Should You Change Financial Advisors When You Retire?

Retirement will likely represent a major turning point in your financial life. During most people’s working years, they generally have a steady source of income from their job and (hopefully) have gotten into the habit of putting money away for future years.

In retirement, that pattern generally gets flipped on its head. There is no more earned income coming in (or at least significantly less), and instead of saving and adding to retirement account balances, you start withdrawing from those retirement accounts. The mental shift of having to pull from your nest egg, rather than adding to it, can be scary.

Retirement also brings new decisions. When does it make sense to start taking Social Security? What happens to your health care coverage when you are no longer employed? How much can you spend from your retirement accounts and not run out of money? How will your taxes change in retirement?

Maybe you have been working with a financial advisor, or maybe you have been managing your finances yourself. Regardless, retirement is a good time to re-evaluate your financial situation. What worked for you before retirement may not work now. Here are a few topics to consider:

Retirement Spending

With no more earned income coming in, coming up with a plan for retirement spending is vital. Do you know how much money you can afford to spend each month in retirement? This can be a daunting question for most people because there are so many variables and so many unknowns. How long will you live? What will your health be like in the later years? What will the stock market do over the next five, 10, or 30 years? How do Social Security, pension income, and taxes fit in? How much do you have in your retirement savings?

A good financial advisor should be able to create a retirement projection to help you organize these financial variables in a way that is easy to understand and that gives you a plan of action. The assumptions used in the projection should make sense to you. The assumptions should also not be overly optimistic and should account for the reality that markets, and life, do not always go the way we want them to.

Is your financial planner doing this for you? A retirement projection is not a one-time thing. Like any plan, it needs to be constantly monitored, revisited, and changed as life circumstances change.

Social Security and Medicare

Throughout your working years, you have probably looked at each paycheck you received only to see significant FICA (Federal Insurance Contributions Act) taxes being deducted for Social Security and Medicare. After all those years of paying in, you will obviously want to make sure you can receive the maximum possible benefit from these programs.

Unfortunately, Medicare and Social Security can be complex, and both have decisions and deadlines that can significantly affect your finances. For example, if you are not working and do not sign up for Medicare at age 65 during your initial enrollment window, you can face an increase in your Part B premiums for the rest of your life.

If you begin taking Social Security before full retirement age, you get to start receiving your money sooner, but you will also receive a lower amount for the rest of your life. A good financial advisor can help you navigate the complexity of these programs and help you evaluate your best options for your specific situation.


For most people, their tax situation drastically changes at retirement. It is important to make sure that the financial advice you are receiving changes as well to reflect your new situation.

During their working years, many people usually benefit from deferring taxes in order to save money while in relatively higher tax brackets. But in retirement, sometimes it might make sense to accelerate the recognition of income to take advantage of the lower tax brackets you may be in.

For example, if you retire at age 65 and have large pre-tax retirement accounts (like a 401(k) or IRA), it may actually make sense for you to take some distributions from these accounts from ages 65 to 70, even if you do not need the money yet.

The reason? The IRS requires you to start withdrawing money from pre-tax accounts once you reach age 70 1/2. By spreading these distributions out over a number of years, it is possible to lower your overall effective tax rate and keep more of your money. This multi-year planning is something a financial planner can help you with.


When you were younger, you were probably more comfortable taking a little more risk with your investments because retirement seemed far away, and you knew you would not need the money anytime soon. But in retirement, once you have started withdrawing from your hard-earned nest egg, your feelings about your risk tolerance might be very different.

A good financial advisor can help you create an investing strategy that matches your risk tolerance and can be an objective source of advice. While most retirees generally need to get more conservative with their investments over time, here at Eclectic Associates we have seen people who want to get too conservative.

With our increasing longevity, it is definitely possible to be too conservative with your investments. With people retiring in their early 60s or even 50s, the probability is high that the money will need to last for over 30 years! A financial advisor can help you balance the risk that you need to take to make your money last with the risk that you feel comfortable taking so that you can sleep at night.

These topics are just a snapshot of the many new decisions that may arise when you retire. If you have a financial advisor, make sure that they are covering these topics as part of your comprehensive financial plan. For more information on how to choose a financial advisor, read our article on the topic:

Schedule a 15-minute discovery call with a fee-only financial advisor to discuss your personal situation.

Eclectic Associates