Featured Success Stories

Laura & Fred
Age 62

Objective

To create a retirement income plan that enabled them to retire at 65, travel internationally, and help their grandkids save for college.

The Situation

Laura and Fred were toward the end of their successful careers.  Their three kids were grown, married, and starting families of their own.  Laura and Fred were ready for the next phase of their lives, but didn’t know exactly how to turn their retirement savings into consistent income after their stopped working.  Plus, they were concerned about Social Security and paying taxes on distributions from their 401k plans.  They wanted to travel the world, spend time with their growing family, and help their grandkids save for college costs.

The Strategy

Laura and Fred needed a comprehensive financial & retirement income plan.  We started by reviewing their cash flow and spending needs.  This included a comprehensive review of their spending over the last three months, and a projection of how their lifestyle would change once they retired.  We incorporated additional travel throughout the year, and some monthly deposits into 529 accounts for the grandkids.

We then reviewed their Social Security benefits and healthcare situation.  If Laura and Fred decided to retire before they turned 65 they’d need to obtain their own health insurance policies before enrolling in Medicare.  We included these costs into their cash flow plan, and modeled out various Social Security filing timelines.  While they’d maximize the value of their benefits by waiting to file until age 70, they decided to shoot for their full retirement ages (67) instead.  Which would allow them to take less out of their retirement accounts each year.

As for their retirement account distributions, we modeled out several options.  The first option was to take more money out of the accounts in the earlier years after retirement, before their mandatory distributions would begin at age 75.  The second option minimized their distributions in the early years, only taking out what they needed to meet their living expenses.  The third was a combination of the two, and utilized Roth IRA conversions to minimize the long term impact of their mandatory distributions and the resulting taxation.

Finally, we analyzed what a college education costs these days, and discussed what kind of assistance Laura and Fred really wanted to provide.  Was it important for them to pay for 100% of the grandkids’ college costs?  Was it important for the kids to have some of their own money at stake?  How did the parents feel about this?  We discussed the pros and cons of 529 accounts, education savings accounts, and taxable accounts in the kids’ names.  Laura and Fred were then able to land on a monthly savings plan that checked all the important boxes.

The Results

Laura and Fred were very excited about their upcoming retirement.  The planning process helped shed light on what cash flow would look like, including Social Security payments and quarterly distributions from their retirement accounts.

Thanks to the retirement projections and modeling we did they have confidence that their savings will last them the rest of their lives, their grandkids will have some college savings at their disposal, and they can live the lifestyle they want without worrying so much about money.