Everyone’s vision of retirement is unique.
The transition to retirement and the accompanying move from “saver” to “spender” can cause anyone anxiety. You’re likely asking questions such as:
- “Can I afford to retire and remain financially independent?”
- “How much can I safely withdraw from my investment accounts without running the risk of running out of money?”
- “How exactly do I get money out of these accounts?” and
- “When should I take Social Security benefits?”
There are many questions that pop up when thinking about retirement. From healthcare expenses to applying for Social Security benefits, there will be times you will want to consult with a Bridgeworth advisor.
The founding partners of Bridgeworth have more than 30 years of planning experience, and we have helped thousands of clients retire. Your advisor will take the time to answer all of your questions in a manner that is straightforward and as jargon-free as possible.
A retirement plan is not a “set-it-and-forget-it” kind of thing. Things change. There are market shifts, changes in tax laws, and changes in your own life that could have an impact on your plan. These realities need to
be assessed by a Bridgeworth CFP® retirement-planning professional to see what, if any, post-retirement strategies should be incorporated into your plan.
One of the primary goals in providing you with informed and thoroughly researched answers to your questions is so that you can worry less about money and enjoy more of life.
You are the only “you” there is. Your financial plan has to be as unique as your fingerprint.
Your financial advisor can also be a good sounding board to help you remain objective and reality-based about any major spending you may be considering, before or during retirement. Having a trusted and objective “voice of reason” can help you stay on track.
This is a team sport. In order to provide you with the best available
insights, your advisor is constantly drawing on Bridgeworth’s extensive wealth of knowledge and financial planning resources.
As the conversation continues, you will make all of your financial decisions. Our role as your financial advisor is to keep you focused and informed on the choices available to you so that you understand how every financial choice you make impacts your goals.
Financial Personal Trainers
To put it plainly, our role is to listen to you to understand what you want your future to look like, and then, coach you all the way there. In fact, that is the best way to think about our role. We are personal trainers who encourage and coach you into a better financial future.
Call us and let’s begin a conversation.
This case study reflects the combined experience working with hundreds of clients over the past 20+ years. It does not represent any one Bridgeworth client, but serves as an example of the benefit of planning. As Dwight D. Eisenhower said, “plans are useless, but planning is indispensable.”
Bill, age 66 and Peggy, age 65, have been married for 43 years. They have 3 adult children, Jen, age 40, Will, age 37, and Jeff, age 35 as well as 4 young grandchildren. Bill and Peggy started working with Bridgeworth 2 years ago when they were anticipating retirement. Bill and Peggy thought they were on the right track to retire, but wanted a thorough review of their financial situation before making any decisions. Bill enjoyed his work as an engineer and Peggy liked working as a school administrator, but they were ready to start a new phase in life where they could have more time to focus on volunteer work with their church’s foster care ministry, have regular “play dates” with their grandchildren, read for pleasure, garden and learn more about woodworking.
At the beginning of our relationship, we spent time getting to know Bill and Peggy and understanding what is important to them. We learned about their desire to help pay for some of their grandchildren’s college expenses, just as their parents helped their children. Bill and Peggy also talked about the importance of maintaining their giving to their church and their desire to travel more, including a retirement celebration trip with the family to Australia and New Zealand. In addition, they wanted to pay for an annual beach trip with their family (and maybe another week at the beach for the two of them afterward to recover!) given their desire to have strong relationships and make memories with their children and grandchildren. To incorporate these goals into the financial plan, we asked Bill and Peggy to do some homework to quantify how much each one costs as well as what it costs for them to live each month. We also requested copies of their financial statements, including investment statements, insurance policies, estate documents, Social Security benefit estimates, and received permission to talk to Bill’s employee benefits department about his 401k retirement plan at the engineering company where he worked. Peggy was able to provide estimates of her pension benefits that she accrued from working as a school administrator.
Like many people, Bill and Peggy found it difficult to determine how much they would spend in retirement. They had never kept a budget before and did not have good historical information on their spending. Plus, they recognized that some spending, like clothes for work, would decrease during retirement years while other spending, like travel, would increase for a while. As part of the planning process, we showed them how to connect their bank accounts to Wealthvision so that they could track spending more easily going forward.
We then analyzed the different elections Bill and Peggy could make for their Social Security benefits and Peggy’s pension benefit to maximize the likelihood that they will be able to achieve their financial goals. Given life expectancy statistics and their own family history, we recommended that Peggy elect pension benefits payable for her life only to get the largest benefit. The Social Security election that produced the best results for Bill and Peggy was for Peggy to take benefits at age 66, her “full” retirement age per Social Security and for Bill to delay his benefits to age 70.
Bill and Peggy took a risk tolerance test and those results combined with their financial plan helped us determine their appropriate investment asset allocation is 65% stocks and 35% bonds. Bill had an old rollover IRA account that has been in cash, partly because of his concerns about the economy and partly because life is busy and he’d not taken time to invest it. We agreed on a timeframe for investing the cash as well as transitioning the investments in Bill’s 401k, Peggy’s 403b, Peggy’s Roth IRA and a joint investment account they have to the 65%/ 35% asset allocation. Bill and Peggy have a healthy income during retirement due to Social Security benefits and Peggy’s pension, but need regular distributions from their investment accounts each year to pay for their family trips and for home renovation projects. We worked with their CPA to determine the most tax efficient way to take these regular distributions and then completed paperwork to have that income deposited in their joint bank account each quarter.
Bill and Peggy are familiar with long-term care because Bill’s Mom had Alzheimer’s and was in a memory care facility the last 2 years of her life. They both want to receive care at home as long as they are able, but recognize there may be a time in the future when facility care is needed. We reviewed long-term care insurance policies with Bill and Peggy and they decided to buy insurance to provide additional security to their financial plan, but elected not to buy all the available “bells and whistles.” Their policies have a daily benefit that will cover the average cost of an assisted living stay today with an inflation rider so the benefits will increase in the future. Bill and Peggy chose a maximum benefit period of 3 years, which is a little more than the “average” length of stay in a nursing home of 2.5 years. They recognize these policies may not cover 100% of long-term care expenses, but Bill and Peggy are comfortable with the trade-off they made between premiums and benefits.
Given that their estate documents were more than 10 years old and pre-dated any grandchildren, we encouraged Bill and Peggy to meet with an estate attorney to review and update documents. They spent time before meeting with the attorney considering decisions about how much money to leave to help pay for education for grandchildren, who should serve as attorneys in fact under their durable powers of attorney and advance healthcare directive, and whether to leave assets outright to their children or in trust.
After the estate documents were signed, we had a family meeting with Bill, Peggy, and their children. Jen and Jeff live in town and were able to attend in person; Will participated via video conference. The purpose of the meeting was two-fold: 1) it allowed the adult children and the Bridgeworth advisors to meet face-to-face and start a relationship, which is helpful in the event children get more involved in their parents’ financial situation later due to death/ disability and 2) it provided a forum for Bill and Peggy to share their plans to pay for annual family beach trips and to contribute $2,000/ year into a 529 college savings plan for each grandchild so the children could incorporate this information into their own financial plans and to share the decisions they made in their estate planning documents. It was important to Bill and Peggy to “set the record straight” regarding choices they made in their wills and powers of attorney to prevent decisions from being misinterpreted later.
Going forward, we will review the financial planning projections annually to make sure Bill and Peggy remains on track to accomplish their goals. We will also continue to review how their investments are performing and whether their ability or willingness to take risk has changed.
Bridgeworth can be a resource to provide objective information and analysis to give you peace of mind about your financial condition.