Couple Considering Retirement – 2008 Recession

Executive Summary

A Senior Executive with a fortune 500 company is in the process of determining a specific date to retire. The client:

  • Has been a client of Vector Wealth Management for several years.
  • Is working asa lead strategist for a division of their current employer.
  • Participates in several benefit plans:
    – Defined benefit pension
    – Incentive Stock Option Plan
    – Restricted Stock Option Plan
    – 401(k) Plan
    – Stock purchase plan
  • Built a reasonable balance between pre-tax (retirement) and after tax assets (65%/35%)

INITIAL PLAN

The client planned on retiring early (late 50’s) and capitalizing on a social security bridge and potential employee buyout opportunity.The plan was intended to initiate in the fall of 2008, with Vector already having identified and set aside their income needs for 2009, 2010,and 2011.

PREMISE:
Retirement was originally planned for 2009. However, it was agreed we would evaluate the retirement date based on:
  • Strength of their financial plan.
  • Whether or not the client still enjoys working at the company.
KEY DISCUSSION POINTS:
  • Client’s financial plan proved strong and they could retire, despite the 2008 market correction.
  • The Great Recession did not impact their income for the next few years because specific investment assets were positioned in Assured Income.
  • For each year the client continued working they would:
    – Increase their savings
    – Receive more company stock
    – Increase his pension benefit
    – Remove the need for income from their investments

RESULT

Although the original retirement date was feasable, the client decided to delay his retirement date at least a year. Throughout the planning process the client gained valuable insight, including:
  • How planning ahead helped protect the client’s asset s needed for income by having a disciplined process established around securing these needs in advance.
  • The “ability” for the client to retire as planned had a liberating impact on his decision to continue working.
  • The delay, and subsequent recovery of the markets, had a measurable impact on the retirement lifestyle options available.
  • No client has more successfully ticked items off their bucket list.