly family member who needs assistance with activities of daily living, such as bathing, dressing, eating or using the bathroom. You should seek a consultation about long-term care options when you become seriously ill or when you turn 60, whichever comes first.

Why you want a professional: Making long-term care decisions is difficult and rife with pitfalls that you cannot see because you don’t do this every day. You want to make the most conscious decisions you can about your care when you have the cognitive and financial ability to do so. When those abilities go away, someone starts making those decisions for you.

Surround Yourself With Good People

When hiring any of these professionals, do your research and your due diligence. Ask friends and family for referrals. Ask good questions. Do not be afraid to have multiple meetings before you engage in a contract. This is your life and your money. These people should be helping you make good, conscious decisions about both. If not, move on.

As Zorba reminds us, being an adult comes with a lot of responsibility. But it doesn’t have to be all doom and gloom. By assembling a team of experts to help you with the various financial aspects of your life, you can take some of the stress out of being an adult. And, who knows, maybe even laugh along the way.

If you need a referral to any of the above professionals, please reach out.

Lanning Financial Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

Pick a date!

You can’t predict the future, but you need to start somewhere. Retiring at 65 is no longer the default. Your target age should stem from your values, so revisit or define them.

Ten years out

This is a time to get a reality check on your financial life and start to envision what retirement will be like.

• Time to take a basic retirement planning class. Look to your local community college, retirement system pension planners, or professional organizations. You’re not trying to become an expert or nail down your plan. But you are trying to figure out what you need to know and what you need to think about.
• How much money have you saved in a 401(k), 403(b) or other retirement account?  Do you need to save more?  Will you need to work longer?  Do you need to adjust your allocations to make them more aggressive or (more likely) conservative
• Will you get a pension? When will you reach the vesting requirements?  How much will you receive? How will it be paid out? In a lump sum, monthly, etc.?)
• Do you have a copy of your Social Security statement? How much can you expect to receive?
• What other assets and investments can contribute to your retirement? Are there any potential drains on your income?
• Start having conversations with your close friends and family members about your vision for your “retirement.”  How do you want to spend your time?  What skills might you want to keep using in part-time or volunteer work?

 Five years out

• Revisit the questions from 10 years out.
• This is a good time to start a journal. Take some of those daydreams you put away and make them more specific. For example, rather than “spend time with grandkids,” you might write “spend two dinners a week with grandchildren.”

 Two years out (or less)

Time to get serious.

1. Make sure your partner/spouse is involved, if you have one and they aren’t already. Communicate and negotiate with them about how you expect to spend your days and money.
2. Hire a financial planner if you haven’t already done so. You want a fiduciary. The Financial Planning Association is a great place to find one.
3. Create a realistic budget. Figure out if you’ll need to work for income or where you may need to cut back on expenses.
4. Figure out when you’ll take Social Security, whether and when you will sign up for Medicare, etc.
5. Turn that “stake in the ground” into a real retirement date. Put a date in the calendar to retire, whether you share this with your employer or not.
6. Get more specific about how you’ll spend your newly found time.

 I often say it’s not about the plan, it’s about planNING. Life happens. Mid-flight corrections are necessary, and you can’t schedule those.  But following this schedule will help minimize the changes and the surprises.

Take the pressure off!

You do not have to have all of the answers now, so start by separating the financial part from the how-to-pass-the-time part. I often tell clients who are “stuck” on how to begin planning for retirement to focus on the first three years and then on the last three years. This takes the stress out of a big question like, “What the heck am I going to do for 20-30 years?!”

For the first three years, write down the collection of projects you want to get done. This often leads to a very satisfying feeling of purpose and direction. It’s like you’re still working, but you’re working on the stuff you want to work on and have been putting off. I’ve had clients travel for a year, remodel homes and take care of grandchildren, to name a few.

Then write down your ideal last three years, which are also usually easy to envision. These are typically slower, easier, quieter. This part also comes with specifics, such as:

• where you’ll live,
• who you’ll rely on for companionship and support,
• how you’ll want to manage your physical slow-down,
• how you want to be cared for and who will take care of you, and
• how you’ll feel at the end of each day

This process helps you figure out how much money or assets you need to set aside to meet these criteria, which will help build the financial part of your retirement plan.

Now for the years in between. I recommend making a list of the skills you want to keep using. This will likely have far fewer specifics than the first or last three years. That’s fine. For instance,

• I’ve had teachers that want to continuing teaching, so they consider tutoring.
• Those leaving executive positions find there are all kinds of nonprofit boards looking for expertise in leadership, development and managing a budget without having to manage employees.
• Some people enjoy mentoring others and find places to create those relationships.
• Talk to others who have retired. Keep your networks going with people who are or are not in the workforce. You don’t need to know exactly what you want to do, but it’s helpful to identify those skills of which you are most proud, most willing to “give away,” and most likely to energize and satisfy you.

