A Retirement Institute Will Help Financial Advisors Understand How To Plan For The Future

Many Americans worry about retirement planning

. Financial advisors with a certificate from a retirement institute can help navigate the complexities of retirement planning. About 50% of US workers over the age of 45 do not know what they need in order to retire comfortably, and about 20% of employees end up retiring later than they had originally planned. Future retirees look for other ways to increase their income with such things as reverse mortgages, early social security, and de-risking investments.

A reverse mortgage allows you to convert a portion of the equity in your home into cash. The equity that you have built up over the years can be paid back to you. According to Reverse Mortgage Insight, the top three reverse mortgage lenders for 2011 were MetLife Bank, One Reverse Mortgage and Urban Financial Group. Origination fees with lenders can be as high as 2% of the home's value, capped at $6,000. Closing costs are frequently an additional 2% and there are mortgage insurance fees charged by HUD. The interest rate charged on these loans is generally higher than the rate someone would pay with a traditional fixed-rate mortgage.

Those who partake in a retirement study may inform clients to choose to take Social Security benefits early. However, if someone whose normal retirement age for Social Security is 66, taking benefits as early as 62 can lower the value of their benefits by 25%. On the other hand, starting to receive benefits after normal retirement age may result in even larger benefits. With delayed retirement, a person can receive his or her largest benefit by retiring at age 70. Although many retirees don't have the financial flexibility to push back Social Security benefits, those who do have that flexibility still have a decision to make. There exists a trade-off between receiving benefits for a prolonged number of years versus the cost of permanently reduced financial benefits.

Planners who choose a retirement study advise clients to invest in stocks and mutual funds. Since the end of 2008, a point in time when the financial crisis was near its worst, investors took out more than $105 billion in stock ETFs and mutual funds than they put in. During 2011, investors withdrew a net $34 billion in large cap stock funds. Yet, since the end of 2008, investors have added more than $55 billion to sector funds (including $12 billion in real estate funds). The question is: "Has de-risking turned into re-risking?" Between 2006 and 2011, college and university endowments cut their holdings in U.S. stocks from 25% to 16%. These same institutions have also increased their holdings in alternative investments (e.g., hedge funds, private equity, and real estate) from 40% to 53% of their holdings.

If you are interested in retirement planning, you can obtain a certification from a retirement institute. Clients expect diversified long-term investment strategies from their financial advisors. Since retirement is a touchy subject for most, using terms such as "portion," "long-term," "knowledgeable," and "comprehensive" will put clients more at ease. With the existence of many financial options, advisors and clients can work together and decide on the best retirement option.

by: Cory Bowman

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