A 74-year-old woman in the prime of retirement asks our help in managing her financial life. Her son has been assisting her with investment decisions but it becomes clear that she needs a strategy for generating consistent income while keeping up with inflation.

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

  • What portion of her retirement income comes from Social Security and from her late husband’s pension? What portion comes from IRAs and other accounts under her management?
  • What are her annual expectations of income as a percentage of her invested assets? Has she figured inflation into this figure? Are there any special expenses to consider?
  • Has her investment portfolio, mostly assembled back when she had employment income, been adjusted to focus on income? Is a growth component still needed? How much of a role do taxes play?
  • Does she own her home outright, or is she still paying down a mortgage? What is her attitude generally about debt?
  • Does she have any life insurance in place, and what future use would it play? Is there a need to continue the coverage?
  • Does her family history suggest that she would enjoy a long life into her 90s or beyond? What assumptions does she have about her health and level of activity as she grows older?
  • What trusts have she and her late husband established? To what extent is she likely to leave a tax-free estate? Does she have Powers of Attorney for health care and financial matters in place?
  • What legacy, if any, does she wish to leave behind for her children and grandchildren? To any charitable organization? How does she want to be remembered?

How We Help
After sitting down with her and her son to discuss what is truly most important, we present her with:

  • An investment plan to help generate greater income at a lower expected rate of volatility than her current portfolio, while still allowing the potential for enough growth to combat inflation and provide for a long life;
  • A thorough review of her insurance, and discovered that she could convert the value of her life insurance (no longer needed) into an additional source of income;
  • Annual gifting goals to the college savings plans for her grandchildren;
  • A way for her to support a local charity through a bequest that would potentially reduce her estate tax liability.

Further, we recommend an attorney to help her update her will and advanced directives, and to make sure her trust allows for the maximum estate tax exemption. We suggest that she pay off the remainder of her fixed-rate mortgage and have worked with her CPA to help lower the amount of Social Security benefits that are taxable.

We help the client and her son feel confident and encouraged, and to look forward to the coming years of her retirement.

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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