The Johnsons: From Pre-Retirement Uncertainty to Confident Retirement
David, 60, and Karen, 60, Johnson are longtime Hudson residents who spent their careers building a successful financial foundation. David worked as an operations manager for a manufacturing company, while Karen served as a nurse administrator at a local healthcare system. As they approached retirement, they realized they needed specialized guidance to navigate the complex transition from earning paychecks to creating sustainable retirement income.
In This Section
The Challenge: Common Pre-Retirement Concerns
The Comprehensive Plan We Developed
Ongoing Partnership and Support
Key Lessons from the Johnson Case Study
The Challenge: Common Pre-Retirement Concerns
The Johnsons came to us with a situation many Northeast Ohio families face as they approach retirement. While they had been diligent savers, they felt overwhelmed by the decisions ahead of them.
Their Financial Picture
- Combined Annual Income: $160,000 ($95,000 David, $65,000 Karen)
- Retirement Savings: $1,750,000 total
- David’s 401(k): $850,000
- Karen’s 403(b): $450,000
- Traditional IRAs: $300,000
- Roth IRAs: $150,000
- Other Assets: $125,000 in certificates of deposits, $50,000 in savings
- Debts: $35,000 remaining mortgage, $8,000 in miscellaneous debt
- Children: Two adult children (ages 30 and 33), both financially independent
Their Key Concerns
- Retirement Timing Plans: David wanted to retire at 65, while Karen planned to retire at 61
- Income Replacement: Uncertainty about whether their savings could support their desired $8,000/month retirement lifestyle plus $10,000 annually for travel during their early retirement years
- Healthcare Cost Anxiety: Karen was particularly concerned about healthcare expenses after losing employer insurance
- Social Security Strategy: Karen wanted to claim Social Security at 62 for immediate income, while David planned to claim at 65
- Tax Efficiency: Worry about making costly mistakes with retirement account withdrawals
- Market Volatility: Concern about sequence of returns risk in early retirement
- Legacy Planning: Desire to leave something to their children while ensuring their own security
Our Discovery Process
We began with a comprehensive 60-minute discovery meeting to understand not just their numbers, but their values, concerns, and retirement vision.
What We Learned
- David dreamed of traveling and pursuing woodworking hobbies
- Karen wanted flexibility to volunteer at local charities
- They hoped to spend $10,000 annually on travel during their early retirement years
- Both valued staying in their Hudson home near family and friends
- They were conservative investors but understood the need for growth
- Healthcare quality was a top priority given Karen’s medical background
Financial Analysis Revealed
- Annual expenses of approximately $100,000, which would likely decrease in retirement
- Investment portfolio weighted heavily toward their employers’ stock (35% concentration risk)
- No comprehensive estate planning documents updated in over 10 years
- Initial Social Security claiming plan (Karen at 62, David at 65) that was not optimal for maximizing benefits
- Potential tax savings through strategic Roth conversions during lower-income years
The Comprehensive Plan We Developed
Based on our analysis, we created a coordinated strategy addressing each aspect of their financial life.
Retirement Income Strategy
Goal: Create sustainable $8,000/month after-tax income
Our Approach:
- Both delay Social Security until age 70
- Strategic retirement account withdrawals to bridge income gap and manage tax brackets
- Utilize taxable accounts first to preserve tax-advantaged growth
Projected Outcome: Sustainable income stream with built-in inflation adjustments and tax efficiency
Investment Portfolio Restructuring
Problem: Over-concentration in employer stock, high fees, inappropriate allocation for their income needs
Our Solution:
- Reduced employer stock concentration from 35% to 5%
- Implemented appropriate allocation to meet their income needs: 65% stocks, 35% bonds
- Shifted from actively managed funds (average 1.0% expense ratio) to low-cost index funds (average 0.10% expense ratio)
Result: Analysis indicated potential annual cost reduction while implementing improved diversification strategies
Social Security Optimization
Analysis: Multiple claiming strategies evaluated using specialized software
Recommendation:
- David delays benefits until age 70
- Karen delays benefits until age 70
- This strategy maximizes survivor benefits and provides inflation-protected income
Value: Social Security analysis suggested potential lifetime benefit optimization compared to both claiming at full retirement age
Tax-Efficient Transition Planning
Strategy: Multi-year Roth conversion plan during lower-income transition years
Implementation:
- Begin Roth conversions once Karen retires at 61
- Convert up to the 12% federal tax bracket annually
- Continue conversions until David begins taking required minimum distributions at age 75.
