3 Questions to Ask Your Financial Advisor Before You Retire in 2027

Are you retiring next year? If so, congratulations. You’ve spent most of your life to this point planning for something that felt like it would never come, but it’s here — finally. Retirement is the culmination of your life’s financial work, making it both intimidating and exciting to finally clock out for the last time.

Perhaps you’ve worked with a financial advisor over the years to guide you through your retirement planning journey. If you’re retiring soon, you probably have more questions than you’ve had in years past. Don’t worry about it; now’s the time to fire away.

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Here are three crucial questions everyone should ask their financial advisor before they retire in 2027.

1. How do you make your money, and are you required to put my interests first?

Financial advisors can make money from three sources: salary, client fees, and commissions. How your advisor earns their living can directly affect how they conduct themselves with you. For instance, a financial advisor who earns commissions on financial products might recommend those to you, even if they’re not in your best interest.

On the other hand, a fee-only advisor is far less likely to have any conflicts of interest, as their compensation is completely transparent. You can ensure your advisor is a fiduciary for additional peace of mind; a fiduciary financial advisor is ethically and legally obligated to act in your best interest.

Fiduciary advisors often hold industry certifications, such as CFP (Certified Financial Planner®) or AIF (Accredited Investment Fiduciary®). Your advisor’s credentials and compensation structure can tell you a lot about them.

2. What is the most effective way to draw from my nest egg?

You’ve spent your working life both saving and investing your money. The transition from the accumulation phase to the distribution phase is probably going to feel weird at first.

It’s crucial to have a plan for how you’ll draw from your nest egg. First, you must know how much you can take out. Draw your retirement savings too fast, and you might run out when you’re older. Draw too little, and you’re sacrificing your standard of living and leaving that money on the table. The 4% rule is a common rule of thumb, but your advisor can tailor your plan to your personal needs and finances.

Second, you need to know how to withdraw money in a way that minimizes your tax bill. Depending on your age and the types of accounts you’ve put your money in, there might be rules in place that trigger stiff penalties, fees, or taxes on early distributions. Your financial advisor should have a plan ready so you can strike the right balance and keep your tax obligations to a minimum.

3. How will I pay for healthcare in retirement?

Most people sign up for Medicare Part A (hospital insurance) and Part B (medical insurance) at age 65 when they’re first eligible. If you retire before you’re 65, you’ll likely be responsible for your own healthcare in retirement until your Medicare enrollment window opens. Funding your own health insurance might be more expensive now; the enhanced tax credits intended to subsidize Affordable Care Act (ACA) premiums expired at the end of 2025, affecting approximately 22 million enrollees. While there are still subsidies, they have income thresholds.

Your financial advisor should understand how to strategically manage your taxable income in retirement so that you don’t unintentionally find yourself paying higher premiums than you could have. They can help you manage your distributions and determine which accounts you pull from.

Healthcare is something people often take for granted while they’re healthy, or during their working years when they’re on an employer’s insurance plan. But medical expenses are a leading cause of bankruptcy among seniors in the U.S., so this topic is one that no retirement planning should overlook. Your financial advisor can help you nail down your healthcare coverage before you retire.

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3 Questions to Ask Your Financial Advisor Before You Retire in 2027 was originally published by The Motley Fool