Contemplating Retirement – Brian and Laurie, Seeking the Confidence to Retire

Brian and Laurie built their nest egg with a disciplined approach to saving. Despite their relative affluence, they were having a hard time contextualizing their wealth and were uncertain if it was “enough” to maintain their dignity and independence throughout their lifetimes.

They recently moved to Doylestown, Pennsylvania to be closer to their newborn grandchildren, but they still harbored trepidation about their financial circumstances. Although they had diligently collected investments of various tax types, including tax-deferred assets, after-tax brokerage accounts, and Roth IRA assets – they were unsure how to draw monthly cash flows from these accounts in a tax-efficient and strategic manner.

To compound their worry, their portfolio was largely self-managed and a seemingly random collection of retail mutual funds held at nine different custodians, some of which they maintained in a separate IRA with a broker referred to them by their neighbor. There existed no coherent strategy for their investments, and the result was a portfolio highly concentrated in the stocks of large U.S. companies and a handful of bonds that were inappropriately risky. Brian and Laurie were aware that nine different large U.S. stock funds did not constitute diversification, and that they were taking on more risks and higher expenses than was prudent – they just weren’t sure how to repair their portfolio and position it for retirement. They reached out to us when they recognized they weren’t confident about what to do next.

After sitting down with Brian and Laurie and exploring their concerns and income needs in retirement, we formulated retirement projections to show how a properly diversified portfolio can provide retirement cash flows more reliably than their current investments. We also engineered a distribution strategy fractionally drawing on IRAs, Roth IRAs, and investments with various cost bases in their taxable accounts in precise proportions to deliver consistent monthly cash flow while minimizing income taxes over a multi-decade planning horizon.

We also tackled analysis to advise on lump sum vs. monthly pension distribution options, optimal Social Security Income claiming strategies, strategic Roth IRA conversions, surrendering an expensive and unnecessary Variable Life Insurance policy, and navigating the complexities of their employer retiree health insurance coverage. Lastly (but certainly not least!), we mapped out funds to support annual three-week beach vacation rentals in Avalon, NJ to bring the whole family together every summer.