- Use taxable account funds to pay conversion taxes, preserving retirement account balances
Benefit: Significant reduction in future required minimum distributions and substantial tax-free growth potential for heirs
Healthcare and Insurance Planning
Medicare Strategy:
- Comprehensive Medicare education and plan selection support
- Evaluated Medicare Supplement vs. Medicare Advantage options
- Coordinated timing with Karen’s retirement from healthcare system
Insurance Review:
- Reduced life insurance coverage as children became financially independent
- Eliminated disability insurance as they approached retirement
- Added umbrella liability policy to protect accumulated assets
- Evaluated long-term care insurance options
Estate Planning Coordination
Actions Taken:
- Updated beneficiary designations on all accounts
- Coordinated with estate planning attorney for updated wills and trusts
- Implemented tax-efficient wealth transfer strategies
- Planned for potential future charitable giving through qualified charitable distributions
Learn More About Our Comprehensive Approach
We don’t just look at any planning area in isolation. We consider how any strategy fits with your overall retirement plan, including:
Retirement Income Planning
Social Security Optimization
Investment Management
Estate Planning Coordination
Implementation Timeline
Year 1: Foundation Setting (Ages 60/60)
- Portfolio restructuring and risk reduction
- Estate planning document updates
- Insurance optimization and healthcare planning
- Social Security benefit analysis and long-term strategy development
Year 2: Karen’s Retirement Preparation (Ages 61/61)
- Karen’s retirement at 61: Transition to David’s health insurance coverage
- Begin systematic Roth conversions up to 12% bracket annually
- Refine retirement budget and cash flow projections for single income household
- Social Security delay strategy education and planning
- Travel budget planning and implementation
Years 3-5: David’s Continued Employment (Ages 62-64/62-64)
- David continues working while Karen enjoys early retirement
- Karen remains on David’s employer health insurance
- Begin travel goals with Karen’s flexible schedule
- Monitor and adjust single-income cash flow management
Years 6-10: Full Retirement Implementation (Ages 65-69/65-69)
- David’s retirement at 65: Both now fully retired
- Healthcare transition: Move to COBRA or ACA marketplace until Medicare eligibility at 65
- Begin optimized withdrawal strategy from retirement accounts will delaying Social Security
- Monitor and adjust investment allocation for full retirement phase
Year 11+: Social Security and Medicare Phase (Ages 70+/70+)
- Both claim Social Security at age 70 for maximum benefits
- Continue Roth conversions strategy until David reach required minimum distribution age
Results After Two Years
Financial Outcomes
- Investment Cost Analysis: Identified potential annual fee reduction through portfolio optimization
- Portfolio Strategy: Implemented diversification strategies designed to enhance risk-adjusted returns
- Tax Efficiency: Completed Roth conversions
- Emergency Preparedness: Maintained 12-month expense emergency fund in high-yield savings
Personal Outcomes
- Increased Confidence: Clear roadmap helped reduce anxiety about retirement transition
- Better Organization: Consolidated accounts and streamlined financial management
- Enhanced Communication: Both spouses became aligned on retirement goals and strategies
- Peace of Mind: Comprehensive insurance and estate planning provided enhanced security
Projected Progress
- Long-term Strategy: Disciplined approach designed to support sustainable retirement income
- Tax Planning: Strategic planning positioned them to reduce current and future tax liabilities
- Social Security Optimization: Strategy designed to maximize potential lifetime benefits
- Healthcare Planning: Prepared for Medicare transition with optimal coverage selections
Ongoing Partnership and Support
Regular Review Schedule
- Semi-Annual Meetings: Comprehensive review meetings twice per year covering progress assessment, strategy adjustments, tax planning, insurance review, and goal reassessment
- Open Communication: Clients can contact us anytime with questions or concerns between scheduled meetings
- Market Updates: Regular communication about market conditions and how they may affect client strategies
Continuous Services
- Investment Monitoring: Active portfolio oversight and rebalancing
- Tax Coordination: Ongoing tax-efficient strategies and year-end planning
- Medicare Support: Plan review and optimization
- Estate Planning Updates: Coordination with legal professionals as needed
- Market Education: Regular communication about market conditions and strategy
Recent Adjustments (Year 3)
- Modified withdrawal strategy based on market conditions
- Adjusted asset allocation as David prepared to enter retirement
- Optimized Medicare plan selection for changing health needs
- Modified long-term care planning as priorities evolved
Key Lessons from the Johnson Case Study
1. Early Planning Creates Options
Starting comprehensive retirement planning 3-5 years before retirement provides time to optimize strategies and make gradual adjustments rather than rushed decisions.
