Working with a financial expert can kickstart your savings through avenues you don’t even know. A financial advisor can help you identify ways to increase your retirement readiness without sacrificing your current standard of living through optimized tax-efficient investments.

Despite advisors offering a leg up, approximately 40% of workers said they didn’t know who they could go to for financial or retirement advice, and just one-third of workers and retirees work with a professional financial advisor according to the Employee Benefit Research Institute. Here are all the ways your retirement savings can benefit from the help of a financial advisor.

5 Ways Financial Advisors Can Affect Retirement Savings

To put it simply, a financial advisor is a professional who provides clients with financial advice. There are many types of financial advisors, but some of the most commonly used for retirement planning are certified financial planners (CFPs), chartered financial analysts (CFAs) and chartered financial consultants (ChFC). Areas of expertise and costs vary by type of advisor.

Financial advisors focus on retirement planning work with their clients to create long-term goals and outline what steps they need to take to meet those goals. As a result, financial advisors can benefit your retirement savings in the following ways.

1. Maximizing Tax Efficiency

Over time, your income and  investments will—hopefully—grow. You’ll owe taxes on the profits from your investments, known as capital gains taxes, when you sell investments or assets. You can also benefit from making certain types of investments now that can reduce your taxable income. A good financial advisor or certified public accountant (CPA) will recommend tax optimization strategies to minimize your tax burden.

For example, a financial advisor may recommend one or more of the following strategies based on your income and tax bracket:

• Tax-advantaged accounts. Your financial advisor will help identify tax-advantaged accounts you can use, such as health savings accounts (HSAs) that allow you to contribute money from a pre-tax basis and grow the earnings tax-free. Your withdrawals can be used for qualified health expenses tax-free. And once you turn 65, you can use the HSA funds without paying the usual penalty for ineligible expenses.
• Backdoor Roth IRA. In some cases, an advisor may recommend converting a traditional IRA to a Roth IRA; you’ll pay taxes on the converted amount, but your future withdrawals in retirement will be tax-free.
• Maximizing tax deductions. A financial advisor or CPA can ensure you’re claiming all of the tax deductions and credits you’re eligible for to minimize your tax bill.

It’s hard to overstate how much of a difference proper tax planning can make in your eventual retirement balance.

If you invest $10,000 today and continue to contribute $20,000 every year for the next 30 years, earning a 10% average annual return with a 24% top marginal tax bracket, here’s what your final balance would look like based on the type of account you have.

A financial advisor can help you identify which accounts are available to you and determine how to prioritize your investing in each. High earning years may be better for contributing pre-tax dollars. Low earning years may be the time to contribute to Roth accounts and complete Roth conversions. A financial advisor will be able to tell you how much to contribute to each and when.

2. Asset Allocation

As an investor, deciding what types of investments to invest in and what percentage of your portfolio should be invested in each asset class—such as stocks, bonds and cash or cash-like assets—can be one of the most difficult and important decisions you can make.

A financial advisor will review your current financial situation and develop a portfolio based on your goals, age, current savings, monthly contributions and risk tolerance.

For example, the asset allocation for someone with decades until retirement may be 80% invested in stocks and 20% in bonds to take advantage of market growth over the long term. But someone closer to retirement age typically cannot take on so much risk, so their focus may be on preserving their money with modest gains. For those investors, their portfolios may be 85% bonds and only 15% stocks.

3. Portfolio Rebalancing

As you save and invest for retirement, your portfolio’s asset allocation can shift over time as market conditions change and the value of your investments fluctuate. For example, bond prices may decrease, driving down the value of the bonds in your portfolio, and stock prices may increase. You need to rebalance your portfolio to ensure it’s aligned with the right level of risk to maximize returns.

With portfolio rebalancing, your financial advisor will monitor your investments and adjust your portfolio by buying or selling assets to maintain the agreed-upon asset allocation.

Although you can rebalance your portfolio yourself, portfolio rebalancing can be a time-consuming process, and it requires constant monitoring of your investments. Having an advisor handle it instead can simplify your finances and make it easier to stay on track.

