“Are we ready to retire?”

Molly and Peter both age 63 were concerned about replacing income after their last pay checks, making their savings last up to 30 years and managing market volatility.

Key questions from them:

• When should we start collecting Social Security?
• What would healthcare costs be in retirement?
• How much can we take out of our investments each year?
• Are our investments allocated properly to provide income and growth over both our lifetimes?
• Can we afford a second home?
• What if we ever need nursing home care – will that destroy our nest egg?
• When we retire, we know what we’re retiring from, but what are we retiring to?

We sat down with Molly and Peter and discussed all of their concerns in detail. They provided us with copies of their investment account statements, their outstanding debt amounts, Social Security benefit statements and an old pension Peter had from a prior job. We asked them plenty of questions to get a thorough understanding of their goals, plans, comfort level with risk, and their attitudes about retirement. It was important that we talked about their lifestyle and the amount of money they needed to “live the life they wanted to live” in the future. These were the takeaways:

• They found that their plans to travel and spend money in retirement were possible.
• They were surprised that Peter’s pension income would not start until age 65.
• They were unpleasantly surprised about the impact of healthcare costs, prior to Medicare eligibility at age 65.
• We were confident they could reduce the risk level in their investments and sustain income withdrawals.
• They learned about required minimum distributions from their retirement accounts starting at age 70 ½, and discovered the potential to push them into a much higher tax bracket than they had considered.
• They were surprised to learn that because of their great health and longevity in their family, they would likely be better off waiting to take Social Security until age 70, but could take it sooner if they preferred.
• They learned that their Social Security amounts were also taxable income.

We strive to provide a valuable experience when outlining the retirement planning process. By addressing key questions, we strive to help family members understand each other’s concerns and strengthen relationships.

Back Cove Financial and Commonwealth Financial Network does not provide legal or tax advice. An estate plan is implemented only in coordination with a client's attorney and/or accountant

Actual performance and results will vary. These case studies do not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted regarding your specific situation.