They just retired and need to turn their savings into cash flow
Don and Lorraine’s Background
Don and Lorraine have been looking forward to the day they
retired for decades.
But now that they’re here, they’re not quite sure what to
do.
Don was a teacher and textbook author for nearly 40 years
while Lorraine was a social worker for more than 30 years.
They recently received their retirement packages from their
school divisions and now the reality of their new situation is setting in.
- Where will their cash flow come from in retirement?
- How can they maximize their after-tax cashflow from all of their income sources, including dividends, interest, stocks options and self-employment?
- How can they maximize the impact of their charitable donations?
How did VPIC
help coordinate a solution?
We met with Don and Lorraine and their advisor to discuss where they are, where they want
to go and how best to get there. And then we listened. We listened to their
vision for their retirement, we listened to their attitudes about money,
spending and investing, and we listened to their thoughts on leaving a legacy.
Once we had a good handle on their situation, our team and Don and Lorraine's advisor went to
work. The first thing we gave them was a one-page summary of their financial
affairs, including their net worth and five years’ worth of cash flow and tax
projections.
Using predictive software, their financial future was projected 10, 20, 30 and 40 years down the road.
This glimpse into the future gave their advisor and our team some guidance in
determining a number of risks to their goals.
They include:
- What if stock markets go into a prolonged slump during their retirement?
- What if inflation spikes unexpectedly?
- What if their spending went up significantly in retirement because they wanted to buy a condo on the beach in the Caribbean or put their grandchildren through university? Or both?
A Solution to Meet
Their Needs
After evaluating all possibilities, our team and Don and Lorraine's advisor came up with a short
list of opportunities and an integrated solution to fit their unique needs.
Because they were both drawing pensions, their immediate
day-to-day living expenses were covered. As a result, they have the opportunity
to grow their investment capital and focus on capital appreciation.
Their portfolio was heavily-weighted towards fixed income, which we felt was far too conservative for their situation.
Their allocation was shifted more towards durable and profitable businesses that pay a growing dividend. They agreed this would put them in the best position to grow their capital over the long term.
Don and Lorraine were very excited by this change because they recognized that growing their capital could create more opportunities in the future to support the educational pursuits of their grandchildren, donate to charities that are close to their hearts and start looking at real estate in the Caribbean.
We shifted their allocation more towards durable and profitable businesses that pay a growing dividend.