To get started with Brian and Debbie we put together a long-term retirement plan. This meant gathering all of their financial information in one place. First, we looked at all of their existing assets like their home and investment accounts. Then we went through all of their current and future cash inflows (like Brian’s salary, pension and social security benefits) and outflows (like living expenses, taxes, and other goals like travel).

With their whole picture in place, we then analyzed various scenarios and their probabilities of success – looking at the “big 3” levers in retirement planning:

• Retirement age
• Lifestyle/expenses
• Investment risk

For example, we considered what it would look like for Brian to retire right away versus work for five more years. In the end, we helped Brian and Debbie find the right balance between their desire to retire now and their travel goals in retirement. While their frugality meant that Brian and Debbie could afford to retire right away, in the end they decided it was worth working a few more years in order to take some of the trips they had been dreaming about.

The next step in the process is the fine-tuning.

We analyzed Brian’s pension and discussed the pros and cons of taking the lump sum compared to monthly payments. While many financial advisors will default to taking the pension as a lump sum so they can charge more fees or sell an annuity, our flat fee means we can offer an unbiased opinion on these sorts of decisions. In Brian’s case, his pension was actually quite generous, and given his family’s longevity, we recommended taking the lifetime income in lieu of a lump sum.

We also helped Brian and Debbie come up with a strategy to maximize their social security benefit. Because Debbie only has a small work history of her own, she will take her own benefit starting at full-retirement age, while Brian will wait until age 70. Once Brian starts taking his benefit, Debbie can switch to her spousal benefit and receive a much higher payout.

Lastly, we helped Brian and Debbie with several tax strategies, including Roth conversions in early retirement while they are in a low tax bracket, as well as a plan to keep them under the threshold to receive a subsidy for health insurance before they turn 65 and qualify for Medicare.

In addition, we created and then implemented asset location and withdrawal strategies for their various investment accounts that reduced their taxes significantly while maintaining proper diversification.

Brian and Debbie appreciated the comprehensiveness of the advice and gained confidence that the retirement they had been envisioning was within their grasp.

They now enjoy the peace of mind that comes from a clear financial plan and they have more energy and mental space to dedicate to the things they enjoy.