Case Study #1
Saving for retirement
Client
Tyra
Age
45
Primary Goal
Grow net worth tax-efficiently and maintain flexibility
*Real names and photos have been altered to protect the privacy of our clients.
*Real names and photos have been altered to protect the privacy of our clients.
Tyra was making great income, owned her home and a rental property. She had been saving consistently, but she didn’t know if there was more that she could do. Since she had excess cash flow, no dependents, and no major purchases, what should she be focused on? She was concerned what would happen if she was no longer able to work. As an airline pilot, there were several potential disqualifying events such as vision impairment or diabetes, so a “what if” plan was important.
We started the Roadmap with Tyra’s highest priority and time sensitive items. This included her “what if” plan and strategies to lower her calendar year tax bill before the end of the year. We “stress tested” her cash flows for early retirement at various ages and provided her with different strategies that could work in the various situations.
As Tyra followed the MWA Roadmap, she realized there were areas aside from savings and cash flow that needed to be addressed. First, we capitalized on the mega backdoor Roth strategy before year-end to lower her lifetime tax liability. While she didn’t have dependents, she hadn’t yet outlined her wishes in an estate plan. Through our family office services, we connected her to trust and estate attorneys to draft her revocable trust and supporting documents, including a power of attorney and medical directive.
Tyra can expect to lower her lifetime tax liabiliy by hundreds of thousands of dollars by implementing the mega backdoor Roth strategy. With her trust and estate plan in place, she can count on her assets being passed as she intends. In addition, if there’s a life event that requires someone else to make financial or medical decisions on her behalf, the process is in place.
Minimize taxes while in retirement, leave an inheritance for their daughter
Lower taxes while in peak earning years (50% marginal tax bracket, CA residents)
