Client: Jack and Diane, both age 55
Job: Retired Executive and High School Teacher
Net Worth: $1,650,000
Children: All children are grown, married, self-supporting, and not living at home
Situation: Jack and Diane receive pensions but are too young to collect Social Security. Their intention is to never work again. They are concerned about market volatility and have been sitting primarily in cash since 2003 while the markets recovered.
After a 25+ year career in the public school system, Diane, a history teacher, decided to take early retirement. She and her husband Jack, who retired from his corporate job at the same time, needed advice on managing this transition and getting back into the stock and bond markets.
Diane was entitled to a pension that paid nearly 80% of her final year’s salary. In addition to her pension, Diane accumulated $150,000 in her tax-sheltered annuity 403b program. Jack also collects a pension and had saved nearly $350,000 in his tax-deferred 401k plan. Jack and Diane are both eligible for Social Security at age 62.
Their pension income provided for all their living expenses. We made arrangements to roll over Jack’s 401k and Diane’s 403b into IRAs and developed a long-term investment strategy for them. As part of that strategy we suggested that Jack and Diane start an account and use part of their pension income to save for expenses such as a new car or to fund a dream vacation to the American heartland.
Since the majority of their retirement money was in cash, they recognized they would need to invest more aggressively and grow their portfolio to offset inflation. We had numerous meetings with Jack and Diane over the next few months. During this time we explored their goals, concerns and feelings toward risk. Additionally, we had them complete a unique behavioral finance risk profile. Because of the way they answered these questions, and our deep understanding of their concerns and wishes, we came back with multiple options to present to get them reinvested.
Jack and Diane were grateful that there were no high pressure sales tactics. They were surprised that we were so patient with them while educating them over a few months. They have remained fully invested now and are at ease with the risk/reward trade-off of their current portfolio. They have commented numerous times how they feel more confident in their decision-making ability and are comfortable knowing someone else is looking out for their best interests. It is our pleasure assisting them.
*Names and some details have been changed to protect client confidentiality.