Thoughtfully managing a windfall

Case study: Putting things in order

Taken at its simplest, retirement planning is about finding the right intersection of “when” and “how much.” Those questions, however, contain myriad considerations that we believe benefit from experienced financial and investment guidance.

High achievers prepare for their next steps

Marcus, 53, and Eva, 55, are accomplished professionals who have led successful careers and climbed the corporate ladder across several firms. They are recent empty-nesters, and Eva has a growing concern about her mother’s health and well-being.

Though they have dutifully invested in their companies’ 401(k) plans in each of their firms and separately have accumulated a variety of stocks and shares in investment funds, their overall financial picture isn’t very clear to them. It’s a hodgepodge – 401(k)s with multiple companies, inherited stocks, some mutual funds – lacking strategic approaches to timing, risk tolerance and diversification.

While they are not necessarily eager to retire, they find themselves often talking about their other life goals. At this point, we believe they would benefit from the clarity a financial plan and in-depth financial inventory can bring.

We would start by helping them understand their goals and quality-of-life desires – the critical first step in figuring out how to pursue them. Then we would inventory their income, assets and liabilities, including employment income, retirement savings plans, financial securities, real estate, life insurance policies, expected inheritances, mortgages and other debt. As part of this, we would also work to consolidate 401(k) plans they may have created through multiple jobs.

We would also work with the couple to help protect their interests from other major risks, like the loss of a spouse, that could cause unnecessary difficulties if left unaddressed.

Through these steps, their goals, tolerance for investment risk and their preferred timing will guide each decision.

Once we understand Eva and Marcus’s present situation, we can start bringing clarity to the “when” question. We can also outline steps the couple can make to better align their retirement desires with their financial picture. During this, we would also look at several potential “what-if” scenarios – such as if Eva’s mother needs additional support, or if Eva or Marcus need to retire earlier than preferred – and plan contingencies. We could even take a look at the couple’s interest in a vacation home, balancing the financial considerations with their quality-of-life desires.

Building a financial plan takes time, but we believe it is effort well-spent – and we work hard to keep it from becoming burdensome. Equipped with this information, we believe Marcus and Eva will be able to approach retirement with confidence and focus on more fulfilling aspects of their lives.

The hypothetical example above is for illustrative purposes and is not representative of any actual experience. Individual results will vary.