Overview and benefits

Sarah's story and plan

Sarah, a go-getter in the tech world has just hit her fifteen-year work anniversary, where a significant chunk of her compensation comes from restricted stock units. Talk about golden handcuffs! Outside of the office, she is busy knocking off her travel bucket list and playing golf with her friends. She is into fitness and living a healthy lifestyle.

Juggling her busy schedule gets harder each year and as her financial situation gets more complex it only takes up more and more time. So, she has hired Twenty Fifty Capital, as a fee-only comprehensive financial planning group, to help manage the financial aspects of her life. Hopefully towards an early retirement.

Case study results

After helping create and review her personal balance sheet and income statement, a few things came to light. Having been at the same company for a long time, Sarah has obviously built up substantial stock in the business and has also become ingrained in her day-to-day habits. While she holds real risk in having such a concentrated investment portfolio, she also has a clear sense of what her financial needs are each year. This clear sense is going to be very helpful in achieving her goal of an early retirement.

With an investment analysis alongside a cash flow forecast, we identified that Sarah was making non-deductible contributions to her IRA that were never converted to her Roth IRA, enrolled in a low deductible health insurance plan, and overly concentrated in company stock. Her Certified Financial Planner at Twenty Fifty Capital put a plan together to improve the odds of early retirement.

Over the next few years, the plan is designed to optimize her IRA conversions given the basis in her IRA and, as a benefit of the healthy lifestyle she likes to live, decrease her annual health insurance premiums by enrolling in a higher deductible insurance plan thus opening the door to HSA eligibility. A strong HSA account will be very beneficial in early retirement when she is off her employer’s plan and not yet eligible for Medicare. From an investment standpoint, Sarah and her Certified Financial Planner agreed upon a schedule to sell off her company stock over time and begin diversifying her portfolio.