Executive Retirement: Navigating Complex Retirement for the Martins
Current State of Finances
Jane and Keith Martin are in their early 60s and find themselves at a financial crossroads as they contemplate retirement. Jane is a Vice President at a Fortune 50 company, with a significant portion of her seven figure compensation coming from bonuses, deferred compensation, and a schedule of Restricted Stock Units (RSUs). The RSUs and deferred comp will vest and require payout in the 3 years following retirement. Keith has been managing their family’s many rental properties, which have been a steady source of income but also a point of uncertainty regarding their future financial strategy.
Their three children are finishing college, and while the Martins are proud to have supported their education, it has been a substantial financial commitment. They have managed to amass a significant nest egg, but with various income streams and asset sales to consider, they’re unsure when they can afford to retire and what their lifestyle would look like when they do.
Financial Advisor Insights: What are we thinking about?
Mixed Compensation
The Martins need a comprehensive financial plan that considers all elements of their complex situation. We need to model and understand the implications of Jane’s deferred compensation and RSUs as this is crucial. We need to forecast the value of these assets over time, considering market conditions, tax implications, and the company’s performance.
Real Estate
A deep dive into the real estate portfolio is necessary. This would include evaluating the current market, the properties’ income-generating potential, the cost basis of the properties, and their role in the Martins’ retirement plan. They might decide to sell some or all properties, continue managing them, or hire a property management company, depending on their retirement timeline and income needs. A big consideration here is whether they want to continue being a property manager.
Retirement spending
Calculating the Martins’ retirement needs will involve a thorough review of their expected living expenses, desired lifestyle, and potential healthcare costs. We would use this information to determine when they can retire comfortably and what their annual spending could look like. Additionally, as their children finish college, establishing a clear boundary between supporting their kids and focusing on their retirement savings is important. This might involve setting expectations with their children about financial independence and helping the Martins understand the impact of additional savings on their retirement goals.
Clean up
There is a lot going on here and we need to pull all these pieces together. Our plan would incorporate their assets, projected income throughout retirement, investment allocation plan, asset protection and personal goals to provide a clear picture of when they can retire and how they can manage their finances to enjoy a comfortable and fulfilling retirement.
What’s Next?
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