The Value of a Financial Plan and a Trusted Wealth Advisor 

The Challenge 

Retirement is an exciting opportunity, but it also holds a lot of uncertainty. Market volatility and unexpected life events can erode your retirement savings, and without the benefit of additional income, ensuring the best chance of success in old age means building and following a sound financial plan. The shift from saving diligently to spending wisely can be a difficult transition, especially when you have certain expectations and are first adjusting to life in retirement.  

Leading up to our clients’ retirement we provided considerable financial planning services and discovered their requested budget in retirement would exceed our recommended distribution percentage. We typically suggest a modest yearly spend of no greater than 4% of retirement savings, but our client wanted to enjoy a more fruitful retirement, especially in the beginning. With salary no longer a factor in their income, taxes and market volatility could be a threat to a successful retirement based on their desired level of spending. Instead of simply saying it was not possible, we worked with our client to adjust their financial plan and look for solutions.  

Our Solution 

Based on our clients’ wishes to enjoy a higher standard of living, which included considerable travel, we set out to develop a comprehensive wealth management plan that included tax strategy, investment diversification, income maximization, and retirement budgeting. Upon retirement, we rolled his lump-sum pension distribution into a 401(k), which deferred all taxes due on the payout. After retirement, we rolled over the 401(k) funds into their IRA where we could strategically manage it in order to help maximize their retirement savings by adding asset classes with the potential to outpace inflation. 

Since our client retired before turning 70, there was an opportunity to increase his Social Security benefits by waiting a few years. We advised him to postpone receiving Social Security payments until he turned 70 which maximized the monthly payment amount that he will receive in perpetuity. However, it also removed an income source for a few years following his retirement. To ensure that spending stayed under control, we discussed and implemented a retirement budget to preserve capital while still planning for the life of retirement he and his wife had been envisioning. 

The Results 

Actively discussing retirement expectations and doing ample financial planning with our client enabled realistic budgeting and informed an actionable investing strategy. By strategically taking a lump sum payout on his pension and developing a solid tax strategy, diversifying the allocation of his retirement funds, and maximizing his Social Security payments, our client is currently living the retirement that he and his wife dreamed of while taking out considerably less principal than expected. With an investment strategy designed to weather the ups and downs of the market as best as possible, our clients are in an excellent position to continue to relish in their well-earned retirement and enjoy life by design with the help of our wealth management team and investment advisors.