Mike and Lori, weren’t sure if their current investments would give them enough to fund the dream retirement they were hoping for in 10-years.
Mike and Lori weren’t sure if their current investments would be enough to fund the dream retirement they were hoping for in 10-years.
The 2008 Market Correction had hit their overall financial portfolio hard. While their investment accounts had gradually regained value, Lori expressed concern that if anything similar might happen again before or during their retirement, it could prove quite disruptive to their lifestyle. At the same time, Mike was concerned they hadn’t saved enough. So they decided to seek advice.
An Investment Strategy That Made Everyone Happy
They came to Buttonwood, wanting safety and growth over the next 10-years, which at first seemed conflicting. But their goal was clear for us: We needed to implement a combined cash-flow, tax, insurance and investment strategy that would have the flexibility to absorb market risk. Our answer: The Bucket Approach.
The Bucket Approach
Bucket #1 contained safe Investments. This is the bucket that provided ongoing cash-flow in retirement. Subsequent buckets incrementally increased risk and housed growth investments focused on the creation of future income. This risk management strategy allowed us to control potential downside while maintaining the ability to grow assets over time.
Because Mike and Lori had a decade until retirement and their current cash flow was adequate, we de-emphasized the first bucket and allocated more of their investments to the other buckets. As they come closer to retirement, we will accelerate the first bucket by shifting some of their higher-risk investments into more conservative options.
To discuss more in depth our Bucket Approach, give us a call at: (816) 285-9000.
He had been the primary earner in the family before he passed away two years ago. They had made a great team and shared much of their life together. However, it was always him who handled most of the investment decisions.
Carol is a widow. Her husband, Dwight, had been the primary earner in the family before he passed away two years ago. They had made a great team and shared much of their life together. However, Dwight had always handled most of the investment decisions.
Dwight did a great job of dotting the i’s and crossing the t’s and when he passed away everything went just as Dwight had planned and Carol was able to work through the estate settlement process with little trouble.
Now, a couple years later, statements kept showing up at the house, bonds were being called, cash was building up, and so many of the newsletters and magazines that made perfect sense to Dwight seemed like jibberish to Carol. After receiving a referral from a good friend, Carol was introduced to the team at Buttonwood Financial Group.
We met at Carol’s house and spent several hours reviewing what turned out to be more than a two foot high stack of investment statements that had built up. What Carol needed was a good, old-fashioned spring cleaning and that was exactly where we started.
Once we boxed up the statements and got them back to the office we were able to implement Buttonwood Wealth Management Solutions (BWMS) software so all of Carol’s investments, bank accounts, CD’s, insurance and estate program were accessible in one location – at any time. There were over fifty-eight different investment accounts, which ranged from assets at brokerage firms to stocks held in dividend reinvestment directly with the companies.
In the weeks that followed we were able to establish two trust accounts and two IRA accounts for all the assets to transfer into. With assets consolidated, we were able to establish a regular withdrawal strategy to create a steady and consistent income for Carol.
Excess cash from called bonds was reinvested, the hassle from piles of statements was eliminated and Carol went from spending time daily trying to track her investments to finding time to travel and be with her grandchildren.
Real Estate Investments Demand Too Much
He used to enjoy painting and cleaning the different properties, but what used to be a pleasant escape had become a burden. His goal was to simplify.
Real Estate Investments Demand Too Much
George called us after being referred by his close friend. He was turning sixty-five years old and had worked in the real estate market his whole life. He was comfortable in that arena and his rental homes had treated him right over the years.
George’s challenge was that his current rental homes were taking an enormous amount of his time. He used to enjoy painting and cleaning the different properties, but what used to be a pleasant escape had become a burden. It was no longer so easy to climb underneath the sink to fix a faucet, and the seemingly never-ending painting took away from his time on the golf course.
His goal was to simplify. He had enough assets to be financially comfortable for years if he could find away to create the cash flows that he needed without the work that went with the real estate he currently owned.
After reviewing some options to reduce the taxes he would incur when he sold his various properties, we put a program in place that would create liquidity over the next three years. We worked with 1031 opportunities to defer taxes, diversify part of his real estate portfolio, and create additional cash flows. We were also able to utilize proceeds from select sales of real estate and reinvest in a well diversified cash flow generating portfolio.
The low tax rates George had enjoyed due to the depreciation of the real estate were maintained by the appropriate use of both tax-free and taxable bonds in his account. A monthly check was deposited directly into his checking account, and the work that had become such a burden with the individual real estate properties was no more.