A Comprehensive Financial Plan for Achieving an Early Retirement Goal
"Robin" is a single mother of two high schoolers. She's 45 and she earns about $350,000 per year. Robin had never worked with a financial advisor before, and one of our clients referred her to Keen Wealth because she was looking for help with streamlining her finances and, hopefully, retiring in nine years.
On today's show, we run Robin's case through Keen Wealth's checklist-driven, comprehensive planning process and explain how my team arrived at actionable strategies for achieving that early retirement goal.
First thing's first: you.
The first meeting at Keen Wealth very rarely focuses on the numbers. We typically begin our discovery process by talking to folks about their work, their families, and how we can help them achieve their financial goals.
But we started talking dollars with Robin a little earlier in her personalized process because she had some specific issues that she wanted to address.
In many ways, Robin's situation is emblematic of how work and financial planning have evolved in recent years. Whereas many of our clients spent decades at the same company, Robin has worked for several different companies, and is currently earning both as an employee and as an independent contractor. These multistage careers are becoming more and more common, even in retirement. And the opportunities they bring can also create considerable financial complexity: Robin had 17 different financial accounts, including retirement accounts from previous employers and an IRA that she had inherited from her deceased father.
Additionally, Robin wanted to purchase her father's house from her siblings, repair it, and potentially rent it out, which she estimated would cost around $275,000.
Robin also had some specific early retirement goals in mind: buying land to build her dream house, lots of travel, and perhaps a little part-time contracting work to earn some extra income and keep her busy.
We didn't have to spend a lot of time helping Robin clarify her vision for the second half of her life -- she'd done that already! And after a lifetime of working hard, saving and investing prudently, and dreaming big, Robin certainly gave my team plenty to work with.
Smoothing out the runway.
Once we had wrapped our heads around Robin's assets and goals, we started to look for potential challenges that she might face on her way to early retirement.
For starters, we advised Robin to consolidate all her retirement accounts (excluding the inherited IRA) into one solo 401(k). This would reduce complexity and allow us to create a cohesive strategy on those investments while also providing opportunities to make back-door Roth IRA conversions in years when that would be advantageous to her.
The debt side of Robin's ledger was pretty clean. Like many soon-to-be retirees, she was wondering about her mortgage. But because she was locked into a low rate, we didn't see any rush to pay that off.
Robin also planned ahead for her teenagers' educations. She'd been investing in 529 plans, and one of them had also earned a scholarship.
In our estimation, Robin's biggest liability was an injury or unexpected illness that might prevent her from working. We advised her to supplement both her life and disability insurance coverage, especially since, if she changed jobs again, her current coverage might not be portable. We also started making plans to bridge her gap to Medicare eligibility for the ten years or so where she will have to pay for insurance out of pocket until she turns 65.
It's never too late!
Because of her hard work and prudence, Robin had already taken some significant steps towards financial independence before she walked into Keen Wealth. But even with her solid asset base, our planning estimated that she had about a 61% chance of achieving her retirement goals. After we streamlined her retirement assets, boosted her insurance coverage, set aside the necessary cash for the two homes she wants to own, and created an annual withdrawal and spending strategy that suited her lifestyle, Robin's success probability increased to where we like to see it - an optimal range where folks can enjoy themselves now while maintaining flexibility to adjust in the future.
If you don’t have the vision for retirement that Robin had, Keen Wealth can help you find clarity. If you do know where you want to go but you don’t know how to get there, Keen Wealth can help you create a blueprint that’s personal, trustworthy, and adaptable. And if you’ve never worked with a financial advisor before, it’s never too late to make an appointment and see how Keen Wealth’s planning process could improve your journey to a successful retirement.
About Bill
Bill Keen is a financial advisor with over 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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