54-year-old with a Laddered Tax-free Retirement & a $1.5M Tax-free Legacy

Case studies are sometimes the best way to illustrate all that goes into financial planning and how to optimize for your specific situation.

Here’s a case I was working on a few weeks ago, enjoy!

⭐️ Here are the details ⭐️

✅ She is 54-years-old

✅ She is retiring & wants to travel a lot

✅ She wants to retire tax-free and delay her social security as long as possible

✅ She has $665k in a Roth IRA the she wants guaranteed income from at age 60

✅ She has $600k in cash value life insurance that she will use before touching her retirement accounts as tax-free retirement income

✅ She has $250k in an old 401k (in an IRA now) that she wants to keep invested until 72 (assuming 6% annual return)

✅ She has $400k in an investment account for traveling and allowing her other money to grow

✅ She will use her standard deduction to do roth conversion on her IRA at about $28k per year

✅ She will collect $3200/month from social security at age 66 as additional income and to cover long-term care should she need it

⭐️ The Income Breakdown ⭐️

✅ From age 54–59 she is going to take $90k tax-free distribution from her cash-value life insurance policy with a 0% loan (that she will never pay back)

✅ At age 60 she turns her Roth IRA into $65,000 of tax-free income for the rest of her life

✅ From 60–66 she will use her investment money to pay herself $25,000/year and to travel when she wants

✅ At 66 her social security security kicks on bringing her income to $103,400 per year (all completely tax-free)

✅ At 72 her IRA is worth about $715k ($504k has been converted to Roth IRA which she won’t touch)

✅ At 72 she will start taking about $18k/year from IRA to satisfy required minimum distributions (RMDs)

✅ Total income from 72–90 approximately $121,000 tax-free

⭐️ Her Legacy Goal at age 90 ⭐️

✅ Her life insurance contract continued to grow and she left $300,000 tax-free to her niece

✅ Her Roth IRA grew at 6% per year and she was able to leave $1.2 tax-free to her only son

As you can see in this case study, not only does this client mitigate her taxes in retirement, but she was able to eliminate taxes in transferring her remaining wealth to her son and her niece as well.

Remember, all of this planning was done (in both scenarios) without any risk of losing money in the market!

Let’s chat 💬😎