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The Advicer

I’m 47, will get a $5,000-per-month pension, only owe $180,000 on my home and have $419,000 in a savings account. Should I get a pro to help me?

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Would I need actively-managed vehicles to reach goals that outperform the market? Do I need a financial adviser?

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Question: I am 47-years-old and eligible to receive my pension in 4.5 years. That pension will only give me $4,300/gross monthly if I decide to receive a benefit before the government’s legal retirement age. If I suspend my benefit to the IRS retirement age, I can increase my benefit to $5,000/gross per month. I only owe $180,000 on my house at 3.25% interest and I don’t have a second mortgage. I have $419,000 in a high-yield savings account that’s getting a 4.9% APY. All of my credit cards have a balance of less than $25. 

I’m pretty healthy, though I have a preexisting immune disability that’s under control. However, my condition has made it difficult to purchase life insurance policies as an investment. All of my kids are grown and out of the house. My risk tolerance for investing is moderate-to-aggressive because I have no problem working another 10-15 years. My employer does cover all of my family’s medical needs as long as I’m employed with zero out-of-pocket cost. I hear so much about REITs, mutual funds that only mirror the market, CDs and treasury bonds. Would I need actively-managed vehicles to reach goals that outperform the market? Do I need a financial adviser? (Looking for a new financial adviser too? This free tool can match you to a fiduciary financial adviser.)

Answer: There are a lot of moving parts and what-ifs complicating your situation. “Optimizing when to take the pension, thinking about how many years to work and aligning the investment portfolio with your other goals is important to ensure you’re not taking on more risk than you can afford,” says certified financial planner Josh Trubow at Sensible Financial.

Have an issue with your financial adviser or looking for a new one? Email questions or concerns to picks@marketwatch.com.

Should you get a financial adviser?

Maybe. A lot of what you’re presenting are arithmetic problems that are objectively answerable and could possibly be done yourself. “The question is really whether or not you have the skill [and/or desire] to run through all the different scenarios,” says certified financial planner Robert Persichitte at Delagify Financial. “It seems complicated enough that the cost of an adviser seems worth it. I could probably make my own shoes, but it’s not worth my time when I can pay $20 at the store for a more reliable result.” (Looking for a new financial adviser too? This free tool can match you to a fiduciary financial adviser.)

Indeed, you could likely benefit from a comprehensive financial plan. “The basic questions you’re asking are in a vacuum of other financial and personal information that comprehensive financial planning will bring out to generate personalized answers,” says certified financial planner David Maurice at Worthwhile Wealth Council — who adds that financial planning can “empower you with financial confidence and a sense of personal competence over all your financial decisions.”

A fee-only fiduciary adviser is likely a good choice because they’re paid exclusively by you, the client, and they’re required to put their clients’ best interests ahead of their own. A certified financial planner could be a good bet, as they have extensive training and professional experience.

Carefully consider whatever recommendations you receive from the adviser you speak with — and get a second opinion from someone with a different philosophy. Then, hear both out so you can get all the facts, says certified financial planner Blaine Thiederman at Progress Wealth Management. “A financial planner who has their CFP and sufficient experience to help you figure out what you should do next would be helpful,” says Thiederman. You can ask a potential adviser these questions during the interview process.

Do you want to go into actively managed funds?

Another thing to keep in mind is that outperforming the market is very difficult to do over long periods of time. (This MarketWatch column looks at the value of index funds over stock picking.)

“Purchasing actively managed investments with the hope of outperforming is likely to have the opposite effect, as active management generally costs a lot more and hasn’t been shown to be able to produce excess returns. For that reason, I’d recommend trying to match the market by using low cost, efficient, well diversified index funds,” says Trubow. 

Certified financial planner Joe Favorito at Landmark Wealth Management says he’s not a believer in actively managed stocks. “A good adviser will manage the overall risk profile for you.” 

What about your life insurance, REITs, savings, mortgage and the pension?

Life insurance is not generally purchased as an investment, but as insurance. “If nobody is relying on your income, there may not be any financial need for life insurance,” says Trubow. This guide can help you figure out whether you need life insurance.

You also don’t necessarily need REITs. But “investments like REITs are viable alternatives for a portion of any portfolio and they can serve as a nice diversifier,” says Favorito. 

The fact that you’re willing to work for another 10-to-15 years is a great asset, and to that end, delaying your pension benefit to IRS retirement age would be constructive, says certified financial planner Eric Uchida Henderson at East Horizon Investments. 

As for your mortgage and savings, “the mortgage rate at 3.25% is attractive. It doesn’t look like rates will be that low for a long time. Your high-yield savings at first glance, looks ample to cover emergency events and with a moderate-to-aggressive risk tolerance, it would seem that you could direct some savings toward market investments,” says Henderson.

Have an issue with your financial adviser or looking for a new one? Email questions or concerns to picks@marketwatch.com.