The Art of Wealth Management

Case Study: Deciding When It’s Wise to Retire

These stories are hypothetical examples of how Dodds Wealth Management Group could assist clients in various situations. Personal information has been used as a basis for each example, but each has been modified to protect our members’ privacy.

*Please note that the information below is not a client testimonial, but instead is an example intended for general information only, and is not predictive of your individual results. Your results will vary. These are illustrative of the types of clients we serve.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

This information is not intended to be a substitute for specific individualized tax or legal advice, We suggest you discuss your specific tax or legal issues with a qualified tax advisor or attorney.

Deciding When It’s Wise to Retire

Frank and Yvette have two primary investments: $6 million in stock from one Fortune 500 company, and a $10 million ranch in Montana.

While this might seem enough to erase any doubt about financial confidence, the couple is concerned about the impact of taxes, and wondered when it would be “wise” to retire.

They also wanted to make sure their three adult children (in their mid-to-late twenties) understand the principles of money management and financial responsibility, so their inheritance could last through their lifetime.

An analysis would show that a possible strategy would be to consider selling 50% of the company stock in order to plan for retirement needs. The funds could then be reinvested in a diversified portfolio with the objective to provide a steady income.

We would also discuss with Frank and Yvette tax strategies that may be useful for them with regard to selling a portion of the stock using a stepped up basis. This strategy may help with diversifying their holdings with little or no capital gains tax.

Dodds would discuss with Frank and Yvette contacting a CPA to discuss establishing an LLC to potentially help with the ranch and gifting shares to their children up to their $5 million exemption. We would also teach their children about sound money management strategies, and construct long-term portfolios with small accounts for each child.

Frank and Yvette could have less risky, liquid assets for their current and future needs. They know they could stop working tomorrow, and still have a comfortable retirement.* Add in that their children understand the basics of smart investment strategies from conversations with the entire Dodds team, and Frank and Yvette could feel more confident about the future.

*Please note that the statements above are for general information only, and are not predictive of your individual results. Your results will vary.