Retirement Success Stories: From Saving to Celebrating

Last week, we discussed a client's retirement success story: investing in a single company, then selling the stock after decades of appreciation and moving into a diversified portfolio. This week, we will focus on how one of the clients we serve achieved retirement through decades of diligent investing in an employer 401(k), and how changes to their investments gave them peace of mind and the flexibility they needed to live their best retirement.

In this case, our client started their career working for a company that offered a pension, which was typical forty years ago. After two decades, the company froze their pension and switched over to offering an employee 401(k) plan. Our client immediately began contributing to the 401(k) plan slightly above the employer match rate, which was modest but, combined with the match, gave them a meaningful retirement savings rate. 

Another twenty years passed, and their 401(k) balance grew because it was invested in a target-date fund that helped automatically balance risk and growth. However, retirement was now on their mind, and they had a 401(k) plan, benefits through an employer pension, and eligibility to collect Social Security.

So, our client reached out to us, which began our formal client-advisor relationship. At the time, they were unsure how to transition from accumulating assets to using them in retirement. We learned what mattered most to them, how they wanted to enjoy their retirement, and how they needed their assets to provide the lifestyle they hoped for. 

Our client’s retirement picture looked as follows: they could leave their 401(k) with their employer or move the funds to an Individual Retirement Account (IRA), collect a monthly pension benefit or take a one-time lump-sum payment, and start collecting Social Security now or defer it for a greater benefit at age seventy.

For our client, we found that their needs were better served by moving their employer 401(k) into an IRA at retirement that we helped manage, since their company’s 401(k) plan did not offer the type of investment management and automatic monthly distributions that they desired. 

Furthermore, while they could have moved their pension plan into the same IRA, their monthly payment benefit through the employer outweighed the benefit of having more flexibility with the funds if they elected to take a lump-sum payment and invest it. So, they elected to take monthly payments for the rest of their life.

Lastly, when it came to choosing what to do with their Social Security benefit, our retirement analysis showed they could defer Social Security until seventy and handle the increased draw from their retirement assets, but they preferred having the extra money now for the peace of mind it provides.

While each of these decisions felt daunting at the time, breaking them down into needs-driven choices and their long-term impact on their assets helped clarify what made the most sense for them.

Retirement can feel daunting, even when someone has saved diligently over the years. That initial transition from accumulation to depletion can feel overwhelming, but that is where working with an Advisor can provide peace of mind.

At Lundeen Abrams Advisors, we have helped many clients make this pivotal transition from working to retirement, and we are here to help you too. Whether it is an employer 401(k) plan, multiple IRAs, a pension, or a brokerage account that will fund your retirement in addition to Social Security, we can help you create a plan so you feel more confident taking the leap.

So please reach out today to schedule a consultation so we can learn more about what makes your situation unique and how we can help. We look forward to working with you soon and creating a plan tailored to your needs.