When to Retire
Approaching Retirement
Primary goal: Understand retirement timeline and ability to maintain current lifestyle.
The Background
Paul and Lynn were in their early 60s and, until then, had been managing their investments. Paul owned his own business and wanted to retire in five years. Lynn was a school principal and wanted to retire as soon as possible. However, she wanted to ensure they could afford for her to do so before making this big decision. Their goal was to maintain their current standard of living in retirement. However, they did not have a clear picture of what they were spending now and had no idea how their expenses would change in retirement, especially if one or both would need long-term care.
The Challenges
- Understand how income and expenses would change in retirement and ensure they could maintain their living standard for the rest of their lives.
- Identify and implement optimal Social Security claiming and pension strategies.
- Estimate the potential impact of a long-term care event and their ability to afford it.
How We Helped
The couple shared what retirement “looks like” to them, and their HTG team took a detailed look at their spending and retirement resources. The resulting plan revealed that Lynn either needed to work two more years if they reduced spending immediately or four more years if they didn’t reduce spending.
- Established a thorough inventory of current and future expenses.
- Created a financial plan that summarized their assets, liabilities, income, and expenses, both with and without long-term care needs, which allowed them to understand when they could retire.
- Evaluated their social security benefit and pension plan distribution choices and recommended a strategy to optimize both.
- Discussed a withdrawal strategy to allow them to live comfortably, minimize their tax liabilities, and meet their financial goals.
- Identified low-income years in early retirement ideal for tax optimization strategies, including Roth conversions and realizing capital gains.
- Advised on Medicare and other healthcare coverage options, which helped the client understand the implications of early retirement and the costs associated with private healthcare.
