Case Study: The Necessity of a Flexible Retirement Plan

By Andrew J. Tapparo, MSF, RICP®

As an independent financial advisor, I specialize in helping people plan for a comfortable retirement. I love helping clients establish and prioritize their goals to build the necessary foundation to develop personalized solutions and a tailored investment portfolio that optimizes their probability of achieving these goals.

In this article, I’d like to explore a case study of a long-term client I’ve helped, which highlights the importance of having a flexible retirement plan and how it can help you accomplish both long and short-term goals. 

The Clients

For the last 15 years, I have been working with a married couple; and like many of my clients, they each work full-time and make it a priority to save money for their retirement. When they initially came to me, they had no financial plan—and no idea how much they needed to fund their dream retirement, if they were saving enough, or when they’d be able to retire. This scenario is fairly common, and it was keeping one of them up at night (also not uncommon).

The Initial Goal 

When I began working with these clients, they had three main questions: 

1. Were they maximizing the retirement savings vehicles at their disposal (401(k) plans and taxable accounts)?
2. How much would they need to retire?
3. When could they retire?

 Their original retirement plan included remaining in their current home as long as possible. As they loved their neighborhood and their home met all their needs, they had no desire to move. They figured they would pay off their mortgage before retirement age. 

How I Helped

This couple is a great example of what many families face. They know they need to save for retirement, but they don’t always know how much or the best vehicle to utilize for this longer-term goal. Without the guidance of a retirement planning specialist, most people save as much as they can (usually in a target-date retirement fund—ouch!), work until they’re 65 (or until they’ve saved the amount some “financial expert” on the radio said they needed for retirement), claim Social Security benefits as soon as they stop working, and then hope for the best. I don’t know about you, but I could never live that way!

When they originally came to me, they were feeling very overwhelmed. Working together, we first began looking at the assets they had accumulated thus far:

• They each had money in retirement accounts.
• They had ample funds in their savings account. 
• The husband was entitled to a pension from his employer at the age of 65.

Once we had an understanding of how their assets were distributed, we began to evaluate their retirement needs. At the time, we determined they were in pretty good shape to retire at the desired age of 65. The wife was younger than the husband, and we discussed retiring at the same time versus each retiring at 65.

Most of their investment accounts were tax-deferred, which meant Uncle Sam was waiting to take his share of their portfolio when they withdrew the needed funds to live on in retirement. We analyzed their tax bracket over their lifetimes and minimized their taxes by performing selective Roth conversions when it was tax advantageous to do so. These conversions would be continued to minimize the tax impact of RMDs as well as blunt the impact of the “widow’s penalty” that often arises when the wife is younger than the husband, which is a common situation.

The New Goal

Everything was working according to plan; we knew this because we had a plan in place! Yogi Berra famously said, “If you don’t know where you are going, you’ll end up someplace else.” This couple knew where they were going and were on track to get there on time.

Fast-forward to last year when they had an opportunity to realize a new goal. They asked me to see if they could afford to retire early and move to their dream property on the coast of Florida. After exploring the various options available to them regarding the sale of their existing home and the purchase of their new home in Florida, we were able to make adjustments to their plan and still keep things on track. The existing plan was like a car’s GPS. We added a new stop along the way and saw how the trip to their destination was affected by this new waypoint. They are now on target to retire early and move into their new Florida home.

Because this couple had started planning early on in life, they were able to make changes; and the money they had saved and we had invested based on their plan allowed them to achieve something they hadn’t originally considered—and that might not have been possible without the plan.

This is an example of why it’s so important to have a flexible retirement plan, because plans and dreams do change! Life happens. A flexible plan can adapt to new dreams and/or realities, and planning early allows you to make the necessary adjustments when opportunities arise.

We Can Help You Too

Whether you are in a similar situation to the couple in this case study, or you have entirely different needs, I encourage you to reach out to me. At Tapparo Capital Management, our singular motivation is your success. We have no cookie-cutter solutions; just personalized service tailored to meet your needs.

I’d be happy to evaluate your situation and share how I can help. Don’t procrastinate. Start planning today! Schedule a “Get Acquainted Call” to see if we are a good fit for each other. Call 978-887-1121 or email andrew@tapparocapital.com. I look forward to hearing from you!

About Andy

Andrew Tapparo is a fee-only financial advisor at Tapparo Capital Management, a financial planning firm in Topsfield, MA, helping clients turn their savings into a retirement income that lasts. Inspired by the quote “Choose a job you love, and you will never work a day in your life,” Andy founded Tapparo Capital Management in 1997 with a passion for helping clients enjoy a truly worry-free and fulfilling retirement and experience financial freedom. As a Retirement Income Certified Professional (RICP®), he designs retirement strategies along with sound money management to help clients retire with confidence.

Andy holds a Bachelor of Science in Industrial Engineering from Rochester Institute of Technology in Rochester, New York, and a Master of Science in Finance from Bentley University in Waltham, Massachusetts. Specializing in retirement income planning, Andy completed a comprehensive financial industry education program at The American College of Financial Services and was awarded the Retirement Income Certified Professional® designation. He is frequently quoted in the media as a financial expert.

Andy and his wife, Susan, live in Topsfield, Massachusetts, and have two beautiful daughters. Outside of work, he is an automobile enthusiast, enjoys taking road trips, and loves the Outer Banks of North Carolina. In his spare time, he volunteers with the local high school varsity girl’s basketball team as the team statistician and runs the team’s website. He is passionate about supporting charities that serve our veterans and their families. To learn more about Andy, connect with him on LinkedIn.