Get Organized to Make Retirement Easier

August 17, 2023 | David Edmisten, CFP®

Have you ever wished your financial life was less complicated?  

Do you find yourself spending a lot of time logging into a lot of different accounts?  

Do you have some financial accounts that are hard to keep track of?  

Do you ever wonder if all of your accounts are aligned together to help you meet your goals in the most effective way?

When I meet with new clients who are thinking about retiring, one of the areas we spend time on is helping to get their financial accounts organized.

Many of the people I meet with have had more than one job over their careers. They’ll typically have several retirement savings accounts spread across different places. 

Sometimes, it can be a 401k from one or more previous employers. If the client has rolled a 401k over to an IRA in the past, they may have Rollover IRA accounts at various brokerage firms. They may have also started their own Traditional or Roth IRA for additional savings. And if my clients have moved, or switched financial advisors in the past, they may have several accounts at multiple institutions.

Along with the retirement savings accounts, most of the people I meet with have one or more checking and savings accounts. They often have taxable brokerage investment accounts as well. There may be other accounts that were inherited from family. There can also be stock accounts for stock options or employee stock purchase plans from the companies they worked for.

Pensions, annuities, and deferred compensation plans can add even more complexity to the number of accounts someone has to manage as they approach retirement.

One of the first steps we take with new clients is to put together an inventory of all of their various financial accounts. 

We then take some time to help simplify things and create a roadmap of how we can consolidate and combine account where we are able. There are always important things to consider before consolidating accounts. Are there tax implications, potential penalties, or higher costs that will result from consolidating accounts?  Conversely, are there costs savings, a wider range of investment options, or easier ways to view or manage accounts if they are consolidated?

Wherever it is prudent, and in the client’s best interest, we will work to consolidate accounts to the simplest form possible. This provides a couple of key benefits for our clients.

First, it is much easier for our clients to visualize and monitor their finances when things are as simple as possible. We try to keep accounts in as few institutions as possible and we provide a client portal where all accounts can be aggregated. This helps our client see everything with one login and all in one place. It’s much easier for them to understand where they stand when their finances are organized in a simple manner.

Second, it helps make retirement spending plans simpler and more effective. At retirement, we try to provide our clients with a very simple retirement income plan. Generally, we are going to have a single cash account that provides the monthly income needed for each client.

But there is a great deal of coordination that is needed to ensure we are maximizing the opportunities present for each client. 

We want to help them earn the most interest on reserve assets. 

We help our clients manage retirement withdrawals in the most tax-efficient manner to help keep their tax bill low. We review each type of account – pre-tax, taxable and Roth – to ensure we are maximizing the current and future benefits available in each type of account. 

We spend time reviewing which types of assets are held in which account for tax-efficiency. We set up a retirement cash flow timeline, so we are always prepared for the spending needs each year, and the available sources of income. It is much more difficult to optimize our client’s retirement income when accounts are spread out in a lot of different places.

Third, it saves our client’s time. When everything is in one place and with a clear, defined process, out clients don’t have to spend time coordinating multiple accounts in many different places. Decisions are clear, the overall financial status is clear, and our clients can use their valuable time for more meaningful activities than sorting through a lot of accounts.

Fourth, it gives our client’s and their families confidence. We help our client ensure they have track of everything and there are no old accounts that have been missed. Our clients can quickly see what their financial picture looks like, where their income is coming from and share that with their spouses or loved ones if they deem appropriate. If life presents an unexpected challenge, having a simple financial structure makes it very easy to make adjustments to keep their plans on track. And in the unfortunate situation where a client passes away, having a simple, organized financial life helps make the transition for their loved ones much less complicated.

If you know you could use some help getting organized, or you aren’t sure that your financial accounts are set up in the most simple and effective manner, schedule a call with us. We are happy to help you make things simple and clear, so you can free up time and have a higher level of confidence when you are ready to retire.

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About the Author:

David Edmisten, CFP®, is the Founder of Next Phase Financial Planning, LLC, a financial advisor in Prescott, AZ. Next Phase Financial planning provides retirement, investment and tax planning that helps corporate employees retire with both financial and lifestyle security.