Planning in Your 50s: Streamlining - Adviser Investments

Planning in Your 50s: Streamlining

March 26, 2021

From your first checking account to your current 401(k) plan, by the time you reach your 50s, you may have opened accounts with numerous financial institutions. But if you’re like most people, you may not have closed nearly as many.

When we begin the financial planning process for our clients and see an excessive number of account statements from a plethora of firms, one of the first steps we recommend is consolidation. Streamlining can help improve your investment returns, reduce fees and, most importantly, give you a clearer picture of your financial situation—a crucial step when preparing for retirement.

Here are five ways to simplify your financial life:

  1. Use fewer custodians. Trying to maintain a cohesive portfolio strategy with multiple accounts at different institutions is sure to create confusion. The best fix is to decrease the number of accounts you manage, making it easier to grasp the overall state of your finances and remain on track with your goals. This will be even simpler if you can consolidate with a single custodian. 
  2. Reduce excess cash. Your emergency fund is the foundation of your financial plan. We recommend keeping enough cash to cover three to six months of expenses. But after years of asset accumulation, you may find that you have more cash on hand than you need, scattered among multiple accounts. As a result, you’re likely missing out on years of compound growth.
  3. Consolidate retirement savings. Odds are you haven’t spent your entire career with one employer—meaning you may have retirement funds stashed in several 401(k) or retirement accounts. Leaving funds to languish in forgotten accounts often means they’re part of a stale investment strategy that’s no longer suitable for your goals. In some cases, rolling the funds into an IRA might lower your costs and improve your returns; in others, it may be preferable to stick with a 401(k).
  4. Put your estate in order. Having accounts that are streamlined, with beneficiaries listed, will help ensure that your assets pass to heirs in accordance with your wishes. It will also make it easier for your beneficiaries to settle your estate. 
  5. Avoid tax penalties. Under current law, required minimum distributions (RMDs) from your retirement accounts begin at age 72. Consolidating your retirement accounts where possible will make RMD management easier, helping you avoid tax penalties.

If you would like to explore consolidation opportunities, please contact your portfolio team. We are ready to assist.

This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.

Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged.

Past performance is not an indication of future returns. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice, nor sell insurance products. Always consult a licensed attorney, tax professional or licensed insurance professional regarding your specific legal or tax situation, or insurance needs.

Companies mentioned in this article are not necessarily held in client portfolios and our references to them should not be viewed as a recommendation to buy, sell or hold any of them.

© 2021 Adviser Investments, LLC. All Rights Reserved.

Adviser Investments' logo is a registered trademark of Adviser Investments, LLC.