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PRP Case Studies

The financial plans we create for you and the investment advice provided by PRP is custom-made to fit your unique situation. Read below to get a better understanding of how we create solutions for customers with different sets of circumstances.



Scenario #1: Married and retiring within 10 years

My wife and I are in our 50's and looking to retire within 3-10 years. I'm employed in the public sector and have made contributions to a 457 deferred compensation plan. I'm also eligible for a pension. My wife is working in the private sector and has saved into her 401(k) account, but won't be receiving a pension. Right after retirement, we plan on selling our home and moving closer to our grandkids. Even though we have a good amount of money saved, we're not sure what would happen if one or both of us gets sick or injured and needs care for a long time. We're also not sure if we will have enough income to cover our living expenses during retirement since we'll be retired for 30-40 years. Based on our own projections, it looks like we will be able to live comfortably off of my pension and our Social Security payments, but we aren't quite sure how much inflation will affect our lifestyle. What would be a good way to address our concerns?

Recommendation: Uncovering what your financial strengths and weaknesses are would be a good start in helping you address your concerns. A financial analysis from top to bottom would help you get a better picture of what potentially lies ahead. In this case, Public Retirement Planners would take a very close look at how much income you will have coming in the door and what would be going out. To be safe, we will project that your living expenses will increase faster than the rate of historic inflation. We would also estimate what your long-term care costs would be in a worst-case scenario. That means both you and your wife needing long-term care for five years or more. Based on your financial report, if there's a decent chance that you will run out of money, we would likely suggest you buy an affordable, flexible long-term care insurance policy. If there's a chance that you will have an income shortage, we would probably suggest you save more during your working years in order to purchase investments that generate sufficient income.



Scenario #2: Married and recently retired

My wife and I just retired and are looking forward to doing some of the things we had to put off while raising our kids. My pension and our Social Security payments are more than enough to cover the bills since we live a frugal, but comfortable lifestyle. Over the years, I was able to save a lot of money into my 457 deferred compensation plan. While contributing to my retirement plan, I didn't pay much attention to the investments I picked or the fees that were being charged. Now that I'm retired and have more free time, I looked over my investments and wondered if the funds that I'm invested in are appropriate for us. Also, even though I've left my employer, I'm still paying an ongoing retirement plan administration fee. Is it necessary to be paying those fees or is there a way to bring my costs down or get more services for what I'm paying currently?

Recommendation: Many participants of employer-sponsored retirement plans such as a 457 or 401(k) are not aware of all the investment and plan administration costs they are paying. A lot of people also feel overwhelmed and confused with all of the choices for investment options that exist. To help cut through the fog, Public Retirement Planners will review all of your investments and present you with a report of how you are invested, how we think you should be invested, and what fees you are currently paying. For a modest cost*, we take on the important responsibility of managing your assets by making investment decisions on your behalf, but well within your level of comfort. We consult with you on a regular basis so you know exactly how your money is performing and what your investment management costs are.

* Please consult with one of our partnered accountants or a tax professional to determine if your investment management cost is tax-deductible.



Scenario #3: Married and approaching retirement

I've been contributing to my 457 deferred compensation plan for many years. During this time, I've taken advantage of a lot of tax deductions and exemptions. We've also been taking deductions for mortgage interest and real estate taxes. The bottom line is that with all of these deductions and exemptions, along with the tax deductions I get for contributing to my 457 plan, we are in a fairly low tax rate. Lately though, I've been thinking about something; when my husband and I retire, we won't have enough tax deductions to itemize so we're going to use the standard deduction. With my pension, my husband's income from his part-time job, and our Social Security, when it comes to pulling money from my 457 plan, I may actually pay taxes at a higher rate than when I was putting money away into my 457 plan. Is there something we can do to avoid this potential situation?

Recommendation: When tax rates were higher in the 80s, 90s, and last decade, it was a good idea to reduce your taxable income by putting away earnings pre-tax into your 457, 410(k), or 403(b) plan. When you retire, however, you might find that because of pension and other income sources, you're paying taxes at a higher rate than when you were saving away. The tax gamble you made won't be paying off as you had hoped. The good news is there are things that you can do now to avoid this situation. Depending upon what your tax advisor decides, it may be a good idea to save your money into your 457 plan through after-tax Roth contributions (if allowed by your employer). Or, if eligible, you and your husband can make Roth IRA contributions which can be later withdrawn without tax or penalty.*

*Refer to IRS Publication 590 for Roth IRA distribution rules