The Situation:

John and Mary had recently retired. They were both receiving a state pension while John was also receiving Social Security. They had saved diligently with the vast majority of their funds being in their IRAs.

However, John and Mary had these questions they wanted to address so that they felt more confident about their financial future.

John and Mary’s Questions and Concerns:

• Given the 10-year difference in their ages, Mary wanted to know if John passed away long before her, would she have enough income throughout her lifetime?
• When should Mary take Social Security?
• They were concerned about the amount of taxes they were going to have to pay when they had to take the Required Minimum Distributions (RMD) from their IRAs.

How We Helped John and Mary:

• Upon review of their investment accounts, a large portion of the IRA money was being managed by a large brokerage company. The advisor assigned to the account gave them updates on its performance but gave them no advice as to how this money fit into any kind of overall financial plan. The rest of the IRA money was not being managed. Finally, they held a substantial amount of money in a bank savings account earning no more than 1%. We worked with them to determine the investment portfolios that would provide the appropriate growth needed to accomplish their goals, but still within their risk tolerance. With a consolidated Investment Strategy, were able to not only increase their long-term return, but actually lower the risk from what they had been taking.
• As we analyzed the payout of RMDs, it became obvious there was an even bigger problem. At the time the RMDs were required to begin, it would force them to take more income than that needed. This would cause an unnecessary and ongoing tax burden. Not to mention those distributions would create taxable income over time! We proposed a Roth Conversion plan to systematically convert the IRA funds to a Roth account which would greatly reduce the RMDs if not completely eliminate them.
• We put some life insurance on John to protect the possible loss of income to Mary if he predeceases her. By funding the policy, it created cash value which was protected from taxes and minimized taxes on their taxable assets.
• We recommend that Mary postpone taking Social Security until age 70. They didn’t need the income and that would give us more time to do the Roth conversions without adding additional income.

They were very happy we were able to address their issues while bringing to light an even bigger tax problem. It allowed them to feel comfortable that their retirement was secure.

**The above are hypothetical situations based on real-life examples. Names and circumstances have been changed.

Case Study #2

The Situation:

David is a General Contractor and Jennifer works as the office manager. David plans to retire at 67. They are saving for retirement by funding their 401k. The rest of their net worth is primarily tied up in their business which they are planning to sell when he retires.

However, David and Liz had these questions they wanted to address so that they felt more confident about their financial future.

David and Liz’s Questions and Concerns:

• Since their business is a major portion of their potential retirement dollars, they are wondering if there will be enough to be able to retire.
• Liz is concerned if David dies early, how will she be able to support herself?
• Since the construction business is cyclical, they are always worried about having enough cash to get through the lean times.

How We Helped David and Liz:

• After reviewing their situation, we were able to revise their retirement plan which allowed them to save more for pre-tax dollars and also to greatly improve their money management. They had a static investment strategy, and it was not maximizing the potential growth.
• We took out a life insurance policy on David that we funded with the cash they were holding in the business which after taxes and inflation was losing money. This cash value of the policy was still available to cover the needs of the business, but also provided a death benefit for Liz if David passed away early. If not, it would provide tax-free retirement income.
• We put a plan in place to give them some options of how to maximize the value of the business when they retire. It involved cleaning up the books, so they could prove the worth of the business if they sought to sell. We also got them thinking about developing key employees so one could manage the business allowing them to keep the business as a source of cash flow in retirement. Not to mention it would also make the business more valuable to a potential buyer.

The plan helped David and Liz see how all their hard work of building a business was going to result in a comfortable retirement. This allowed them to focus on what they did best, which was running their business.

**The above are hypothetical situations based on real-life examples. Names and circumstances have been changed.

Case Study #3

The Situation:

Jennifer is a professional earning a good salary. She plans to work another 5 years or so. She has been divorced for about 5 years and hasn’t paid much attention to her finances.

However, Jennifer had these questions she wanted to address so that she felt more confident about her financial future.

Jennifer’s Questions and Concerns:

• Jennifer still uses the same financial advisor that managed the financial assets when she was married. He reviews the performance with her twice a year but has never talked to her about her long-range plans. She’s concerned she won’t be able to retire when she is ready.
• A friend recently asked her if she had done any estate planning since the divorce. Her financial advisor nor her CPA ever brought it up. She then began to worry about what other issues she wasn’t addressing.

How We Helped Jennifer:

• We started with a full review of all of her assets including real estate. Explained how everything was invested, discussed the risk (volatility) and what the outcome would look like if she continued on her current path. Explored what she wanted her future to look like and made the necessary changes to start moving in that direction to achieve her desired future. We developed an overall investment strategy for her that increased her return but managed her risk within her risk tolerance.
• We reviewed her insurances and made the necessary adjustments to protect her assets. Then worked with an attorney to establish an estate plan for her.
• We developed a plan to minimize her taxes as she goes into retirement so she would be able to avoid some of the unnecessary taxes many retirees get hit with.

Afterward, Jennifer felt she knew where she was headed financially and was comfortable that nothing was falling between the cracks. It gave her a sense of peace knowing she was on the right track, but also that she could make adjustments if she needed to.

**The above are hypothetical situations based on real-life examples. Names and circumstances have been changed.

The information given herein is taken from sources that IFP Advisors, LLC, dba Independent Financial Partners (IFP), IFP Securities LLC, dba Independent Financial Partners (IFP), and its advisors believe to be reliable, but it is not guaranteed by us as to accuracy or completeness. This is for informational purposes only and in no event should be construed as an offer to sell or solicitation of an offer to buy any securities or products. Please consult your tax and/or legal advisor before implementing any tax and/or legal related strategies mentioned in this publication as IFP does not provide tax and/or legal advice. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors. This report may not be reproduced, distributed, or published by any person for any purpose without IFP’s express prior written consent.