Bill (Age 66) and Susan (Age 65)
Last year, Bill and Susan retired from a major corporation in the Upper Midwest. Tired of the snow and cold, the couple decided to flee to the sweet, sunny South. They moved to a golf course community near Wilmington, North Carolina, where they plan to enjoy their retirement years.
This is the second marriage for both Bill and Susan, and each has grown kids from a previous marriage. Both also have money in their 401(k)s, and Bill has deferred compensation and stock options from his previous employer.
The couple knows they face many tax and legal questions after their move, as well as the tax and estate laws of their new home state. Bill and Susan also:
- Need to figure out how to distribute their assets when one of them dies — they want to protect each other but also ensure both sets of children get their fair share.
- Want to work with an experienced financial professional who will make their goals a priority and offer substantial guidance.
- Would rather spend their days golfing instead of researching legal and financial stuff.
First, we divided Bill and Susan’s opportunities into three main categories: financial, tax and legacy. Then, we:
- Discovered the couple’s current investments were set for people still in the accumulation phase of life, not for retirees concerned about growing and preserving those assets. We helped Bill and Susan adjust their investments to more closely match their new risk tolerance.
- Showed them what their taxes were likely to be in the decades ahead. We developed a plan to move their money out of IRAs, 401(k)s and other "qualified" funds (where the taxes have yet to be paid) into such tax-free investments as Roth IRAs — doing it strategically, so they could pay the taxes at a lower rate.
- Reviewed the assets each person brought to the marriage — as well as the additions and growth since then — to help the couple make a plan for how to distribute those assets after one of them passes away. We also referred them to an attorney and then worked with Bill and Susan to ensconce the plan into new estate documents.
This is a hypothetical example provided for illustrative purposes only; it does not represent a real-life scenario and should not be construed as advice designed to meet the particular needs of an individual's situation.