A senior executive of a Fortune 500 company and his spouse seek our help in managing their assets in the expectation of retiring within the next five years. They also want a tax-efficient strategy for exercising company stock options and stock grants. With their youngest child about to graduate college, they plan to sell the family home and move to a large condominium in downtown Chicago.

As part of the discovery process, we ask many questions to surface issues and gain a better understanding of their situation:

  • What do they envision their retirement to be? Do they plan to travel frequently or go out on the town often? What standard of living will they desire in retirement?
  • What expectations do they have for retirement income from the company’s pension and nonqualified plans? How much would Social Security at age 62 or 67 be a factor? Would the sale proceeds of their current home play a part?
  • Have they worked with a qualified tax professional to understand the impact of alternative minimum tax (AMT) on the exercise of company stock options? Do they have a strategy for holding company stock from grants in a tax-advantaged way?
  • What protections do they have in place in the event of an economic downturn before retirement or a catastrophic health issue? Have they considered long-term care or income replacement planning?
  • When was the last time they updated their wills and other estate planning documents? With adult children, does it make sense to start figuring current and future grandchildren into their estate plans? Do they have charitable intentions? How would they like to be remembered years from now?

How We Help
After uncovering what is truly important to them, we present them with:

  • A comprehensive financial plan based on their goal of retiring in 5 years to downtown Chicago at their desired standard of living;
  • A thorough review of their insurance and any gaps that could result if long-term care were needed by either spouse;
  • The establishment of a “What if” emergency fund for any unforeseen needs until retirement;
  • An income tax and alternative minimum tax-sensible strategy for exercising company stock options and grants;
  • Coordination of investments across all their accounts in anticipation of retirement and the future need to seek to generate dependable income from their portfolio;
  • Annual gifting goals and the establishment of 529 college savings plans for current and future grandchildren;
  • A way for them to support a local charity through the donation of appreciated securities.

Finally, we recommend an attorney to help them establish living trusts, updated wills and advanced directives. We help them clarify what truly matters in their lives, prioritize their goals and put a process in place toward achieving them. When the time comes, we will coordinate with their CPA to help determine a tax-efficient approach to the sale of their home and the use of pension and Social Security benefits. We help them feel confident and encouraged so they can look forward to an active retirement in a few years.

Examples presented here should not be interpreted as a guarantee of future performance of success. Case studies are hypothetical examples used to illustrate how we help clients plan for a better future. Plans require updating as conditions change. No plan or strategy can assure success. Financial Planning offered through LPL Financial, a Registered Investment Advisor.

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