Do Federal and State Employees Need a Financial Advisor?

As a federal or state employee, you have access to excellent retirement systems that provide access to historically well-performing funds, come with employer match, and pensions. However, what your retirement income actually looks like is up to you. You are largely left to figure out how to invest, the amount of risk to take on, and how to adjust as you close in on retirement.

That can be a scary prospect.

The federal and state retirement systems are very DIY, which can leave you feeling overwhelmed and worried that even as you save diligently throughout your career, you don’t know if you’re doing everything you should to ensure a successful retirement.

Your financial future, including retirement, is too important to leave to chance. You need a professional approach. A fee-only financial advisor is someone worth considering because unlike other advisors who sell products and make commissions, these types of advisors are paid a set rate for the services they provide. They don’t have the embedded conflict of interest to make a sale on a financial product that may or may not be in your best interest.

Here is why you as a federal or state employee should absolutely consider hiring a fee-only financial advisor.

1 – A Fee-Only Advisor can provide robust financial planning no matter where your funds are held.

As a federal or state employee you get access to benefits and retirement offerings that are unique to government employees. While it can sound like great news, it also paves the way for confusion, especially since your options depend on your role, branch, post, years of service, etc.

Federal and state employees often make the mistake of not even considering a financial advisor to help them manage their wealth. Because your assets are saved in federal and state systems, you may think no advisor will work with you because they won’t be directly managing your money on their platforms. This is not true.

Today, there are many fee-only financial advisors that offer stand-alone financial planning services that don’t require direct asset management to qualify.

2 – Fee-Only Financial Advisors can make sure you won’t overpay on your taxes in retirement.

Tax diversification is one of the most overlooked retirement planning strategies by federal and state employees. You likely aren’t aware of how to diversify in the first place or what tools are available to you within your retirement system.

Many federal and state employees have access to tax-deferred retirement accounts like traditional IRAs and 401(k)s, TSPs, 457(b)s and 403(b)s. However, you also have access to tax-exempt accounts like a Federal Roth TSP or a State of Alaska’s Roth Deferred Compensation plan.

Knowing which accounts to take advantage of and which to disregard is a challenge. The last thing you want to do is give away too much money to the IRS when you could have bolstered your retirement.

You need a unique perspective that takes into account your specific situation and goals. This is where a fee-only financial advisor can save the day and set you up for a predictable, secure, tax-responsible retirement.

3 – Fee-Only Financial Advisors can help you clearly understand your full financial picture and maximize your opportunities accordingly.

It’s hard to plan for retirement when you can’t see the big picture.

As a Federal or State employee, your retirement savings is only one piece of the puzzle. But what about your spouse? If they are also a federal or state employee, or even if they are working in the private sector, it’s very likely that no one has ever taken a look at everything you’re doing (and not doing) to collectively build toward the future you want.

The same thing applies to your children and grandchildren. The financial decisions you make now will impact future generations. At the very least you don’t want to be a burden to those coming after you, but you also want to have an inheritance mindset that fortifies your legacy.

The future has a way of sneaking up on us. A little planning now goes a long way in determining what your life and wealth looks like in your later years, like retirement and beyond. By working with a fee-only financial advisor, you can discover and take advantage of many different opportunities for wealth building and financial security.

4 – Fee-Only Financial Advisors help you avoid mistakes

The markets are constantly changing. When you’re making all the financial decisions, it can be easy to let these sudden changes infect your wealth-building commitment.

For instance, you’ve likely not been immune to the emails from financial “gurus” when the market dropped and someone told you to take all your money and put it in the G Fund (if you’re a federal employee) or the State Street Money Market or Stable Value Fund (if you’re a State of Alaska employee), otherwise known as Cash Funds. When you pull out of the market, it’s nearly impossible to know when to jump back in, and you can severely limit your growth potential by getting it wrong.

As a federal and state employee, you’re probably used to getting general tips and advice on what to do with your money. However, your money is so personal, and you definitely shouldn’t be making life-changing choices based on someone’s general feeling about the markets on any given day.

A fee-only financial advisor will help you make the best decisions at the right time and avoid costly mistakes. More than anything, they will give you professional guidance on which to base your financial moves as the markets fluctuate.

5 – Fee-Only Financial Advisors can help you plan for what comes next

Retirement can just be seen as a term used to describe the next season of your life. Not everyone plans on slowing down or even to stop working. Whatever “next” means to you, you need a plan in place to enable it.

Depending on what position you hold in the federal or state government, you may be eligible to retire at a certain age or after so many years in service. In some cases, you may also be forced to retire at a certain point.

Knowing the best time for you, personally, to retire is invaluable. Your stage of life will determine what your retirement is going to look like. Will you be 50 with three kids just getting ready to start college? Maybe you decide to stay longer or even transition to your encore career.

In either case, knowing the financial impact of when you retire from your current federal or state position is critical to your success. Having a plan for life after retirement is even more important.

Get Your Personalized Fee-Only Financial Advice Today

The future is coming no matter what. You can have a financially secure future and enjoy your retirement without worry, or you can settle on uncertainty as you go it alone.

With a fee-only financial advisor on your side, you can get a personalized plan designed to meet even your boldest goals, avoid mistakes like overpaying on taxes, give you a clear view of your big picture, and pave a clear financial path for the future. 

At Frontier Financial, we work with federal and state employees to ensure their financial outlook is secure. Schedule a call today and discover the difference a fee-only financial advisor can make.

Stop guessing. Start planning.