Are you a purposeful retiree? Are you living your financial independence to its fullest? Do you have goals but aren’t sure if your investments are still well-positioned to fulfill those goals? And what happens as things change in the world around you? Our comprehensive planning and investment service can help answer those questions. We believe that planning for a purposeful retirement is not just about money but also about health, family relationships, and leaving a legacy.
Purposeful retirees Leonard and Debbie Lee are 75 years old and have been in retirement for 10 years. They enjoy gardening, visiting family, Lady Vol basketball, and relaxing in their new hot tub. They are debt-free and live on Social Security income, a modest pension, and the Required Minimum Distributions from their retirement accounts.
The APC Way
On APC’s advice, based on their unique circumstances, the Lees deferred taking Social Security to age 70 thereby maximizing their income benefits.
The Lees are tax-sensitive and want to reduce income taxes as much as possible.
The APC Way
When available we have used “tax loss harvesting” to create capital losses and tax deductions. Also, knowing the Lees generous charitable giving, we guided them to Qualified Charitable Distributions to reduce the income taxes on their RMD. The Lees were pleased that our review of their retirement security showed they could increase their charitable spending.
Both are concerned about losing their independence to health issues such as dementia. In the late 1990s they bought Long-Term Care insurance (LTCI), but the premiums have dramatically increased every five to six years. Should they keep the coverage or drop it?
The APC Way
Based on our analysis, the Lees could “self-insure” potential elder care expenses, but it might significantly draw down their portfolio. Thus, APC’s advice was to keep a modified version of the existing LTCI coverage in order to preserve as much of the Lee’s wealth as possible to support their legacy goals.
The Lees have a Living Trust and old Wills that have not been revised to reflect current Federal and State estate laws. They want to help their children and grandchildren now, not only at death.
The APC Way
Under current regulations, the Lee’s estate would pass to their heirs tax-free so amending their Wills removed old at-death trust strategies that could have unnecessarily restricted income to a surviving spouse. Their existing Living Trust can be an effective asset management and wealth transfer tool, but the Lees needed our help “funding” the trust, i.e., re-titling certain assets to the trust. The Lees also needed to execute Powers-Of-Attorney for each other and added an adult child as a contingent backup. After confirming their financial plans’ ability to afford annual gifting we helped Leonard and Debbie implement a holiday gifting schedule for the children and grandchildren, using APC-managed accounts as the source of funds.
For many years, the Lees portfolio lacked true investment diversification, with a concentration in stocks of large U.S. companies. In fact, their portfolio was 83% stocks.
The APC Way
We over-hauled the Lees investment strategy. First, we reset the overall asset allocation to a more age-appropriate risk level. Second, we positioned about five years of their expected goal spending into short- to intermediate-term bond funds (including municipal bond funds for tax relief). Thirdly, we constructed a more all-weather approach to growth investing, adding international and small company stock funds, a real estate-based fund, and a dividend-based fund to their portfolio.
Case Study Two
Purposeful retiree Debbie Lee is now 78-years-old and has been retired for 13 years. Her husband, Leonard, died suddenly last year. She still enjoys gardening, time with family, and relaxing in the hot tub. She has recently started doing some volunteer work and enjoys that social connection. She has a sizeable cash reserve in her credit union, and being debt-free, lives primarily on Social Security income and a survivor’s pension.
The APC Way
On APC’s advice, based on their unique circumstances, the Lees deferred taking Social Security to age 70 thereby maximizing their income benefits. Debbie now receives Leonard’s maximum benefit.
Debbie wants to reduce income taxes and increase her charitable giving if possible.
The APC Way
Following our recommendation, the Lees were using Qualified Charitable Distributions to reduce the income taxes on their RMDs. Debbie was pleased that our review of her retirement security showed she could increase her charitable spending.
Debbie is still concerned about losing her independence to health issues such as dementia. In the 1990s, the Lees bought Long-Term Care insurance (LTCI) and kept a modified version after several premium increases.
The APC Way
Debbie could “self-insure” some potential elder care expenses, but the odds of needing in-home assistance earlier and longer increase for a single person. Thus, APC’s advice was to keep the existing LTCI coverage to preserve as much of her wealth as possible for her legacy goals.
The Lees updated their estate plan with a Living Trust a few years ago. Debbie realizes that she may need to update some legal documents again and she also wants to help her children and grandchildren now, not only at death.
The APC Way
The Living Trust has allowed for a smooth financial transition after Leonard’s death. Debbie will have her attorney prepare updated healthcare directives. After confirming her financial plans’ ability to afford annual gifting we helped Debbie implement a holiday gifting schedule for the children and grandchildren, using APC-managed accounts as the source of funds.
During her last update meeting, Debbie thanked us for our caring service through a difficult time. “I’m so grateful that Leonard and I found you when we did. I don’t know what I would do now without APC!”