A 39-year-old doctor and single mother of twins age 6 contacted us in 2003 to assist in achieving her retirement goals. She brought with her the following: 5 whole life insurance policies costing $2564/yr., a $130,000 CD, $141,000 IRA variable annuity, and $202,000 in a 401K plan invested in a guaranteed fund. She wanted to retire at age 60. With the twins' education provided for by relatives, her only other concern was about long term care for herself in the future.
We determined her risk tolerance was conservative and explained retirement at age 60 was improbable. We suggested increasing her risk tolerance or reducing her retirement standard of living. She preferred increasing her risk tolerance to more balanced and invested accordingly within equities and fixed income investments. We opened a self-directed brokerage account within her 401k to improve choices. It was in her best interests to reduce the amount of policies and change the protection to coverage more suitable to her needs. We moved the IRA variable annuity to a brokerage IRA reducing her costs and improving the potential returns. She also wanted to transfer the risk of long term care. Even though she was younger, we found a ten-pay plan that would lock in the cost so no future premium increases would occur after her payments. Also, we worked with her attorney to create a proper estate plan.
Our client is well on her way to retiring in nine years at age 60. Her insurance expenses have been reduced and are more suitable. Her investments have performed according to targets and are less expensive and more customized.