4. Handling Withdrawals

Once you enter retirement, you may be unsure of how much money you can safely withdraw from your retirement fund and the impact of those withdrawals on taxes. An advisor will help you create a withdrawal strategy that satisfies required minimum distribution requirements and also allows you to have enough income for your lifetime.

If you’re panic about your money not lasting long enough, your advisor will also work with you to create a budget and spending plan. If your savings are insufficient for your retirement goals, your advisor may recommend other strategies, such as delaying retirement or reducing your withdrawal amount to extend your savings and supply your investments more time to grow.

5. Optimizing Social Security or Pensions

If you’re eligible for Social Security or an employer-provided pension, your financial advisor can assist you with navigating those benefits.

With Social Security, your advisor will work with you to determine when is the best time to begin receiving payments and, if applicable, how to handle spousal or survivor benefits. If you have a pension, an advisor can help you decide between taking a lump sum payment or accepting annuity payments.

Planning for Retirement

Retirement planning can be a complex process, and if you find it challenging or overwhelming, the expertise of a financial advisor can be invaluable. Your advisor can provide you with a personalized, strategic roadmap to help you reach your goals. And as your needs change or major life events happen, your advisor can help you adjust accordingly so you can retire in comfort.

Even if you don’t find planning for retirement challenging, checking in with a financial advisor throughout your working years can help you ensure that you’re staying on track. A good financial advisor can help identify ways to make your financial life more efficient so you can save more without feeling deprived.

Who wants to use a check? Quite a few people, thank you very much.

Total check payments hit $27.23 trillion in 2021, according to the Federal Reserve, or about 21% of all non-cash payment values. That ain’t all grandma birthday presents. (That same report from the Fed showed that as the average check volume has increased, the number of checks used is dwindling.)

Checks, then, are an important, albeit dwindling, form of payment that you’ll probably end up using from time-to-time. The key is to know the different types of checks at your disposal, when to deploy which one and what costs are involved. 

What is a personal check?

Roughly one thousand years ago, an Iranian traveler named Nasir-i Khosrau made use of a sakk – written instructions from a merchant telling his bank to make a payment from his account. 

Checks look much different today, but the basic concept has held constant.

At its core, a personal check is a declaration of payment from the issuer to the payee that orders a financial institution to pay the amount of money noted on the check to the person who’s named as the recipient of the check.

The party writing the check only has a few clear obligations to get the payment process rolling, including:  

• Writing in legible, dark ink.
• Writing the current date on the date line in month-day-year format.
• Adding the payee’s name next to “Pay to the order of.”
• Writing the numeric value of the check in the box with a dollar sign ($19.99).
• Spelling out the value on the “Dollar amount” line, with cents expressed as a fraction (Nineteen dollars and 99/100).
• Signing on the “Signature” line.

You can also add any clarifying note to the payee on the “Memo” line in the lower left, such as “for services rendered.”

The check can be cashed at the bank that issues the check (where the bank may charge a small fee if the payee doesn’t have an account at the bank) or be deposited at the recipient’s bank, where typically the payee typically must wait one to two business days for the check to clear for domestic  banks. If the check is international it may take up to six weeks to be available, sometimes longer. 

Some retailers, especially big box stores and major grocery store chains, will also allow you to either cash a personal check (again, with a modest service fee attached) or pay for goods with a personal check.

While historically bank customers had to pay for their checks, and many still do, many banks, such as Ally and Chase, issue checks gratis.

What is a cashier’s check?

Banks and credit unions also offer cashier’s checks where the funds needed are backed by the issuing bank and not the customer’s bank account. These checks often used for big-ticket purchases, like a new home or a new vehicle.

To get a cashier’s check you’ll need to go to the bank with your government-issued ID, the name of the person you are paying, the exact amount you wish to pay and any memo note you want to include.

Once at the bank, you’ll speak to a teller who will create the check and the funds will be withdrawn from your account, or you can pay cash. The bank will hold these funds until the check is cashed. 

You’ll receive the check and a receipt. For security’s sake, hang on to the receipt until the check clears.  

