Shane and Laurie Winfield are in their early 50s. Shane Winfield had been employed with the same company for 30 years, which provided him with stock options and a planned pension from the company. The stock options and pension provided Shane with numerous possibilities as to when and how to take each benefit, and he didn’t know where to start when making a decision. Unlike many couples, Shane and Laurie do not want to wait for retirement to sneak up on them without consulting a professional financial advisor who can help them develop a retirement savings plan and guide them through the large life transition caused by retirement.
Challenges: Too Many Options, Not Enough Discernment
- Shane and Laurie do not have a good grasp of what their capital needs might be during retirement.
- The couple do not know when to exercise the stock options they were holding so they would provide maximum benefit with the least tax consequences.
- Shane Winfield’s pension plan has over twenty options on how to take his pension, which is overwhelming, and he needs assistance on clarifying which option would best provide for his family in the case of his untimely death.
- Shane wants to plan for not only the financial side of retirement, but also the overall life transition and lack of structure in retirement. He wants to be financially stable so he can focus on volunteering and lending his efforts to causes that are important to Laurie and him.
How Would Legacy Planning Help in This Scenario?
New Opportunities and Better Clarity
- Further financial clarity. The Legacy team would start by working to help the Winfields gain clarity on their current financial picture, and then work to provide them with various retirement scenarios at different income levels.
- Stock options strategy. Legacy would develop a strategy for the stock options to mitigate risk, diversify timing of the exercise options, and reduce tax liability. We would walk alongside Shane and Laurie, presenting the information in a clear, easy-to-understand format to help them make informed decisions about when and how to exercise their options—and how to thoughtfully use the resulting cash flow in alignment with their broader financial goals.
- Pension strategies. The Legacy advisors would run the pension numbers for each given option and present different risk scenarios. This clarity could allow Shane and Laurie to think about what they wanted the pension to do for them, namely protect Laurie and their daughter if anything were to happen to Shane.
- Family involvement. Legacy would make it a point to bring in Laurie for meetings so she understands the accounts the family owned. We would also address the need for life insurance planning.
Proactive Planning Can Provide Further Confidence
The Winfields’ scenario poses a common dilemma that affluent individuals face, which is converting business success during your working years into useful life purpose after retirement. At Legacy, we view the retirement stage of life a little differently than most. We find what we do and how we approach retirement is fundamentally different from most advisors. Instead of only focusing on the dollar amount in an IRA, we are more inclined to ask the questions, “What will you do to feel fulfilled in retirement?” and “How can you serve and benefit others during retirement?” It’s asking questions like this that really impact clients to think past day one of retirement.
