Take proactive steps to enjoy a successful, fulfilling retirement
Client Challenge: Planning for a financially stress-free and secure retirement; successfully balancing financial obligations with post-retirement income.
The KHC Approach
1. Clarify Goals
2. Build a Plan
3. Take Action
The road to retirement is a different journey for each of us.
For some, it means carefully saving money to live a leisurely, yet financially secure life. To others, it means taking skills and talents honed over years in the workplace and putting them to use in different ways. And for others, it is the excitement of planning activities for which there's finally time.
For Roger and Eileen, retirement planning meant a little bit of all of that. A long-time corporate executive, Roger enjoyed a successful 30-plus year career at a large accounting firm. Over the years, he took advantage of benefits such as the company pension, retirement options, generous healthcare coverage and a comfortable income.
By 2010, the couple was beginning to think about the next phase of life, with Roger expressing a desire to retire from his corporate job by year-end 2013. Unlike many, Roger and Eileen realized that successfully planning for the kind of retirement they wanted didn't begin the day Roger left his corporate job, but rather far in advance of that.
The couple had not lived an extravagant lifestyle, however, they had certain obligations for even beyond retirement. Among the most pressing were the financial support of their daughter and her family, and their church's capital campaign. The couple also had the desire to travel and enjoy other activities without worrying about finances after Roger stopped working.
The KHC Team, led by Jessi Sumner, principal and director of wealth management, had been working with Roger and Eileen for several years. Over the years, the team had encouraged the couple in Making Life Count!® and being clear on what their priorities were. With ongoing discussion, Roger and Eileen began to map out their next phase using KHC’s three-pronged approach:
- Clarify Goals
- Build a Plan
- Take Action
Clarifying Goals: To fully understand Roger and Eileen's retirement plans and how realistic they were, the team began taking an in-depth look at the goals Roger and Eileen outlined for their post- career phase. Walking through this process involved not only looking at finances, but also the emotional, mental and social changes that retirement often brings. The couple's retirement goals were:
- Providing support for their church; a commitment they had made pre-retirement and wished to continue.
- Taking a few international trips
- Supporting their community and causes through charitable giving
- Potentially downsizing their house and purchasing something smaller
- Financially supporting their daughter and her children
With their goals clarified, and viewed side by side with their financial picture, the couple was in a good position to determine what adjustments needed to be made pre-retirement to meet their goals for after Roger stopped working.
Building a Plan: Over the next several months, Roger and Eileen, along with the KHC team, made some decisions to support their goals. Emily, their daughter, expressed a desire to go back to school to help her secure a job that paid better than her current clerk position. Roger and Eileen felt that was a good idea, allowing them to invest in Emily's career for the short-term and ultimately lower their level of financial support to her over time as she made more money. Making this career commitment for Emily meant reducing the church contributions for a period. Roger also decided that he would like to continue working, but on a consultative basis with the flexibility to be selective about the work he took on. To that end, before he left his job, he began working with Joni Lindquist, KHC principal and career coach, to determine what his consulting practice might look like. The financial team at KHC helped Roger formulate a pension maximization strategy and helped the couple explore retiree health benefits to ensure coverage for some underlying health issues both had.
Taking Action: By 2014, Roger and Eileen had made significant progress on their retirement plans. They ultimately sold their house and moved to a smaller place, which saved money. After the initial investment in Emily's career training, they also began paring down the amount of support they were providing for her and her family. Roger and Eileen updated their investment strategy to one more focused on protection and stable growth rather than their previous growth-oriented strategy during their accumulation phase. This revised strategy included keeping two years of living expenses in cash and cash-like equivalents in the portfolio. A “paycheck “ system was implemented that provided Roger and Eileen a regular monthly amount from their portfolio that supplemented his pension to cover their expenses. This helps keep them on track with their overall plan. The couple also selected a healthcare plan appropriate for their needs.
Roger developed a viable strategy around his consulting prospects that would allow him to continue earning, but in a less stressful and demanding manner than his corporate job. This plan focused on leveraging his current contacts, many of whom had already asked him for his help.
In essence, Roger and Eileen were successful in not simply retiring from something, but retiring to the lifestyle they had chosen for their next adventure in life.
Disclaimer: The above does not represent an actual client's experience but rather is meant to provide an example of the firm's process and methodology.