Case Study

Preparing for Retirement
with a More Comprehensive Plan

Affectionate British couple at home preparing tea in the kitchen and smiling while hugging – lifestyles concepts

Situation

Jim is a 65-year-old surgeon at a local hospital who is planning to retire within the next two years. His wife, Jennifer, is retired. He has always contributed the maximum to his retirement accounts, and has a substantial amount saved in pre-tax accounts.

As he approaches this transition, he wants to ensure he can maintain the lifestyle he has worked hard to build throughout retirement. He looks forward to spending more time traveling, playing golf, and enjoying life with his family. Ideally, he would like to spend more in his early retirement years and scale back in his 80’s.

He also expressed a desire to begin gifting to his grandchildren, specifically setting aside funds to support future college expenses.

Concerns

  • Does our current financial plan address all important aspects, such as insurance, estate planning, IRMAA premiums, and taxes? 
  • How can I be sure I can comfortably retire in two years
    and enjoy the retirement we’ve pictured?   
  • What strategies can I incorporate to minimize my taxes throughout retirement? 
  • Does my portfolio align with my other financial accounts, or are decisions being made without the full picture in mind? 
  • My mother was in a long-term care facility which was costly. Should we inquire about long-term care insurance or 
    self-insure? 
  • What role does Jennifer’s Inherited IRA from her father play in our overall financial picture? 

Our Solution

  • Financial Planning

  • Investments

  • Tax Strategy

Investments

  • We started with a risk tolerance analysis to better understand Jim’s comfort with market volatility and long-term return expectations.
  • After reviewing, our team noticed a disconnect between his current portfolio and personal risk tolerance. He was more willing to take risk than his portfolio assumed. We increased his exposure to stocks to better align with his personal risk tolerance.
  • We introduced alternative investments for additional diversification beyond traditional stocks and bonds, which were not available in his prior employer-sponsored retirement plans.
  • We helped consolidate the majority of his investable assets into Charles Schwab, while continuing to monitor and advise on accounts he elected to leave in his former employer’s plan.

Financial Planning

  • Connected all accounts to a comprehensive financial planning platform to evaluate their net worth and overall financial picture. This allows for a 360 degree overview of their finances, so we don’t miss any blind spots.
  • Helped Jim review his budget, and concluded targeting monthly after-tax retirement spending in the $20,000–$25,000 range.
  • Modeled retirement distributions to support their lifestyle as “Go-Go>Slow Go>No Go” flow to retirement which equates to spending more in their early retirement years, eventually scaling back, and potential increased healthcare expenses in later years.
  • Modeled a plan with a significant Long-Term care event built in, and although their plan showed they can self-insure, Jim elected to speak to an insurance specialist to procure quotes. We coordinated a meeting with an insurance specialist.
  • Recommended annual 529 plan contributions of $5,000 per grandchild to take advantage of the Maryland 529 state tax deduction to fund education goals. These plans also provide the option to roll over up to $35,000 into each Grandchild’s Roth IRA account in the future.
  • Referred Jim to a local estate planning attorney to update his estate documents and ensure alignment with his overall financial plan. Immediately updated beneficiary designations and re-titled some taxable accounts into the name of the Trust.

Tax Strategy

  • We developed a tax strategy, with the help of Jim’s CPA, that incorporates a donor-advised fund for charitable deductions and future qualified charitable distributions (QCDs) from his IRA.
  • Our team educated Jim on recent tax law changes under the One Big Beautiful Bill Act, including the increase in the state and local tax deduction, and how this impacts his overall tax picture.
  • We ran forward-looking tax projections to ensure appropriate withholding from his employment income to avoid underpayment penalties.
  • We implemented an asset location strategy by placing tax-inefficient investments into qualified accounts and more tax-friendly investments into taxable accounts to help minimize lifetime tax liability.
  • We calculate Jennifer’s Inherited IRA required minimum distribution (RMDS) every year to ensure timely distributions. Since this account must be depleted in 10 years from the decedent’s death, we recommend increasing distributions when Jim retires and in a lower tax bracket.

Outcome

Jim now feels confident in his ability to retire and maintain the lifestyle
he and Jennifer envision, including the flexibility to travel and enjoy
retirement on their terms.

He appreciated being able to review different retirement projections, so he has options based on when he chooses to retire.

He values having a clear plan in place which goes beyond investments and addresses his taxes, estate, and other financial details, with the flexibility to change things in the future.

With a coordinated strategy in place, Jim has the clarity and peace of mind to confidently move forward with retirement.