Case Study #2 – Retiree


Randy was referred by an existing client who had retired years ago. Randy called in and indicated that his company had offered him an early retirement package and he wanted to see if he could make it work. He was 64 and his wife 61. His primary concern was the lump sum pension buyout that his company had offered. Randy had 60 days to make a decision.

We scheduled an appointment with Randy and his wife, Rayna. We went through our educational presentation to explain how money behaves differently in drawdown (retirement) than in accumulation (working years).

During this process we discovered that Randy had a 401(k) through his employer, an old IRA that he started when he first got married and a lump sum pension buyout that his existing company was offering. His wife also had an IRA from her working years and together they had a joint brokerage account. Randy has earned over the SS max the last 6 years, his Social Security benefit is over $2,600/month at 66. His wife did not have enough quarters of credit to qualify under her own earnings record.

The only debt they had was their house and they were 3 years away from paying that off. Their kids were both married and one of them had just had a child.

After working through their budget, Randy and Rayna gave us their desired income level in retirement. We tested that income amount against their assets over all relative periods in history to see how they would’ve fared. At first it didn’t work, so we made some adjustments to their budget and their asset allocation. We looked at the options of taking the pension and taking the lump sum as well as paying off the house now or continuing with the mortgage.

After completing the analysis, here are the recommendations we worked together to establish:

  • Pay off the mortgage
  • Take the lump sum pension offer
  • We recommended that Randy file and suspend his SS benefits at 66 so Rayna could begin drawing her benefit, then he would begin his benefits at 70.
  • We created a diversified portfolio of ETFs and Mutual funds implementing our 2 management strategies, both strategic and tactical.
  • We implemented our withdrawal “lock-in” strategy to increase his probability of success throughout retirement.

Randy was happy with the recommendations and the plan we created and he elected to go ahead and retire.