Mark and Rahel
Age: 68 and 66
Mark stopped working two years ago though Rahel has only recently retired. They have lots of plans for the future – trips to take, old friends to see, and new hobbies to try.
They know they’ll spend more in the first few years of retirement as they work through their bucket list. They need a plan that supports the lifestyle they envision while keeping them from ever running out of money.
They live in a high tax jurisdiction and worry that this may be eating into too much of their nest egg.
Mark retired somewhat unexpectedly when his company offered him an enhanced buyout package. It wasn’t an issue while Rahel was working, but they feel like its time to consult a financial advisor now that the paychecks have stopped.
They have 401(k)s, vested stock options, pensions, and a deferred compensation plan. Neither have ever taken a distribution from any of their retirement savings accounts and both are a little unsure about how to access them. There are questions over which ones to access first as well
They want to know the following:
- When should we start taking social security?
- What survivor options should we choose on our pensions?
- Our stock options are volatile – what should we do with them?
- We’re thinking of relocating to Florida, how much money would we save in taxes?
- What accounts should we start pulling money out of first?
Stock options have unique rules and the deferred compensation plan adds another layer to their liquidation strategy. It was important for Mark and Rahel to have an easy, enjoyable, and stress-free planning process.
To avoid major surprises, their CPA was brought into the process early. Their planner coordinated with their CPA to compile all necessary information from Rahel’s former employee benefits administrator.
They worked through all possible tax ramifications on the options available to Mark and Rahel and established a retirement spenddown strategy. They tested different scenarios for turning on pensions and social security.
Their planner also ran different portfolio longevity projections based on the various survivor options.
Knowing precisely what their options were helped put them at ease. They moved forward with their plan, confident that they wouldn’t be leaving any money on the table or running short in later years.
The actions Mark and Rahel were able to take from their plan improved their financial outlook in many ways:
- They devised the social security claiming strategy that optimized their benefits.
- They reduced their tax bill
- They made a confident choice for their pension survivor options
- They restructured their portfolios to incorporate the concentrated stock positions they held
- The built a withdrawal plan that they couldn’t outlive
Mark and Rahel are living their best lives. They bought a small beachside condo in Florida. They travel to see friends in Denver and Seattle, and they’re staying fit at the rock climbing gym they finally tried out and joined.
They’re at ease. They live how they want without worrying about money. It’s life on their own terms with regular check-ins along the way.
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Note: The above case study is hypothetical and does not involve an actual Carmichael Hill & Associates client. No portion of the content should be construed by a client or prospective client as a guarantee that he/she will experience the same or certain level of results or satisfaction if Carmichael Hill and Associates is engaged to provide investment advisory services.