A couple in their late 50s was contemplating retirement in the next few years.  Up to this point, each had enjoyed successful careers, one as an executive and the other as a business owner and had done a good job of managing their $5 million investment portfolio.  However, the size of their portfolio and the looming decisions that they needed to make about retirement made them uneasy about continuing to manage their financial situation on their own.

We started working with them by first learning about their financial objectives.  They wanted to be able to continue their existing lifestyle with plans to travel more in their 60s.  They had been considering purchasing a second home, but they felt unsure if it was something that they could afford.  They also wanted to continue supporting a few charities.  Finally, the couple was considering providing financial support to their children, who were starting families of their own.

Through our collaborative portfolio design process, we built a diversified portfolio aligned with their goals—one that balanced the growth they needed to achieve their goals with the stability they wanted to be able to weather occasional market downturns.

Our retirement modeling analysis indicated that their assets were sufficient to meet their financial objectives if they retired in a few years.  In fact, the analysis suggested that they could retire immediately!  When we added their additional goals of purchasing a second home and making gifts to their family and charities, the analysis suggested a slightly lower (but still sufficient) probability of meeting all these objectives.  Our modeling suggested that working a few more years or viewing their second home as an asset that could eventually be sold if needed would significantly improve their financial outlook.  With these considerations in mind, they could confidently move forward with retirement, the second home purchase, and their plans to support family and charities.

We had meaningful conversations with them about their anxieties related to making the leap to retirement.  The husband told us that he was nervous about the cost of buying a second home, and the wife was nervous about giving up her steady income.  In our experience, no amount of analysis can completely relieve someone’s financial anxieties, but through an open dialogue and thoughtful planning, we helped to allay their concerns.

We then set out to guide them through navigating the maze of financial planning issues that would help them achieve their goals:

• To support their charitable objectives, we advised them to make a large contribution to a donor-advised fund. Doing so allowed them to pre-fund the next 10 to 15 years of charitable donations that they planned to make through future grant requests from the donor-advised fund.  They received a large tax deduction while their income and marginal tax rate were still high.
• We developed a tax-efficient withdrawal plan to help them think through which accounts they should use to maximize their annual cash flow while minimizing taxes.
• We evaluated investment strategies that could minimize the tax impact associated with selling the husband’s business and the wife’s shares of company stock.
• We also began to think through financial planning strategies like Roth IRA conversions and Social Security claiming decisions that would benefit them during retirement.

While our technical planning strategies added value, the greatest benefit was helping the clients gain confidence in their decisions. Retirement is rarely limited to numbers alone; it is often constrained by uncertainty. By developing a comprehensive plan and committing to revisiting it as circumstances evolve, our clients gained the confidence to retire on their terms, pursue the experiences that mattered most to them, and focus less on financial worries and more on enjoying the next chapter of their lives.

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The views expressed in this blog post represent the current opinion of Gibson Capital, LLC and are intended for informational purposes only. We may amend, supplement, or replace this information as circumstances warrant. This blog post may contain forward-looking statements based on information available at the time of production and are therefore speculative in nature and should not be considered a reliable predicter of future outcomes. These statements do not represent an offer to buy or sell securities and may not be relied upon for the purpose of entering into any transaction.

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