Fred and Betty - Preparing for retirement and beyond in the final years of their careers

Fred and Betty are happily married and have lived in the Shenandoah Valley all of their lives. Fred began his career at the local pharmaceutical company over 35 years ago, starting out as an hourly employee and working his way up to management. Betty stayed at home while her children were little, and as her children got older, she went back to work in the school system, working part-time.

Now they’re only a few years away from retirement, and between Fred’s 401(k) balance and his pension plan, they have more financial resources than they ever expected. They feel extremely fortunate to be in the position that they are in. Fred also wants to make sure that he transitions well into retirement…and that he is able to stay retired. Some of Fred’s friends retired just before the financial crisis in 2008, and after some poor choices they found themselves back in the workforce.

The thought of life without a paycheck is somewhat concerning to them, even though they know that they have enough assets to carry them through their retirement years.. 

Their main questions are:

• How can we make the best use of Fred’s pension? Should we take a lump sum or a lifetime income annuity?
• How should we handle our healthcare expenses in retirement? Should we take advantage of the company retiree insurance or explore other options?
• How should we think about Social Security? Should we take it early and accept a reduced benefit, or should we wait with the hopes of getting a higher benefit later?
• How aggressively should we invest? We have longevity in our family, and we want to make sure that our assets will carry us for the rest of our lives.
• How can I minimize taxes in retirement?
• How can we best pass our wealth down to our kids and grandchildren?

They also desire to know exactly how much they are paying their financial advisory team, so that they are certain that they are receiving value for the fee. 

Fred and Betty began their conversations with the team at Larson Wealth Management three years before they hoped to retire. 

Over the course of four meetings, we gathered more information and finalized their written plan. Now they have complete clarity and a game plan for drawing the pension, timing, their Social Security benefits, and clear action items so that they know what to do to save taxes now and into retirement. The team at Larson Wealth created a concise written financial plan and took the time to explain the answers to the most important questions. Fred and Betty were initially surprised to hear that the annual planning fee would cost $5,000, but then quickly felt better abou the fee once they understood the value they would receive.

After the initial plan was created, we set a regular meeting schedule to make sure that they stay on track as they get closer to the retirement date. As questions came up in between the meetings, they emailed their questions over to the team and typically received a response within 24 hours. 

As their retirement date finally came near, the pharmaceutical company offered Fred a “package” for early retirement. Fred and Betty decided to take the “package” because they already knew all of their most important numbers; they had been talking through their strategy over the last few years with the team at Larson Wealth Management. 

They rolled Fred’s 401(k) to the team and are now paying all of their financial planning and investment management fees directly from their investments so that they do not need to write a check for the advice they’re receiving. Their annual asset-based fee is 0.85%.

At retirement, the team helped Fred and Betty refine their budget and determine a withdrawal strategy that will allow them to manage the ups and downs of the market while also minimizing the taxes they pay in retirement. 

As they move through their retirement and then begin to draw Social Security, they are now in a position to start a gifting strategy to their children and grandkids. 

Fred and Betty are grateful that they made the decision to partner up with the team at Larson Wealth Management and feel ready for what comes up next.

This is a hypothetical situation based on real life examples. Names and circumstances have been changed. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your advisor prior to investing.