Recent Retiree Finances: Retirement and Wealth Management for the Thompsons
Current State of Finances
The Jim and Lisa Thompson, both in their late 60s, have recently retired and are now focusing on managing their significant wealth and enjoying their golden years. They have successfully paid off all their debts and have accumulated a wealth of $6 million, primarily in retirement accounts, stocks, and real estate. They spend about $180,000/year plus $60,000 on travel.
As they navigate retirement, their primary concerns are understanding and optimizing their Social Security benefits, planning for Roth conversions, handling Required Minimum Distributions (RMDs) from their retirement accounts, managing Medicare and healthcare, planning frequent travel, and establishing a legacy for their children and grandchildren. They currently pay substantial annual Asset Under Management (AUM) fees for financial advising but are considering self-managing their accounts to reduce expenses and take a more hands-on approach now that they are no longer working.
Financial Advisor Insights: What are we thinking about?
Income Sources
For the Thompsons, we are facing a ticking RMD time bomb. Their savings is primarily in tax-deferred accounts and will be subject to RMDs despite them not nearly the amount of their RMD to live off of, pushing them into an unnecessarily high tax bracket. They may benefit from delaying their Social Security benefits to maximize their monthly payouts and also providing “room” for annual Roth conversions.
Legacy
We need to review their estate plan to make sure our financial recommendations are in line with their legacy goals. Do they have a trust set up? How much could they leave their family without hindering their ability to travel and continue the lifestyle that they enjoy? We could also discuss ways for the Thompsons to see the impact of their wealth on their family now opposed to after they pass, such as establishing annual gifting amounts, helping the grandkids with college, and taking family vacations.
Self Managed Accounts
We need to help increase financial literacy and walk the Thompsons through trades in their investment accounts before transferring over the holdings from their AUM manager. This will save them tens of thousands of dollars each year and allow them more control. We would meet with them to regularly rebalance their portfolio and provide specific trade recommendations for each account so that they can execute their own investment management strategy.
What’s Next?
Use the link below to schedule an Introductory Meeting. This initial call is completely free allows us to discuss whether our working together is a good fit.