Financial planning that starts with you

A Kansas couple finds a holistic approach to financial planning.

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Key takeaways

  • Retirement planning is not a "one and done" process. Financial planning is a deep and continuing process—a collaborative conversation with an advisor you trust.
  • Your advisor should be the quarterback of your financial planning team and connect you with a network of specialists from an estate planning lawyer to a tax attorney, among others.
  • Don't wait for a major health event to happen to you. Be prepared to tackle a sweeping range of financial and health planning issues.

Five years ago, Dave Rock had a wakeup call via a heart attack. He was 54.

While there was a history of heart disease in his family, at the time, he was healthy and trying to do the right things to stay that way. Or so he thought. It all happened so fast.

One afternoon while sitting in a dealer meeting in the boardroom at John Deere in Olathe, Kansas, he noticed some heavy pressure in his chest. After a period of denial, he drove himself to urgent care and then ER where he learned that he was having a heart attack. With this news he anticipated a stent or 2 would have him going again. He had a major business presentation on Friday he "had" to get back for. It turned out the fix was major bypass surgery. In a moment, his life changed, and so did his wife, Lisa's, and daughter, Christine's.

A major health crisis makes you pause and question. Assuming recovery, what will my capabilities be? Will my family be taken care of? What is it I should be doing? What do I want my legacy to be? What needs to change to make that a reality?

"My heart attack was a significant call to action to get prepared financially and mentally to retire," Dave says. "You can have the awareness and all the investment folders lying in a pile, but if you don't act on it and put the pieces in place, they have no value. I knew right way that Lisa and I needed to get all of our bases covered—not just think about it. And, I knew it was important to determine a focus for my time." When Dave told his mother he was thinking of retiring early, she challenged him with, "What will you do once the garage is cleaned out?"

By covering all the bases, Dave is referring to a sweeping range of financial fundamentals. Top of the list: Could he retire early? Did they have an estate plan in place? Did he have access to health insurance to carry him through until Medicare kicked in? What would their tax scenario look like in the years ahead? Did they have a giving plan that would benefit the causes they cared most about? Importantly, did they have the proper provisions in place to transfer their wealth to their daughter? Did they have a power of attorney and health care power of attorney?

Early retirement soul searching

The to-do catalog, at first blush, was daunting. But Dave wasn't a financial neophyte. He and Lisa had been actively working with a Fidelity wealth advisor for roughly 5 years, and both were fully committed to learning and taking an active role in their financial management.

But the truth was their lives did turn topsy-turvy, and Dave's health crisis caught them both off-guard, prompting not only a hard look at their financial blueprint, but some soul-searching.

At the time, Dave was manager, dealer development at John Deere Co. and had already clocked in around 33 years working for the Ag Equipment division of the Moline, Illinois -based equipment manufacturer. "I didn't want to leave my best and last years at Deere," Dave says.

"I loved the work, but work was getting in the way of what I wanted to do as a volunteer, to give back to causes I believe in. I serve on several boards and committees at our church, a local public school foundation, and my alma mater, Kansas State University. At work, meetings and obligations there came first, and I couldn’t do full justice to both."

Admittedly, he had been toying with the notion of retiring early with Lisa, a senior mortgage underwriter, then 53. At that juncture he hadn't focused on the reality of what that financial playing field would entail, or if they had truly saved enough to make it.

The couple, of course, had done some careful preparation over the years. Lisa's grandfather had advised them when they married that, "The first dollar you invest will earn you the most and don't retire until everything is paid for." They lived beneath their means, invested, saved for their daughter's college education in 529 plans, and set aside money in retirement accounts.

Building a relationship with an advisor

Meantime, leading up to Dave's heart attack, the couple had developed a close working relationship with Chad Burt, an Overland Park, Kansas-based Fidelity wealth management advisor and Certified Financial Planner®. But there was plenty of work yet to do. "In the early years, we were thinking mostly in terms of growing our assets and thinking towards retirement," Dave says. "Initially, he gave us advice on our investments, but we became more and more confident working with him, and, before long, what we were really talking about is our financial lives."

One challenge: Dave had years when he received sizeable bonuses and stock options to exercise, and there were tax implications to consider. "The Rocks are very charitable, giving folks, so introducing to them to the Fidelity Charitable Giving Account® was a solution to help reduce their taxes," advisor Burt says. Now that they are retired, the Rocks are able to continue charitable giving from their Giving Account versus retirement funds.

The couple had been cautious working with advisors in the past. "We had several misstarts with other investment advisors who didn't treat Dave and me like we were both equal partners in this," Lisa says. "I even got up and walked out during a dinner with one advisor we had when we lived in Texas. With Chad Burt, it was refreshing. I never felt that I wasn't a 50-50 partner with Dave in this. We felt comfortable with him as someone we could trust, who would look after us, and always took the time to answer my questions."

Meantime, their advisor relationship with Chad Burt has been a bonus for Christine, who will graduate from Kansas State University this year. She has met with him too, to discuss her own accounts. "She knows exactly what to do if something happens to us," Lisa says. "Call Chad Burt."

