Disability Leading to Retirement
Life took an unwelcome turn when Liam suffered a heart attack at work. The hard-charging chief logistics officer for a pharmaceutical company accepted stress as part of the job. But at 58, his heart attack shook his air of invincibility, brought home how precious life is and altered his perspective about how he will spend time.
Either reduce his stress or risk a second potentially fatal heart attack, his doctor warns. There is no “scaling back” in his high-octane role; instead, he plans to retire early, travel, live a healthier lifestyle and spend time with his wife Ellie and his grandchildren. He qualifies for permanent disability, which would allow him to retire sooner than expected. The question remains how to put together the resources – from savings and equity compensation including performance shares -- to replace his lost income between his current age of 58 until his pension starts at age 62 and when he qualifies for Social Security benefits at age 66 and four months.
His senior role has earned Liam a high level of earned income plus performance shares. His performance shares vest over three years and are subject to an additional two-year post-vest holding period. He is not sure his company’s policy provides for pro rata distribution when termination is caused by retirement, death or disability. This means his shares may vest more quickly than if he was working:
Liam is a sharp executive and knows he has sufficient assets to retire now. He’s unsure about the best sources of cash flow and recognizes he needs help in putting a plan together to meet living expenses that is predictable, reliable and effective.
Ellie, for her part, was shaken to the core by Liam’s heart attack. She needs to understand the financial picture in the event she was left on her own. Their advisor will review the couple’s financial picture with Ellie and help her come up to speed on company and personal life insurance and other benefits. The advisor will develop a plan that matches the timing of cash flows with living expenses.
The couple needs clarity around these issues before applying for retirement benefits. They look forward to a life of travel, family outings and volunteer work now that Liam is feeling better and has time to spend on fulfilling life outside the office.
*The name, likeness, and circumstances in this example are a fictional composite of facts from executives similar to actual SFG Clients.