2. Coordination is Critical
Social Security, Medicare, tax planning, and investment management work best when coordinated together rather than addressed separately.
3. Flexibility Matters
Having multiple account types (taxable, traditional retirement, Roth) provides flexibility to manage taxes and adapt to changing circumstances.
4. Professional Guidance Adds Value
The combination of technical expertise and objective advice helped the Johnsons avoid common mistakes and optimize their outcomes.
5. Communication is Key
Regular review and open communication ensure strategies remain aligned with goals and life changes.
Ready to Create Your Own Success Story?
If you’re approaching retirement in Northeast Ohio and facing similar challenges to the Johnsons, we’d welcome the opportunity to explore how comprehensive financial planning might benefit your situation.
What You Can Expect
Complimentary 30-Minute Consultation: We’ll discuss your situation, answer your questions, and explore whether our approach is a good fit for your needs.
No Pressure, No Sales Pitch: Our initial meeting is about understanding your situation and providing valuable insights, not selling you services.
Clear Next Steps: If we’re a good fit, we’ll explain our process, timeline, and fee structure so you can make an informed decision.
Take the Next Step
Contact Western Reserve Capital Management today to schedule your free consultation. Whether you’re in Hudson, Akron, New Philadelphia, or anywhere in Northeast Ohio, we’re here to help you navigate your transition to retirement with confidence.sustainable retirement.
Frequently Asked Questions
This case study is hypothetical but represents a composite of common situations we encounter with Northeast Ohio families approaching retirement. While the Johnsons are not actual clients, the challenges, strategies, and outcomes reflect realistic scenarios based on our experience serving similar families in Hudson, Akron, and New Philadelphia.
Every client’s situation is unique, and results depend on many factors including market conditions, personal circumstances, and the specific strategies implemented. However, the types of improvements shown – reduced investment costs, tax optimization, and enhanced retirement security – are common outcomes when families engage in comprehensive retirement planning.
The specific dollar amounts and percentages will vary based on individual situations, but the systematic approach to addressing multiple planning areas typically provides measurable benefits.
Several factors made the Johnsons ideal candidates for comprehensive financial planning:
Adequate savings: Their $1.75 million in retirement assets provided a foundation for various optimization strategies
Planning horizon: Starting 3-5 years before retirement allowed time for strategic implementation
Willingness to engage: They were committed to the planning process and open to making necessary changes
Realistic expectations: They understood that planning requires ongoing attention and periodic adjustments
Families with these characteristics often see the most significant benefits from comprehensive planning.
Every family’s situation is unique, which is why we customize our approach for each client. Whether you have more or less in assets, different family circumstances, or unique goals, the principle of comprehensive, coordinated planning remains valuable.
Some common variations we work with include:
Single individuals vs. married couples
Different asset levels (from $750,000 to $5 million+)
Varying retirement timelines and goals
Different risk tolerances and investment preferences
Unique family situations or health considerations
The key is developing strategies that fit your specific situation, goals, and values.
Yes, we work with families across a range of asset levels. While the specific strategies may differ, the principles of comprehensive retirement planning provide value regardless of asset size.
For families with smaller portfolios, we might focus more on:
Social Security and Medicare optimization
Tax-efficient withdrawal strategies
Risk management and insurance planning
Maximizing employer benefits
The key is ensuring our services provide value relative to your planning needs and financial situation.
About the Author
Gage Paul CFP®, RICP®, EA
Gage Paul, CFP®, EA, RICP®, is a fee-only fiduciary financial advisor with Western Reserve Capital Management, LLC, serving Ohio families approaching and in retirement from offices in Hudson, New Philadelphia, and Akron. He holds a Bachelor of Science in Business Administration with a specialization in Financial Planning from the University of Akron. Learn More about Gage
Important Disclosure: This case study is hypothetical and does not represent actual Western Reserve Capital Management client results. No portion of the content should be construed by a client or prospective client as a guarantee that he/she will experience the same or similar results or satisfaction if Western Reserve Capital Management, LLC is engaged to provide investment advisory services. Individual results will vary based on market conditions, personal circumstances, and implementation of strategies. Past performance does not guarantee future results. All figures are estimates based on assumptions that may not prove accurate. No guarantee is made that similar results can be achieved for other clients.