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SMALL BUSINESS OWNER SELLING BUSINESS
Small business owner came to us to discuss selling his business. Owner wanted to have a holistic financial plan to specifically understand how to best use the equity to fund their retirement
CASE STUDY/SCENARIO/PICTURE THIS/IMAGINE..
- Assets distributed among 401(k), Non-Qualified Investments, Private Equity, and Investment Real Estate.
- No formal estate plan had been executed
- Current investment strategies not in alignment with client’s objective to generate consistent retirement income.
HOW WE HELPED/OUR SOLUTION/INDIVIDUALIZED PLAN
- Develop a comprehensive list of all assets, liabilities, and income sources
- Develop a holistic financial plan used to evaluate various scenarios
- Identify the impact of using proceeds from sale of business to pay off existing debt versus investing profits.
TEAM EFFORT/ALSO ON BOARD/CALLED IN EXPERIENCED PROFESSIONALS
- Consulted with a Tax and Estate Planning Attorney to develop a comprehensive Estate plan.
- Conduct an insurance needs analysis to identify gaps in coverage as well as applicable strategies
- Develop an investment strategy to meet the following objectives;
- Generate consistent retirement income to compliment other sources of income
- Minimize taxes associated with generating retirement income
- Exposure to asset classes based on current and forecasted Capital Markets
SUCCESS STORY/OUTCOME/SUCCESSFUL RESULTS
- Confirmed that investment strategies were able to meet client retirement income needs
- Reduced overall risk in investment portfolio to meet clients’ stated investment objectives and risk profile.
- Redirected future retirement savings into vehicles that would provide tax free earnings and distributions.
- Developed a comprehensive estate plan to meet the clients state objectives
- Quarterly reviews to discuss and monitor financial plan, as well as any necessary changes to investment strategies
COUPLE AT THE DOORSTEP OF RETIREMENT
Couple was referred to us one year prior to their intended retirement. They felt like they were in decent shape overall, but had a lot of questions about how finances would come together and whether or not they were making all the right moves in preparation.
CASE STUDY/SCENARIO/PICTURE THIS/IMAGINE..
- Married, each with adult children from prior marriages
- Husband’s health is tentative, the wife is healthy and has longevity in her family
- Wealth distributed among rental property and pre-tax retirement accounts, with multiple properties in differents states
- Husband worked in both the public and private sector, so Social Security would be impacted by the Windfall Elimination Provision
- Wife has a pension plan with multiple payment options
- Husband’s account, all in money market funds
- Wife’s account, being managed with little feedback
- In the process of estate planning when we initially met
HOW WE HELPED/OUR SOLUTION/INDIVIDUALIZED PLAN
- Reviewed their cash flow in detail to determine their income needs
- Incorporated income needs and existing resources into a detailed retirement projection with multiple scenarios – modeling out alternatives of selling or keeping portions of the rental portfolio.
- Consolidated retirement accounts into two Traditional IRAs to be managed in line with their risk tolerance and objectives
- Developed a plan to convert a good portion of the Traditional IRA money to Roth IRAs, strategically converting money in years where income is expected to be lower.
- Reviewed estate planning documents, to verify they were in line with objectives.
TEAM EFFORT/ALSO ON BOARD/CALLED IN EXPERIENCED PROFESSIONALS
- After developing an outline for the IRA to Roth conversion plan, we reviewed the strategy with their accountant, and now check in annually to move as much as we can within specified marginal tax brackets.
- Upon reviewing their estate documents, we realized that the couple was under the impression that their assets would be protected from long-term care expenses. We had a joint meeting with the attorney to review their estate plan structure, and as we believed the plan did not provide long-term care protections.
