“Could we meet to discuss my retirement plan? I can’t do this much longer. What are my options? I need something positive; I need to see the light at the end of the tunnel.”
Here’s a brief summary of my interaction with Toni. She’s great btw.
Toni’s 50 years old, a middle-school math teacher by day, fitness instructor by night, and a lover of travel, music, and dancing in her time off.
We have such great clients, and Toni’s no different. That said, we all have our breaking point and I’d be lying if I didn’t say that I’ve had this conversation with dozens of individuals over the past 20 years—They’re tired and just can’t stomach another decade plus in their current job.
For Toni and her kindhearted free spirit, it felt like her career had reached that tipping point.
If we are being honest, I certainly empathize with teachers. My parents are both retired teachers, I saw how hard the job can be.
We met with Toni and presented her current situation in our visual balance sheet.
We were honest and had to share with her that she wasn’t financially in a place where she could call it quits and live comfortably.
However, she Toni had options.
She held significant assets in her individual brokerage account which provided some flexibility. Good news, she didn’t have to wait until 55 or 59½ to tap into her only retirement accounts [403(b)] for access to cash, she could instead use the savings in her individual account immediately.
We encouraged Toni to explore finding a job that she could enjoy and look forward to, even if it meant a pay cut.
We estimated Toni would need $5,000/mo. to maintain a frugal lifestyle. Currently she could comfortably take $3,000/mo. from her individual brokerage account, leaving a $2,000/mo shortfall. Toni’s goal was to find a flexible, inspiring job in which she could earn $2,000+/mo. and she would be in good shape.
We broke her situation into four different segments.
- Age 50-60 Awesome job with supplemental income from brokerage
- Age 60 Begin pension from her years teaching
- Age __ Where’s Toni’s 403(b)? Add/discuss that.
- Age 67 Begin taking Social Security
In the final two stages, we can adjust the supplemental income as needed depending upon her needs at that time.
After all, maybe she finds a job she loves and wants to continue doing it for the foreseeable future.
Bottom line, it all starts with a plan!
We always tell people that the ongoing monitoring of the plan is the most important aspect of the plan. As soon as we put a plan in place, we know that it is going to need future work. There are certain assumptions that we simply aren’t going to get right (rates of return, inflation, job changes, life events, etc…) which just reminds us that we need to get together and make course corrections as needed.
As your goals change, your financial plan needs to be just as flexible to adapt and change.
If you or someone you’re close to is a high-achieving professional that could use help aligning their finances and establishing a financial plan, please reach out to us, we’re accepting new clients and eager to help.
Cheers, Nic
This is a hypothetical situation based on real life examples. Names and circumstances have been changed. The opinions voiced in this material are for general information only and are not intended to provide specific individualized investment, tax or legal advice for any individual. We suggest that you discuss your specific situation with a qualified, legal advisor and financial advisor.
