Case Study 1: Stephen and Nicole

Retirement Planning Case Study 1: Stephen and Nicole

Ages: 62 & 56
Professions: Senior Director of Technology & VP of Marketing

Primary Goal

Evaluate an early retirement package, manage taxes and shift into retirement.

Stephen and Nicole thought they were on track, but an early retirement offer from Stephen’s company forced them to consider retirement earlier than originally planned. We examine these problems in this retirement planning case study.

The Issues

Suddenly, Stephen was forced to make a decision about retirement. He and Nicole thought that they had at least three more years before they would need to take action.

Over their careers, Stephen and Nicole did a good job of saving money each year in their 401(k) plans. In addition, they had both accumulated stock options, restricted stock, and even deferred compensation income in Stephen’s case. But was it enough?

Here were the issues:

  • Was retirement actually an option for them? Did they have enough money for Stephen to accept the package? If so, would Nicole have to continue working or could she retire too? She just assumed she would have to work until she was 62.
  • How much could they pay themselves without stressing about running out of money? No matter when they retired, they weren’t sure how to turn their retirement savings into a reliable monthly paycheck.
  • Finally, how could they minimize the taxes on their retirement plans and executive benefits? While they weren’t against paying their fair share, the last things they wanted were unpleasant surprises at tax time.

The Plan

Stephen and Nicole realized that this was a critical time and needed help from someone with extensive experience in executive compensation issues and retirement.

Given the deadline for Stephen’s response, they didn’t want to risk making this critical decision on their own.

For Stephen and Nicole, the financial planning process looked like this:

  • Gather the data. This included the details of each retirement and executive compensation plan, their investments and their desired retirement living expenses.
  • Consider all the options. The next step was to collaborate with their CPA to review each retirement scenario – including early retirement for both of them – and determine the odds of success for each one.
  • Choose a strategy. After careful consideration, they chose a retirement option they were both comfortable with, which included an investment strategy and sustainable withdrawal plan.
  • Establish new accounts and execute the plan. Finally, it was time to start putting the new strategy into play.

Seeing all of the options side-by-side allowed them to make a confident, informed decision. They knew that they would be able to move forward with a sustainable stream of retirement income for the rest of their lives.

The Results

Stephen chose to accept the early retirement package and couldn’t be happier with his decision.

While Nicole wasn’t quite ready to say goodbye to her career, she wanted to focus on slowing down. She didn’t want to miss out on any more annual trips with her girlfriends because of work.

The financial planning process helped Stephen and Nicole in many ways:

  • Stephen was able to accept his early retirement offer without any stress.
  • Nicole was able to continue working on her terms, knowing she could retire at any time.
  • They saved thousands in taxes by creating a strategy for their retirement plans, stock options and restricted stock.
  • They were able to turn their retirement savings into a predictable stream of income that would be there for them for the rest of their lives.

Stephen finally has time to work out every day and play golf with the guys on Friday mornings. He recently started mentoring young professionals as a way to give back to the business community.

Today, Nicole is finally preparing to retire – years earlier than she thought possible. She accomplished all she wanted from her career and still made time to enjoy life and have fun along the way.

They continue to take two big international trips each year, along with traveling to see family and an annual beach getaway to 30-A.

Stephen and Nicole have confidence in knowing that their retirement plan is sustainable. They can relax and enjoy the retirement they worked so hard to earn.

They regularly review their retirement plan to ensure that their retirement will continue to be stress-free.

For privacy reasons, the case study described above is hypothetical and the facts do not apply to an actual Prana Wealth client. This retirement planning case study should in no way be construed as a guarantee that a current or prospective client will experience similar results or levels of satisfaction if he or she engages with Prana Wealth for wealth management services.

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