Client Facts:
- Married, ages 62 & 60
- He retired at 62; She is retiring at 63
- Total income: $84,000/year
- Total cash: $85,000
- Total brokerage: $420,000
- Total tax-deferred: $1,530,000
- Total Roth: $120,000
- Social Security:
- His: $2,400/month (started at 62)
- Hers: estimated $2,600/month at 67
- Spending goal: $8,000/month
Retirement Goals & Concerns
- Maintain $95k–$100k/year lifestyle in retirement
- Protect against large future RMDs.
- Avoid Medicare premium increases when possible
- Make sure the surviving spouse is taken care of.
- Protect against market downturn risk early in retirement
- Fund $100k for grandchild’s education
- Leave at least $500k to children as legacy
What We Did…
Cash-flow / Distribution Planning
- Put together a retirement income plan that blended guaranteed and variable income.
- His pension and Social Security cover a base level of expenses, reducing the need to sell investments in down markets.
- Designed a multi-account withdrawal strategy.
- Rather than taking money from just one account, we will take money from multiple accounts to increase the plan’s tax efficiency.
- Coordinated her part-time income phase-out.
- Smoothed the transition to full retirement and allowed additional Roth conversions before RMDs will start.
Investment Planning
- Adjusted their asset allocation to a balanced mix of 70% growth (stock) and 30% income (bond).
- This will provide growth for long-term needs while reducing volatility and sequence-of-returns risk.
- Diversified taxable account into tax-efficient ETFs.
- This will lower their annual taxes while preserving income by using municipal bonds.
- Implemented a set of rules for rebalancing and withdrawal sequencing.
- Ensures portfolio risk stays aligned while drawing tax-efficiently across accounts.
Tax Planning
- Planned partial Roth conversions between ages 63–70.
- Reduces future RMDs, smooths out lifetime tax liability, and grows tax-free assets for heirs.
- Harvesting capital gains in low-tax years.
- Filled the 12% bracket with tax-gain harvesting to avoid higher Medicare premiums.
- Coordinated deductions with charitable giving.
- Bunching donations every few years into a Donor-Advised Fund allowed itemizing for larger tax benefits.
Estate Planning
- Recommended revocable living trust.
- Simplifies probate, keeps affairs private, and provides smoother transfer of assets.
- Updated beneficiary designations.
- Ensured retirement accounts pass directly to spouses, then children, avoiding unintended taxation.
- Education funding plan.
- Continued contributions to 529 plan to get a state income tax deduction while coordinating with tax-free gifting strategies to reach $100k college fund goal.
Insurance & Risk Management
- Reviewed and extended umbrella coverage.
- We are maintaining a $2M liability protection to safeguard assets from lawsuits or accidents.
- Explored hybrid long-term care policy.
- Provides coverage for potential care needs without “use it or lose it” premiums to better protect their legacy goals.
- Reviewed expiring life insurance.
- Determined the term policy was no longer essential for income replacement, but explored smaller permanent coverage for legacy and estate liquidity.