Ben Howarth is a financial adviser and financial services representative with the Barnum Financial Group, an office of MetLife and a part of the MetLife Premier Client Group. The firm was named MetLife’s Firm of the Year in both 2012 and 2013. Howarth is a graduate of Bryant College where he received a Bachelor of Science degree with a concentration in finance. He is based in Warwick and conducts numerous workshops on retirement planning for employees at Rhode Island businesses as part of MetLife’s PlanSmart financial education series.
PBN: The financial markets are off to a volatile start in 2015. What do you say to your clients who might be concerned?
HOWARTH: Volatility can be a reminder to check your goals and risk tolerance. It’s always a good idea to have a plan in place to help gain clarity on what you want to accomplish, determine where you are in relation to those goals, and then to sit down periodically with your adviser or other financial professional to make sure you are still are on the right track. It is important to determine if your asset allocation still makes sense, if any rebalancing is necessary, and if your liquidity needs are met. Comprehensive retirement planning is an ongoing journey, not a one-step process. Things change from both an individual and family perspective, and that may impact investment options. However, don’t let volatility deter you from investing – you may just need to be even more proactive in your planning approach.
PBN: Volatility aside, what should employees and employers be thinking of in the realm of financial planning and retirement?
HOWARTH: I conduct MetLife’s PlanSmart workshops for many employees onsite at a number of Rhode Island companies and non-profits, and one thing I stress continually is the necessity in today’s environment to have a plan. An employee may contribute to a 401(k) or 403(b), an executive may have a profit-sharing plan, a small business owner may have an SEP, but none of that is a substitute for having your plan in place. It should be shaped to meet your unique goals and objectives. A secure retirement is something all of us want, of course, but there can be other goals along life’s path that require planning as well.
PBN: What are some of the most frequent questions you get from clients or those attending employee workshops?
HOWARTH: One question is something I just mentioned – how to invest today for multiple goals across different time frames. For example, saving for a child’s college education may be an intermediate-term goal, and having adequate savings in retirement is a longer-term objective. Homeowners often want to know whether to pay off a mortgage more quickly or to invest that money for retirement. When to take Social Security is an issue that always comes up as people near retirement and, of course, there are plenty of concerns about health care and long term care expenses as we get older. People are living longer today, so it takes more planning to make the money last. The answers to all of these questions will vary depending on the individual’s circumstances.
PBN: What should employees be thinking about if they already have a retirement savings plan at work?
HOWARTH: Recognize that when it is time to retire, your employer’s retirement savings plan may provide the largest check you will ever see. Try to make it as large as possible. Even a small, one percent increase in a qualified plan contribution can have a big impact over time. It is important, too, that underlying investments line up with the employee’s risk tolerance, objectives, and time horizon. And just because you have an employee benefit plan, don’t pass up an opportunity to save in other vehicles like an Individual Retirement Account, for example.
PBN: If people have an estate, should they be considering estate planning?
HOWARTH: Almost everyone can benefit from an estate plan, regardless of the size of the estate. Estate taxes and the desire to leave a legacy are an important motivator for creating an estate plan, of course, but there are also plenty of other common-sense reasons. For example, parents who neglect to put an estate plan in place and pass away unexpectedly are leaving the ultimate choice of guardian up to a probate judge and potentially inviting family disputes. They are also giving up the chance to create a trust to hold their children’s inheritance. I think we can all remember back when we were 18 or so. It probably wouldn’t have been a great idea for us to get a chunk of money with no restrictions on it. There are ways in estate planning to put safeguards in place to help ensure that assets are spent wisely. Another good reason for estate planning is that, in the right circumstances, it can be one of the most effective ways to provide protection against the rising cost of long term care. In other words, estate planning is a must-have discussion with one’s attorney and financial adviser.