While the Senior Citizens League's Social Security and Medicare policy analyst Mary Johnson knows more than a thing or two about the subtleties of retirement planning, she nonetheless works regularly with a financial advisor. She has for years, in fact.
That may be surprising for some people to hear, Johnson recently told ThinkAdvisor, but the simple truth is that even those with a wealth of financial knowledge can benefit from having a trusted sounding board and access to outside expertise. This is especially true in the run-up to retirement, something Johnson is herself currently experiencing, having revealed her plans to retire from the advocacy group in March.
Johnson announced her decision alongside the release of an analysis showing that millions of Social Security beneficiaries are facing an "inflation rollercoaster" in 2024. At the same time, many may be learning that they owe taxes on their Social Security benefits for the first time — thanks to sizable cost-of-living adjustments in recent years and a related quirk in the tax laws — putting additional strain on cash-strapped older Americans.
Now, these closely studied planning challenges have changed from an abstract matter to a personal challenge to overcome, Johnson said. As recounted in the interview, the support of a skilled planning professional can make all the difference, particularly when the markets are volatile.
"For a long time I couldn't really imagine retirement, because I have loved my work," Johnson said. "Soon, it will be time for me to take my advice and learn how well it works in real life."
THINKADVISOR: Can you tell us more about your decision to retire? Was this something you have been thinking about for a long time?
Mary Johnson: Last July I sent a letter into our executive director Shannon Benton, telling her about my decision to retire in March of 2024. It was a really hard letter to send, because I love my work and I know how much the League is doing.
But on a personal level, this has taken years of preparation, and that is essential for a successful retirement. You don't start planning for retirement the day you make your announcement. Frankly, I've been thinking about this for 20 years, for example by ensuring that I am putting enough money into my 401(k).
I had also set up my own worksheets comparing Social Security claiming ages and the amount of my estimated benefit. Going through the exercise reminded me of how important our work is at the League.
There are lots of people out there facing this question who don't have the expertise that I do. How long do I work? When do I claim? Is it better to claim right away? Do I wait for 70? Do I work until required minimum distributions are required to start?
Have you done all the planning work on your own? Or have you relied on a financial professional at any point?
I did work out my own kind of optimal claiming strategy on my own, but I also worked with an advisor on other things, for example to ensure that I will be receiving the appropriate required minimum distributions. The RMDs plus Social Security will provide my retirement income.
I've actually been working with financial advisors since even before I had extra money to invest. Years ago, I served as my grandmother's guardian, as her power of attorney, and we had various attorneys and planners involved there. She didn't have a ton of money, but she did have a lot of property.
Her estate was actually open for 10 years because of some complications, and it was a lot of work to get her estate closed. That experience taught me the importance of seeking out expertise, and I've had planners at my side really ever since that experience.
It's about having someone to talk to and bounce ideas off of. In my particular case, it is a special relationship, because they have allowed me to use my own research and analysis skills to manage my own portfolio — but that has made it all the more important for me to discuss each and every trade and decision.