In my experience, most people take two to three years to settle into a “retirement groove.” They tackle all of their projects early on, then they hit the end of that list and it takes a while to figure out how to spend their days. Even those who have done a “whole lotta nothin’” in the first year of retirement realize they want to make a change in how they spend their time. This is typical and normal. I also find it takes two to three years for the budget to work itself out. Rest assured, both how to spend time and how to spend money do work out. And both begin with figuring out how to spend the first three years and how to spend the last three years.

You must make your own path

Start here:  It’s not your fault.  Your parents probably had their retirements built this way:

     • By the government (Social Security)
     • By their employer(s) (a pension)
     • By their savings (what they saved)

But your retirement probably looks more like this:

     • Your savings (maybe a 401k plan)
     • Your savings
     • Your savings

Not only is this a daunting proposition, but the people who probably help you with advice about many things (your parents) are often unable to help you at all in retirement planning because what they did won’t work for you.  As a result, this generation is a little lost.  Not your fault.  But it is your responsibility to recognize that you may need some assistance and help in learning what needs to be done, when and how.  Read.  Ask questions.  Do research.  This is your life and your money.  You can do this.

And, well, that’s what I’m here for.  I can help, too.  Let’s get started.

Finding the right retirement income sources

What about the government?  Will Social Security income go away?  Hard to say.  Social Security income is a huge political football that no one wants to drop or be accused of ending.  As workers (a large electorate), we pay into the system and would like to see money out of the system.  Yet, the Social Security statement itself discloses that it predicts to pay on 78% of benefits in 2037 (http://www.ssa.gov/mystatement/currentstatement.pdf).  Even my clients in their late 50s don’t think they’ll get a dime of Social Security.  Here’s my take:  If it’s there, I want my clients to get their share and have that share be taxed as little as possible.  That takes some planning now.

What about employers?  Will employer pensions ever come back into vogue?  Unlikely.  They’re expensive and complicated to manage.  Employers faced with rising costs (medical insurance being high on that list) are looking to give retirement income benefits as cheaply as possible.  In years past that has meant the 401k, which for most highly compensated employees and business owners is inadequate.  The 401k was never intended to be the sole retirement benefit. It was designed to supplement the pension offered.  Even if my clients fund a 401k, we have to find alternate investment vehicles.

What about personal savings?  No one feels they’re saving enough.  That might be true.  Only to make it worse, no one feels like they made any money with their investments in the last 10 years.  There are many solutions here besides winning the lottery (and, by the way, if this is your solution, remember that you have to play to win – it’s always about the follow-through).  One of the tricks, I believe, is to find retirement income sources that provide tax-free income.  No, not the Roth IRA which most Bay Area families don’t quality to fund, and even if they did, they’d only be able to put away $5K.  Business owners (especially of C corporations), in particular, have potentially one of the best strategies to make this happen.  The other trick is to find non-stock market related investments.

The government might create a universal retirement funding plan.  You might win the lottery.  Or, you might just explore some of your personal savings options.

The following statements are not true

The mortgage business is a highly commoditized, highly competitive place.  I have no illusions about that.  I did however get lulled back into an illusion that every mortgage salesperson has the same level of advice, expertise, and service that Scott and I do.  That illusion has been blown, once again.  There’s nothing better than a respectable competitor to learn from.  There’s nothing worse than dealing with a “peer” that you’d be afraid to be seen eating lunch with.

I would never hire the person on the other end of the phone based on personality, but I’ll leave the personal out of this.  This poor sot probably has to deal with 20-50 calls like mine every day because he was well practiced, down to the verbal tics, in handling all my questions and objections.  However, I would never advise anyone to do business with him or his company because his sales tactics included the following paraphrased sentences, none of which was true:

     * You’re getting the best rate and preferred treatment because you were
        referred by your existing lender. (May grace befall upon the borrowers
        who are not preferred.)

     * You’re getting the best rate because we’re not a middleman and we go
        direct to Fannie Mae and Freddie Mac to get the best rate for you.

     * You’re getting the best rate because you qualify for special government
        programs, and we’re one of few companies that can offer these
        programs.

     * I can guarantee that we’re providing you the best rate.

     * I’ve closed over 1000 loans, and therefore I have the experience to tell
        you that this new loan is in your best decision you could make.

     * Why do you need to waste your time confirming with someone else who 
        doesn’t have experience in the business that I’m offering the best rate? 
        You’re a busy person.  Why don’t we just go ahead and wrap this up.

     * I’m a busy person. I was working on several other applications when
        you called.  I didn’t expect this call from you today.  I’m going to be
        busy tomorrow.  Can we set up a time when you’ll be around so I can be
        sure to reach you to follow up?

No sensitivity to the fact that my friend is sick.  Apparently not enough experience to notice the fact that my friend is in her upper-60s and might be receiving Social Security Income to quality.  And clearly not confident that he was offering the best deal because he was pushing for the commitment so hard it finally repulsed me.  It wasn’t even my loan, and I have pretty thick skin.

The lesson? If you have seniors in your life, make sure they get help with their financial affairs. The world moves very quickly, they often make decisions much more slowly, and they require more time to digest information and comprehend it.  Our culture wants speedy decisions, not quality ones.  The second lesson:  Don’t believe everything you hear from your own lender.