CAROL
CASE STUDY #2*
AGE: 61
Carol’s Challenge
Carol came to us after her divorce was finalized. She was unsure how to proceed with transferring assets to her name. She also needed help with retirement income planning.
Our Approach
We sorted through Carol’s paperwork to transfer assets, determine her long-term financial goals, and assess how items like child support, alimony payments, and future Social Security benefits would impact her standard of living. Additionally, we made sure the proper beneficiaries were added to her accounts.
The Results
We helped Carol in the following ways:
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Transitioning assets. We worked closely with Carol and her attorney to ensure the legal documents were submitted in a timely manner so that the release of funds would not count as taxable income. We then split all of Carol’s ex-husband’s retirement accounts (one 401(k) plan and two IRAs) after opening a traditional IRA and a Roth IRA in her name. We then worked with Carol to invest the assets according to her unique goals and risk tolerance.
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Cash-flow concerns. We consolidated Carol’s investment and retirement accounts into one custodial platform. We also created an income plan that would allow her to withdraw $6,500 per month from her new accounts in order to cover her living expenses until she starts receiving Social Security at age 67.
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Estate planning. Per the terms of the divorce settlement, Carol was supposed to remain a beneficiary on her ex-husband’s life insurance policy. In verifying this information, it was discovered that there were no beneficiaries listed at all. If her ex-husband had passed, the death benefit would have gone to his estate and she would have received nothing. We immediately worked with the insurance company and the former spouse to add Carol as a beneficiary.
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Home and mortgage. Our client was awarded the house as part of the divorce decree. But after our assessment, it became clear that it didn’t make financial sense to own the home. With that in mind, we were able to refinance the house to increase her cash flow by approximately $600/month. Although it was difficult for her to let go of the house, Carol agreed to sell the home in four years after her daughter graduated college. Moving to a smaller home would improve her monthly cash flow by $1,500, giving her more confidence that her retirement income would last well into her 90s.
*This is a hypothetical case study.