Growing Wealth Phase - Susan & John
Physicians in their early 40s with young children.
- Retirement Savings – how much to save, into what type of accounts, how to grow the wealth safely and tax efficiently.
- Kids’ College Expenses – how much to save
Student Loans – how to pay down the debt efficiently
- Time – don’t have the time to research the information and are concerned they’re not managing their finances, both now and in the future, efficiently.
Susan and John wer local phyicians and were in search for a firm that was legally required to act in their best interest. They had many questions and we worked together to identify what was important to them. They felt fortunate to be in the position that they were in and wanted to make sure that they were making smart decisions without spending needless time searching for answers. We developed a plan on how to spread their savings towards retirement, kid’s college and student loans. By analyzing their tax situation, we were able to determine which accounts their savings should go to (403b’s, Roth IRAs, 457, and kid’s college accounts). We then designed an investment plan to help grow their wealth over time. Lastly, we reviewed to see if there were any gaps that could affect them and helped them implement this strategy along the way.
As they progress toward their goals, we have been there proactively guiding them. We’ve been there for them to make investment changes, update their employee benefits, tax projections and answer any questions along the way, which decreased their stress and increased their confidence.
Growing Wealth Phase - Sandra & Dan
A physician and an engineer in their 50s with grown children. Ten years away from retirement.
- Changing Advisors – want a fiduciary relationship with an advisor.
- Taxable Accounts – producing a high percentage of capital gains and uncertain if they were in tax efficient accounts.
- Health Savings Accounts – uncertain if they were utilizing benefits correctly.
- Savings Accounts – large balances that could be used for investing and growing their wealth but unsure how much to keep set aside.
Sandra and Dan were a couple in their early 50s. Sandra was a local pediatrician and Dan was an engineer at a software company. They had worked with another advisor in the past but the focus was always on the investments they managed and what insurance products could be sold. Sandra and Dan wanted a fiduciary who could help them grow their wealth. They were about 10 years from retirement and their kids were out of the house. They had paid for all of their kids’ schooling but were worried they weren’t fully prepared for retirement.
We reviewed their savings strategy and noticed that they were saving quite a bit into a savings account. After discussing with them, we shifted money, leveraged a Roth IRA strategy, and then took advantage of the Health Savings Account Dan had through work. We also noticed the funds in their taxable account were producing a high percentage of capital gains. After running tax projections, we decided to rebalance these investments into lower-fee funds/tax-efficient investments.
We meet semi-annually to see how they are progressing toward their goals. With only 10 years until retirement, it is important to stay on track and stay ahead as things change. Working together has reduced their stress and allowed them to focus on what matters most to them.
Preparing for Retirement Phase - Patty & Jim
A teacher and project manager in their early 60s approaching retirement within 5 years.
- Retirement Accounts – concerned about starting withdrawals
- Healthcare – worried about the cost of healthcare
- Pensions – how they impact their retirement
- Social Security – when they should start collecting
- Age of Retirement – how retiring sooner/later will impact retirement
Patty, a local school teacher, and Jim, a project manager for a defense contractor was approaching retirement. Patty loved to be outside and garden while Jim had a passion for woodworking. Any time we spoke to them about their hobbies, their eyes would light up. Jim had a mind like an engineer and came to us with a bunch of spreadsheets (which we love to see). Based on his assumptions, they could only retire at their Medicare age (65) which was 5 years away. He just couldn’t get his head around withdrawing money from their accounts before then and was worried about the cost of healthcare.
To us, a successful outcome would be to find a way to retire sooner. Mentioning this to Jim made him laugh because he couldn’t envision this happening. We took a look at what income sources they would have in retirement. Patty had a pension and Jim had a small one as well and both were eligible for social security. Then we reviewed what accounts they had and we created a plan for them to retire in 3 years. We structured their portfolio so they would be able to withdraw from safer securities during their first years of retirement. This way they could be confident in retiring even in a recession.
The markets can fluctuate and we are continuing to work with them to make sure we stay on track for their target retirement date.
Preparing for Retirement Phase - Bill & Jan
A utility worker and a nurse approaching retirement with the next year.
- Income – would their accounts produce enough income to retire comfortably?
- Tax-Efficient – did they have their money in the correct type of accounts to create the least amount of taxes?
- Accounts – which accounts should they withdraw from?
- All Bases Covered – did they miss anything?
We met Bill and Jan one year prior to their retirement date. They felt confident on the date but were concerned about how to produce enough income, which accounts to draw from, and wanted a solid game plan in case they were missing anything. Neither had any pension income and had a mix of savings, pre-tax accounts, and small Roth IRA accounts. Most of their savings were in pre-tax accounts.
First, we took a look at what they needed to do prior to their retirement date. We shifted their monthly savings to build up their savings account, which would give them some flexibility when drawing on their accounts. Then we made a decision to allocate more into safer investments to protect against a recession. These would be the investments we will draw first when the markets are down.
In retirement, we ran tax projections to see what their expected tax liability would be and noticed that since they had most of their investments in pre-tax accounts, they would have large required minimum distributions later in their plan. Much that it would exceed their income need. We decided to start implementing Roth conversions because paying for the taxes now was better than later in their plan.
Over the last 5 years, we were able to structure their retirement accounts to be more balanced and saved on taxes. They felt relieved and happy that they know how to fund retirement and also save on taxes. We continue to manage their portfolio as markets and tax laws change.