Expect to pay a service fee of around $10 to $15, although fee figures may waver from bank to bank, and some financial institutions do offer free cashier’s checks to regular customers.

What is a certified check?

Payment recipients who want to be sure an incoming check is legitimate can request a certified check. Like a cashier’s check, a certified check is usually used for a large purchase. 

With a cashier’s check, the funds are drawn from the bank’s account. A certified check, on the other hand, is drawn on from a personal account. Still, a certified check shows that the bank Verified the funds were in the account at the time of issue. The funds are ‘earmarked’ for payment of the check. 

By having the paying bank certify the check is coming from a bank account with enough money to cover the purchase, that payee has less risk of experiencing a bounced check. 

To get a certified check, the payer must have an account at the bank that issues the certified check. Most banks require you to go to the branch in person to get a certified check. This is because it physically stamps your paper check, so it will need you to provide a check from your checkbook. If you are unable to visit your bank in person, call and see it is able to do it over the phone.  

When you go to your bank to get a certified check, you’ll need a government-issued ID and your checkbook. You will fill out the check at the bank in front of the teller and he or she will stamp the check to certify that you have the funds in your account to cover the check.  

Also, be prepared to pay the issuing bank or credit union a service fee of between $10 and $20, depending on the financial institution. 

Major differences between a personal check, cashier’s check and a certified check

A personal check is a form of payment where the payer issues a paper statement with a specific payment amount, a specific date and the names of the payee and payer included on that statement. 

Unlike cashier’s checks or certified checks, there is no ensure the check won’t bounce due to insufficient funds which represents a risk to the payee. This is why so many personal checks are used for more modest financial amounts.

A cashier’s check guarantees there are sufficient funds in the account to cover a payment. It does so by immediately withdrawing the funds from the customer’s account and using funds from the financial institution’s own account.

A certified check also guarantees there’s enough funds in an account to cover a check payment, but it is restricted to using funds only from the paying customer’s account. The money is not withdrawn from the customer’s account until the certified check is cashed. 

Check fraud

In 2022, U.S. banks and credit unions filed 459,851 “suspicious activity reports” for check fraud, according to the Richmond Federal Reserve. That’s significantly up from 249,812 SARs filed in 2021.

Identity thieves can easily access the information that shows up on a personal check, such as name, address and a financial institution’s routing number. Stolen checks often come right out of USPS mailboxes.

Once that data winds up in a fraudster’s hands, it’s relatively easy for criminals to misrepresent themselves to financial institutions and write fraudulent checks or forge checks in another person’s name. The way banks and credit unions operate, it may take weeks for financial institutions to flag a check fraud case, and by that time, the perpetrators are long gone.

Another common check fraud scheme is to approach victims online and ask the victim to deposit a check and return some of the funds back to the fraudster. The victim sends the fraudster money and then the check bounces. Leaving the victim out whatever funds they had sent. This scam resulted in $770 million in losses in 2021.

To prevent check fraud, consumers should never share personal data with anyone they don’t know and never respond to email or texts asking for personal data.

If you do accept a check from a stranger, do not agree to return funds to them. You can also call the issuing bank and verify that the funds are available before depositing a check. 

If the bank cannot verify the certified or cashier’s check there’s a good chance fraud is involved. In that scenario, don’t accept the check and report the incident to the bank that issued the check and report it to your own bank, as well.

Frequently Asked Questions (FAQs)

How much time do I have to cash a personal check?

Personal, business and payroll checks are typically valid for 180 days. Some checks will state on the check that it is good for 90 days.

How do you write a personal check?

Take a check in your name from your bank and write the date, the name of the payee, the amount (both numerically and alphabetically), your signature and, on the lower left side of the check, write a note on why the check was written. Keep records of all checks in case you need clarification later on.

Does a personal check or cashier’s check clear faster?

Cashier’s checks always clear in one business day. Some personal checks do clear in a day, but many personal checks take several days to clear. International checks may take weeks to clear.

Which type of check is safest?

Both certified checks and cashier’s checks are guaranteed by banks and thus are safer and more reliable than personal checks.