Manager frustrated with work; eager to retire early.
Challenge
Our future client was frustrated with work and frustrated with his 401(k) options. He was losing value because his employer did not allow the plan to accept any stock. The plan had vague information about the funds so it was difficult to tell where his money was invested. He was eager to retire at 59½ and roll over his 401(k) account, and associate and management pension plans to a well-managed IRA.
How We Helped
- We grew his initial small account, a personal IRA, by 37 percent within one year. We did this by buying stocks that our research identified as the stocks with strong relative strength, meaning their recent upward performance predicts they are likely to continue to move up the fastest.
- The client saw his small investment account performing better than the Dow and the S&P 500. When he was comfortable with our process, he transferred two larger IRA accounts to our management. His largest account remained his 401(k) with his employer.
- His employer offered an early retirement package that the client had the years of employment (35) and age to qualify. We did a retirement plan, mapping his income from the beginning of retirement until age 62 (when he could begin Social Security) and then beyond when his wife retired, too. Once we showed the client how he would have income, the client accepted the early retirement package. We toasted with a bourbon on his retirement day!
Couple with three sons whose college years would overlap; facing huge capital gains from selling appreciated company stock.
Challenge
This client couple has three sons, two of which will overlap in college. Also, the husband faces a huge capital gains tax when he sells his much-appreciated company stock.
How We Helped
- The couple had one 529 plan for their three sons. We opened two other 529 plans so each son had his own, and then the parents could easily track account balances. We divided the first account balance among the other two, matching the balance with the future college expenses. So the oldest son (expected first to go to college) gained the largest account balance.
- The parents didn’t know which mutual funds in the 529 plans were ideal to select as investments. We ranked the mutual fund offerings from most likely to grow to least likely to grow. Then the couple had objective information to make their decisions about funds. The couple contributed monthly to each account to build up the balances.
- The husband participated in the company stock purchase plan for more than 20 years. In that time, his investment grew 3,500 percent, presenting a huge capital gains problem that paying tax on the gains likely would consume the greater portion of his gain. We identified a tax shelter. He used the sale of a portion of his company stock to purchase the tax shelter. This tax shelter allowed him to write off 70 percent of the purchase price and reduce his capital gains income tax obligation.
Couple with sizeable undergraduate and graduate student loans, credit card debt, and a car loan. Have a 401(k) account still with previous employer. No will or other estate planning documents.
Challenge
This client couple was doing well in their careers. But they needed organization to their financial picture. They had education loans, credit cards balances, and a car loan. They had a 401(k) account still with a previous employer. They had a brokerage account with a different firm. They have extensive personal life insurance coverage. They did not have wills, power of attorney, nor health care directives.
How We Helped
- We took a deep dive into their financial situation with respect to income, expenses, liabilities, investments, employer benefits, emergency fund, and life insurance. With their financial picture complete, we prioritized their actions. We established a meeting schedule so all will stay on top of progress.
- With reminders from us, the old 401(k) was rolled over to the husband’s current IRA account. The brokerage account was transferred to an individual account. Now the funds are under our management.
- We helped the couple investigate refinancing their mortgage and adding to the refinancing some of their school loans.
- We tracked as they paid off the credit card balances and car loan. We tracked as they paid off each education loan balance.
- We shared calculators with the couple so they could determine whether to buy outright or finance all or part of a new vehicle purchase.
- When their child arrived, we presented a projection of college costs. They decided to open a separate account and set up automatic drafting of monthly deposits.
- They completed their estate planning documents. Now being parents, the need for a will was critical to ensure their child would be raised by the family member they designated should anything happen to both of them.