Pre-retirees – Case study

MIke & beth

Mike and Beth are married.  Beth decided to stay at home early in her career to focus on raising their three children.  Mike has worked at a few companies over the years but has spent the last 20 at XYZ Corp, a publicly traded company.  Over the years he has accumulated a lot of shares of the company through their stock purchase plan, restricted stock options, and some incentive units.  Their children are currently in college and will be graduating and off the family payroll soon.  As Mike reaches his 60th birthday, he and Beth have started to talk about retirement.  They have not worked with a financial advisor but wish to explore how one might help them.

Challenges:

  • Mike is too busy to keep track of the various stock option deadlines
  • Mike has put away money in various asset classes over the years but doesn’t know if they have enough money to retire when he wants to
  • They would like to travel more in retirement but are not sure how much they can spend each year
  • Mike has a lot of money in retirement plans and wants to know if they can lower their tax burden in retirement
  • Beth and Mike are not sure how to create a retirement spending plan
  • They are not sure when to start social security and heard it might be beneficial to wait until age 70
  • The couple would like to know how to plan for health care costs, especially if they retire before Medicare eligibility
  • Mike and Beth would like to leave some money to their children but not at the expense of their retirement

How Moneta helped:

The Duff Team sat down with Beth and Mike to map out what is really important to them in retirement.  They described their ideal scenario and the team helped them figure out what that lifestyle would cost each year.  It turned out Mike and Beth could afford to either buy a second home in Phoenix or travel to different parts of the US for 3-4 day trips multiple times a year.  Next the Duff team created a spending and investment plan that laid out how much income would come from social security and the portfolio each year to support their lifestyle.  They discussed how Mike can lower his tax burden in retirement through various retirement plan distribution strategies. Mike and Beth learned the different amounts of social security available to them at different ages and how to optimize their benefits along with how the Medicare process would work.  The team put together a stock vesting schedule to help Mike keep track of his various company stock and sent regular reminders to him when it was time to exercise a stock option, file an 83(b) election, or sell stock.  Finally, and most importantly, Mike and Beth had the freedom to retire confidently and know they would be able to leave a legacy to their children – and even gift some money to the kids during their lifetime when they really could use the help!

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