Case Study – Anne & Fred
• Age 57 & 62
• Annual Income $132,000
• Net Worth $1,065,951
• Considering Early Retirement
Anne and Fred Reese, 57 and 62, are looking ahead to retirement early next year. They are thinking about heading south to a cheaper and warmer state but haven’t made a firm decision. Fred is the sole breadwinner and earns $125,000 plus an additional $8,000 from investments.
The Reese’s can be considered “millionaires next door,” with a net worth of $1,065,951. They have absolutely no debt and the following assets: $32,000 in a 2% bank passbook account, $347,365 in telephone stock; $224,901 in Fred’s 401(k); $31,000 in an annuity; $202,685 in mutual funds; $23,000 in whole life insurance; their $190,000 home; and $15,000 of personal property.
The Reese’s two main concerns are longevity and taxes. “We want to take income from investments with the least amount of tax liability and make the money we have accrued last as long as we do,”notes Fred. He also noted a concern about taking money out of tax-deferred plans in the correct manner to avoid IRS penalties.
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