Client Facts
- Married, ages 62/60
- Both are retired
- Total Brokerage: $350,000
- Total pre-tax retirement: $1.4M
- Total Roth: $150,000
- HSA: $25,000
- Cash: $75,000
- Home: $850,000 (paid off)
- Social Security at 67: $3,200 & $3,000
- Monthly spending: $10,000
- Legacy Goal: $200,000 for each child
- Gifting: $5,000/year
- Two adult children
Retirement Goals
- Generate $120,000/year in after-tax income in retirement
- Avoid big tax surprises and minimize lifetime taxes
- Leave a legacy for their kids and donate to their church
- Ensure healthcare coverage until Medicare
- Avoid becoming a burden if long-term care is needed
What we did…
Cash-flow & Distribution Planning
- Designed a tax-efficient withdrawal plan:
- We will use brokerage money for spending needs first.
- We will convert IRA money up to the standard deduction until Medicare starts.
- Structured a detailed Roth conversion plan before RMDs begin.
- Agreed to delay social security until 67 and then evaluate each year.
Investment Planning
- Designed a 65% growth and 35% income allocation.
- We will hold all income investments in their pre-tax accounts for optimal tax efficiency.
- We will use tax gain harvesting to move income investments out of their brokerage accounts.
- Insulated 5 years of income needs from the stock market.
Tax Planning
- Harvesting capital gains at 0% in their brokerage account.
- Harvesting unrealized losses as much as possible.
- Converting IRA money at 0% until Medicare starts then maximizing at least the 12% bracket.
- Using brokerage investments for gifting.
- Managing income for health insurance purposes until Medicare starts.
Long-term Care Planning
- We used a LTC broker to get quotes for LTC insurance for discussion.
- Outlined a plan for using their home equity for LTC needs.
Estate Planning
- We had them update their Will and Power of Attorney documents because they were outdated.
- Their overall estate was simple enough they opted to not use a Trust.
- We reviewed every single asset/account and ensured there is a beneficiary/transfer-on-death assigned.