That's actually what Lisa did the day after Dave's open-heart surgery. "I wanted to let him know what had happened, to make sure our finances were in good order, and that our beneficiaries were up-to-date," she says.

And, to be honest, she just needed to talk to him. "Certainly, there's a business relationship between us, but we have always considered Chad Burt a friend as well," Lisa says.

Burt assured her that everything was fine, but the couple knew the time had come to get serious about their strategy for their next chapter. Retiring sooner, rather than later, at least for Dave, was now on the front burner. Lisa wasn't quite ready.

"We had some pieces in place when I had the heart attack, but we knew we needed to do more," Dave says. "We're not done yet; we don't have the songs picked for our funeral and that kind of thing."

Reinventing their view of retirement

During the 2 months that Dave was out of the office recuperating, the couple took a deeper dive with Burt beyond simply their financial health. They explored what their retirement might truly look like, their passions, interests, the lifestyle they envisioned moving forward, their daughter's financial future, and notably, their philanthropic legacy.

Dave devoted hours poring over the prospect of an early retirement. "I had a great job, stock options and bonuses, and I thought, did I really want to walk away from all of that?"

The heart attack "changed Dave's perspective on life," Chad Burt says. "Dave loved working at Deere, but after that happened he was kind of like 'Hmm, what's the earliest I can retire?' We really changed the game plan and began to ask Can he retire this year, next year; what does that look like?"

Burt began conscientiously running the various scenarios, including sources of non-retirement fund assets the couple could tap until Dave was eligible to withdraw funds from his Deere pension and his retirement savings accounts. "Everyone's situation is unique," Burt says. "Financial planning is not cookie cutter. You're not making widgets all day. That's what I love about my job."

Dave, too, took to the task with gusto. "He would call me up after working with Fidelity's retirement calculator and say 'I have really pushed the numbers as far as my expenses, while leaving room for 2–3 major travel trips each year," Chad Burt recalls. Questions discussed included: Am I looking at this right? Should I up the inflation rate? What about long-term care? What would we need to change in terms of investments and in terms of the amount of risk, if I were to retire early? Which stock options make the most sense to execute?

A team approach to financial planning

Burt set up meetings for the Rocks with other financial specialists. "I'm the quarterback of the situation," he says. "I introduce topics and talk to them, but when they're ready, I find the right person to guide them." He introduced them, for example, to an estate planning attorney to review their documents from health care proxies to living wills and power of attorney designations to named beneficiaries. They also wanted to make sure that if something happened to them, Christine's inheritance would have some guardrails to protect her via a trust.

With the stock option piece, Burt brought in Fidelity’s stock options group to run Black-Scholes models to show them what makes sense. And a tax attorney helped the couple navigate a variety of moves, including converting some funds from Dave's traditional IRA to a Roth IRA each year to help reduce future taxes when required minimum distributions kick in at 70½.

Chad Burt peered further down the road to study strategies that the couple might opt for when the time comes to receive Social Security benefits. "Neither one is close to 62 yet," he says. "Lisa is 58, and Dave turns 60 at the end of November. But we have talked about a split strategy. We may start Lisa's benefit at her full retirement age, which would be roughly $2,000 a month, and delay Dave's until he is 70. That way, we take advantage of the 8% annual bump in the benefit between his full retirement age and that time, so his monthly benefit would eventually amount to around $3,500."

"Although there are 2 people, you're planning for the longer of the 2 lives," he explains. "In this case, we're assuming that Lisa will live longer than Dave due to his heart issue. If something were to happen to Dave, Lisa will drop her benefit and utilize Dave's. If he is fine, great, they'll be collecting an estimated $5,500 a month from their Social Security accounts."

Planning for future health care expenses

Finally, the trio tackled what might be their biggest expense in the next few decades, health care. "Over the last decade, we've been saving in a health savings account (HSA) and not drawing from that," Dave says. That's because of the generous employer health care and retiree health care benefits offered by Dave's former employer. But the couple will have the HSA, which currently tops $125,000, to spend tax-free on qualified medical expenses not covered by Medicare, or even on non-covered items in their retirement years.

As to early retirement, well, it was 3 years in the making, but Dave finally did it. Two years ago, at the age of 57, he retired.

"After I retired, I spent the first month redoing my basement woodworking shop, changing it from a place where I had my tools stored along with the Christmas decorations to a dedicated shop," he says. "Lisa now calls it my 'laboratory.'" His passion: repurposing old wood into something new like a floor lamp from an old fence post. "A special item is a jewelry box I made for Lisa from walnut wood her granddad salvaged from the log cabin his grandparents built on their homestead in Nebraska," he says.

This spring, Lisa cashed her final paycheck. To celebrate, the Rocks packed their suitcases and jetted off on a rambling 3-week excursion to England, Scotland, and Ireland. "We enjoyed the pubs in Dublin and Belfast, as well as meeting the cows that provide the milk for a famous Irish beverage," Dave laughs. Can you say, Sláinte?.

Next steps to consider

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