Retirement Drawdown:playing his cards right

When they met in Toronto, Kiku and Scott were an average pair of 16-year old friends with part-time jobs. Love and marriage followed their college graduation, and eventually children, a boy and girl. Scott has continued in operations roles with the N.J.-based packaging company he joined out of college. His work afforded them the opportunity to travel globally and hike in three continents. In many ways – financially, experientially, professionally – their married life exceeded their expectations for the life they might lead. Their conscientious savings has led to an enviable level of financial security. Now 40 years with the same company, Scott is in a senior role as chief of operations.

Kiku was fortunate to spend her career teaching middle school. She enjoyed having summers off while raising their daughter and son. As they were grown, she became a middle school principal, accruing a NJ state pension over 38 years of service, her last 10 years in administration.

Scott likes staying on top of things; at work he is a stickler for maintaining a process for everything in his manufacturing operations. That’s the nagging feeling Scott has now about retirement finances. The couple faces looming milestones without a plan or a process. How will it all work when the 62-year olds retire in a few years?

With a substantial grant expected on March 31, Scott needs to make an annual election of either Restricted Stock Units (RSUs), Nonqualified Stock Options (NQOs) or a combination of both. The pending deadline is weighing on them. While the couple has been managing their own finances, the closer they are getting to retirement, the more they are feeling confused and anxious.

They believe they have sufficient assets to retire in 2023 and fund their retirement expenses of $150,000 annually. This will fund their lifestyle that tends toward outdoor activities and time with their daughter and two grandchildren. Speaking of grandchildren, they want to carve out enough for college.

Kiku & Scott – Cashflow For Retirement 

 

Estimated Living Expenses 

$150,000

Pension (Annual State Teacher’s Pension)

$60,000 

Shortfall (Covered by Social Security, LTI and Savings Withdrawals)

$90,000 

The 62-year olds are careful and conscientious. They want to feel more secure when it comes to leveraging the use of Scott’s equity compensation for retirement. With the March 31 deadline bearing down on them, they turn to SFG to help with Scott’s annual election, education funding and the cash flow strategy that will make their retirement a carefree reality.

*The name, likeness, and circumstances in this example are a fictional composite of facts from executives similar to actual SFG Clients.

Matthew P. Witter, CFP®, ChFC®, AIF®, is a Senior Vice President, Lead Advisor/Investment Specialist, at SFG Wealth Planning. Matt develops financial plans for executive clients, and provides lead advice to the firm’s Executive Planning Services and Financial Independence Planning Services clients.

Executive Compensation, Non-Qualified Deferred Compensation, Restricted Stock Units, Retirement Planning, Stock Options

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