Preparing for retirement

Clients: Scott (56) & Melissa (54)

Primary Goals: Retire no later than 62 and 60, leave assets to children, minimize taxes.

Background:

Scott works for an insurance company and Melissa works as a middle school teacher. They have two kids that are both out of the house and financially independent. Scott and Melissa’s expenses have gone down now that their kids are out of the house so they are focused on accumulating wealth prior to retirement.

Approach:

Scott and Melissa spend a lot of time outside of work visiting their children, volunteering in their community, playing in a pickleball league, and going to their beach condo on the weekends.

They made it very clear that they had a lot on their plate and they want to focus on spending time with the people and doing the things they enjoy, not managing their finances. Their busy schedule was getting in the way of optimally managing their financial situation, so they decided they were going to delegate management responsibilities to a trusted team of advisors.

Most of our clients hired us when they were in the peak of balancing work, family, and personal matters. Our concise and informative prospective client interview process was built with people like Scott and Melissa in mind. We put together a Reitre WYZE assessment for Scott and Melissa that answered their questions and highlighted where we would add value without adding to their already full plate.

Results:

The solutions we recommended for Scott and Melissa helped them in several ways:

1. We created a financial plan that achieved their target retirement age with minimal risk of running out of money.
2. We uncovered that Scott & Melissa had a basic will that hasn’t been updated in 20 years. Since then, their financial situation has become increasingly complex. Scott and Melissa worked with our trusted estate planning partner to develop a strategy that would protect their assets and avoid probate.
3. We developed a retirement spending plan that balanced their retirement lifestyle and the estate that would pass to their children. We explained that their spending plan is dynamic and can adjusted upward or downward based on market performance.
4. Scott and Melissa were high income earners during their working years, therefore it was never appropriate or possible for them to contribute to Roth IRAs or Roth 401ks. Most of their assets were rolled over into pre tax Traditional IRAs that have mandatory distributions starting at age 73. Without a tax minimization strategy in place, the mandatory distributions were projected to push Scott and Melissa into the 32% tax bracket. We developed a Roth conversion strategy that would keep them in the 22% tax bracket during retirement and save them ~250k in taxes over the life of their plan.

Scott & Melissa are now retired and no longer feel burdened when discussing their finances because they have a plan in place that were actively involved in developing. Scott and Melissa are happy, referring clients of WYZE WEALTH. We review their financial plan, taxes and investments twice a year to make sure they are on track for achieving their goals.