Craig and Melissa

Step 1

Our focus with Craig and Melissa was creating a financial plan showing what it would look like to retire at age 60. We did a what-if analysis that showed probabilities of success of retiring at age 60 with their current contribution rates versus suggested rates to increase the probability of success.

Our initial plan for them both retiring at 60 showed a 68% probability of success, but if they increased their 403b contributions by 5%, their probability increased to 75%.

We also showed that if they waited till 62 and increased contributions, their probability of success went up to 82% which is in the middle of what we call the confidence zone(75-90%).

Step 2

We discussed their budget and their ability to save more for the next 10 years to achieve a higher probability score for retiring at 60.

Step 3

Since Craig and Melissa were in their early 50’s, we discussed their risk tolerance and discussed an investment portfolio to match their risk and stage of life.

Step 4

We took over the management of Craig’s old 403B by doing a direct rollover to an IRA. We also consolidated their other investment accounts at 2 different banks and brokerage firms.

We then created a taxable investment account to start investing $800/ month and recommended increasing their contribution rates by 5% in their plans at work. These changes increased the probability of success for retiring early from 68% to 82%, well within the confidence zone of 70-90%

Step 5

Because Craig and Melissa make a joint income over the IRS limits for contributing to ROTH IRA’s, we started a conversation about converting some of Craig’s IRA to a Roth over the next 10 years. Because Melissa doesn’t have an IRA, we discussed a strategy called the “Back Door Roth” which would allow her to contribute to her Roth IRA avoiding the income limits.

We also referred Craig and Melissa to our partnership with Trust & Will to get their estate plan in order.