An Independent Investment Advisor can serve as a financial ally for both those who are on the cusp of retirement and those already enjoying a lifestyle free from work.
Over the years we have helped many people prepare for and manage their retirement income stream. Here is one story based on an actual client (names and personal details have been changed):
Jack and Elaine came to us in their late 50’s. Jack was a respected surgeon at a local hospital and we managed his investment account; Elaine was a homemaker who had raised their 2 children. In the fall he came into our office unexpectedly and said that he needed to talk to us. He had just been diagnosed with a serious heart condition and was visibly upset.
What if he needed to cut back on his hours or stop work? Could they afford to move to California to be closer to their family? Who would take care of their special needs daughter if something happened to him?
Luckily, we had already done a comprehensive financial plan for them, so we had much of the information that we needed. We updated the plan which helped Jack and Elaine evaluate their ability to take early retirement including covering the additional costs of medical insurance until Medicare kicked in at age 65. In scenario testing, we explored the tax consequences of moving to California looking at the differences in home costs, real estate taxes, medical insurance cost, and cost of living. We discussed ways to protect their daughter by establishing a special needs trust on her behalf. The portfolio that we managed was changed to be more income-oriented – setting up a bond ladder and shifting their equity positions to those with higher dividends. Jack was able to retire early; leading a more stress-free life has helped his health. They did purchase a home on the coast of California. And Elaine felt more secure knowing that we would be there as a trusted advisor for her.
For individuals who are 5 -10 years away from retirement the question of “When can I retire?” often looms large. It can be difficult to go from earned income (a paycheck) to relying on investment income, pensions (if applicable), and Social Security. To avoid making costly mistakes we recommend doing a financial plan to assess your financial situation and see if your goals are aligned with the reality of your finances. At this stage, you can still adjust by working longer, saving more, or reducing spending should there be projected shortfalls. In our comprehensive analysis, we also examine your investments to determine if your asset allocation (the percentage of stocks, bonds, and cash) is appropriate for your age and risk tolerance. If the family has 2 income earners we will assess the best strategies for claiming Social Security. Pre-retirees will gain clarity about this next stage of their lives and through the process, they can test out different options to see the projected impact. Working with a CERTIFIED FINANCIAL PLANNER™ allows you to see how various decisions such as the state that you choose to retire in or downsizing your home, can affect your probability of success. If there are other financial goals that you are trying to accomplish, we will factor these in as well. For many pre-retirees, these goals include college education funding for their children, major purchases (such as a vacation home or boat), and debt reduction. If help is needed in implementing the plan, such as through appropriate investment strategies, we have you covered through our investment management team.
Couples who are already retired may find that they still have worries. While employed, most people take advantage of company-sponsored retirement plans with limited investment choices and some financial guidance provided by their employer. Once you are in retirement the full responsibility for managing these accounts falls on you. Retirees have questions about their asset allocation, the underlying investments, and the risk that they are taking. Preservation of these assets becomes very important and mistakes at this stage can be extremely costly. Cash flow concerns are common such as “how much can I safely withdraw?” We work with retirees to set up recurring income streams using dividend producing stocks and interest-bearing bonds. We discourage using expensive and inflexible products like annuities when less-expensive and better options are readily available. In addition, our financial planning for retirees also includes topics such as long-term care planning and estate planning. Finally, we seek to answer the underlying question of “Will I outlive my money?” through cash flow review and probability analysis. Our retired clients find that working with us simplifies their financial life and removes stress.
We are a fee-only firm unwavering in our promise to deliver a long-term financial strategy that will help guide your financial decisions and answer your financial questions. We want you to know where you stand and have a plan to get where you want to be.