- Worked with attorney to establish customized beneficiary designations
SUCCESS STORY/OUTCOME/SUCCESSFUL RESULTS
- System is in place to monitor how their retirement income plan is progressing
- Over half of their investable assets will be in a Roth IRA, thus providing tax-efficient flexible access to funds
- More accurate understanding of their estate plan
- Diversified investment portfolio matching objectives and risk profile
- Wife’s pension will be taken as an annuity, rather than a lump sum, but deferred so that the Roth conversion plan can be carried out
- More peace of mind about their situation, enabling them to be confident that they can give money away to loved ones and important causes
- Fostered trusting relationship with open lines of communication
YOUNG ACCUMULATORS WITH NEWBORN
A young high income couple came in with their newborn knowing they needed help with more than just saving for retirement. They wanted to understand how to save for education and retirement while protecting their future goals.
CASE STUDY/SCENARIO/PICTURE THIS/IMAGINE..
- A couple in the mid-thirties with a newborn baby
- Nominal cash savings
- Credit Card debt mounting
- Retirement savings plans through work
- No IRA or Roth IRA
- Limited disability and life insurance through work
- No estate plan
HOW WE HELPED/OUR SOLUTION/INDIVIDUALIZED PLAN
- Implement a holistic Financial Plan to identify the weak points of their situation
- Decided to pay off consumer loans from cash flow
- Maximized all benefits through each of the employers focusing on disability and life insurance
- Reallocated the employer sponsored retirement plans to diversity and target long term growth
- Implement private life insurance policies for each spouse
- Initiated education savings through a new 529 Plan
- Funded backdoor Roth IRA contributions
SUCCESS STORY/OUTCOME/SUCCESSFUL RESULTS
- Eliminated consumer loans
- Increased cash flow once consumer loans were paid off
- Mitigated risks associated with disability and premature death
- Better equipped to handle the future cost of child’s education
- Sound investment portfolio matching clients’ long term financial goals
- Bucket of tax-free money growing in a Roth IRA
CORPORATE EXECUTIVE
with opportunity for buyout and early retirement
Corporate executive came to us with an offer for an early retirement buyout in a stressful and high-profile job. He was hopeful but uncertain of the impact an early retirement scenario.
CASE STUDY/SCENARIO/PICTURE THIS/IMAGINE..
- Wealth distributed among 401(k), deferred compensation, significant buyout package, pension, and employer’s stock
- Majority of assets held in husband’s name
- Outdated beneficiaries on file for retirement assets
- Multiple properties in different states
- Out-of-date estate and long term care planning documents
- No strategic plan for wealth distribution / income planning in the event of early retirement
HOW WE HELPED/OUR SOLUTION/INDIVIDUALIZED PLAN
- Began with organizing a full list of assets, liabilities, income sources and vesting schedules
- Helped discern and prioritize financial planning goals
- Built financial planning projections to determine an appropriate level of investment risk
- Confirmed and monitored deferred compensation investment and distribution elections
- Confirmed the normal pension income and identified the buyout pension benefit that eventually would end and need replacement
- Consulted on multiple avenues for replacing the buyout pension benefit with likely opportunity for increasing this benefit over time
- Consolidated employer retirement accounts and IRAs
Conducted an insurance needs analysis which included reviewing employer-provided benefits as well as the future of those benefits in retirement - Identified and collaborated about the opportunity to close the gap associated with a Long Term Care need
TEAM EFFORT/ALSO ON BOARD/CALLED IN EXPERIENCED PROFESSIONALS
- Coordinated the Long Term Care insurance coverage to provide adequate coverage in the event of a future need.
- Conferred about different deferred compensation payout schedules in order to maximize income in the early years of retirement
- Introduced the client to a CPA to help determine taxability of life insurance benefits that would remain long after retirement date
SUCCESS STORY/OUTCOME/SUCCESSFUL RESULTS
- Confirmed the early retirement scenario with sufficient resources to continue lifestyle uninterrupted
- Better equipped to monitor their financial and lifestyle goals
- Based on the client’s age recommended leaving funds in the 401(k) for penalty free access early in retirement
- Diversified investment portfolio matching clients’ goals and risk profile
- Implemented multi-tiered retirement income schedule using deferred comp and retirement accounts
- Income will be greater than original pension benefit expected based on alternative strategy implementation
- Mitigated risks through the use of appropriate insurance and estate planning
