Case Study | Start A Plan Anytime

Overview and benefits

Profile

Scott & Melissa, established career professionals

Financial Goal

Preparing later in life for retirement

Age

58 & 57

State

Florida

Scott & Melissa's story

Scott and Melissa are both mid-career and happy in their fields. Scott has been a commercial architect for 22 years and Melissa just hit her 20th year in software sales. As each year passes, they feel an increasing need to get their retirement plan solidified and know they need to do so. However, time is limited and this item just keeps getting pushed down the “to do” list with their daily lives.
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Fortunately, Scott and Melissa have great benefit packages at work with low cost health insurance and 5% 401K matches. They exceed the income limit for being able to deduct their IRA contributions and have neglected to make them on an after-tax basis, but they have both maxed out the employee contributions to their 401K for the last ten years. They have built up significant equity in their house and do not plan to move in the foreseeable future. Outside of their 401K plans, they do not have any ongoing savings nor investments.

Case study results

While they have done a great job maxing out their 401Ks and purchased a good long-term home, they are investing almost all of their retirement funds in tax-deferred accounts. Over time, this will hinder their ability to control their taxable income in retirement. While the 401K contributions have been great, Scott and Melissa will need more than what the 401K accounts are expected to provide in retirement.
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Their planning started with a tax projection of what annual withdrawals and their applicable taxable income will be from retirement onwards. Simultaneously, we looked through past tax returns to determine the basis in their IRAs and made a plan for annual conversions to their Roth IRAs on a schedule they found comfortable. They are also going to begin making frequent contributions to taxable brokerage accounts to help increase their retirement funds.

After taking a deeper look into the equity in their home and finding their State has very low property tax exemptions against creditor claims, we made an introduction to an estate attorney who will help determine if moving their home into an LLC is a prudent decision.

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