Client Facts
- Married couple - retired
- Ages 66/65
- Total Brokerage $200,000
- Total Tax-Deferred $650,000
- Total Roth $0
- Total Social Security $47,600/year (both turned on)
- Total Pension $22,500/year
- Monthly spending $6,000/month
Retirement Goals & Concerns:
- Ensure they don’t run out of money
- The want to do $85,000 of renovations to their home
- Plan for potential long-term care
- Reduce taxes on their tax-deferred money
What we did…
Cash-flow & Distribution Planning
- We stress tested their planning to ensure they don’t run out of money
- This uses all their income sources and account balances, along with spending needs
- Their projections showed they needs $150,000 from their accounts over the next 5 years
- We will insulate this money away from the movements of the market so it’s guaranteed to be there for them
Investment Planning
- Their portfolio was way too conservative at 30/70. We recommended 80/20 based on their 5-year income need
- They thought that was a little too risky so we settled on 70/30. This still worked very well and they were more comfortable with it
- We will now monitor the portfolio to make sure it’s not getting too risky or too conservative
- We made sure their money was spread out across all the different asset classes to ensure the largest return while reducing risk
Tax Planning
- They held a lot of income investments in their brokerage account - which means they paid taxes on this money every year
- We moved those investments into their IRA - which will give them about $8,000 more per year in extra return
- We looked at their brokerage accounts and saw we were able to create the $85,000 for home renovations with very little tax consequence
- We put together a multi-year Roth conversion plan to maximize the 12/15% tax bracket
- This plan will save them about $250,000 in lifetime taxes
Insurance & Risk Management
- They wanted to make sure they didn’t spend through their saving in a potential LTC event
- We looked at policies and determined they were too expensive
- We recommended, and they agreed, that earmarking equity in their home for potential LTC expenses made the most sense
- This makes sense because they don’t plan on leaving the home and their kids would likely sell the home upon inheritance anyways