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WHO WE SERVE:

Academic Professionals

Higher-Education Professors and Faculty


Academic / Higher Education Professional – A Case Study

In this Academics client scenario, Braun-Bostich & Associates (BBA) helped Ron and Linda map out a plan for their approaching transition to retirement.

Note: This BBA strategy is used for a variety of academic professional clients in many different personal and financial situations, including people like Ron and Linda. BBA’s role here is to help solidify what their retirement goals are and to establish a practical pathway for them to achieve those goals.

*Names have been changed for privacy.

Personal and Financial Profile

Professor Ron Drake is 67 and his wife, Professor Linda Drake, is 63 and they hope to retire within the next 4 years. Each of them have TIAA accounts through their university employer, but Ron started an SRA (403(b) plan) with Fidelity several years ago.


Linda has an Individual Retirement Account (IRA) from her time working in private industry, and collectively the Drake’s have $190,000 in Bank CDs and savings accounts.

For years, Ron and Linda Drake* have occasionally spoken with representatives from the three separate financial institutions where their investments currently reside. As a result, they are unsure of how all the pieces fit together to their benefit as retirement approaches – managing three advisory relationships over the years has been daunting at best. Additionally, the couple has two adolescent grandchildren and are eager to assist with their college education expenses.

As they contemplate the current state of their bank holdings, they consult with BBA and agree that it would be wise to invest $90,000 and keep the remaining $100,000 as savings. Note that neither has considered opening a 457b plan through the university, which would permit them to tax-defer another $26,000 each from their university salaries.

With BBA’s guidance, they decide to make that move, thus saving approximately 40% in taxes on the combined $54,000 they placed into the plan. That additional deferral keeps them under the income limits for contributing to a Roth IRA, so they each decide to do that as well.

Additionally, they make a decision to place $5,000 each into a 529 college savings plan for each grandchild, allowing them to deduct the collective $10,000 on their state income taxes.

Note: This BBA strategy is used for a variety of academic professional clients in many different personal and financial situations, including people like Ron and Linda. BBA’s role here is to help solidify what their retirement goals are and to establish a practical pathway for them to achieve those goals. 

Augmenting for the Best Retirement

Like Fidelity, the Teachers Insurance and Annuity Association (TIAA) has several exceptional and exclusive investments for Ron and Linda’s consideration. BBA reviews the Drake’s holdings, then reallocate the entire portfolio in an integrated manner, choosing particular funds that utilize TIAA’s top-ranked options and others that make use of Fidelity’s areas of strength.

Within Linda’s IRA, we selected from thousands of top-ranked, no-load mutual funds available. Once we reorganize the couple’s portfolio, we take risk-related action as necessary.

Each quarter, BBA provides the Drakes with a consolidated financial statement displaying holdings from all of their accounts, how each is allocated, and how their investments are increasing (fee adjusted balance) versus an applicable benchmark. The couple is then able to track the growth of their net worth swiftly and with ease. To summarize, we:

Analyze
Begin by reviewing current holdings and researching available options

Restructure
Portfolio reallocation in line with BBA strategy, considering cost, performance, and tax incentives

Report
Deliver consolidated quarterly statements for Ron and Linda so they’re able to easily track their portfolio’s performance

Collective Set Up for Long-Term Achievement

Upon running a detailed cash flow analysis, BBA is pleased to report that Ron and Linda are entirely prepared to enjoy a financially comfortable retirement. Going forward, their BBA advisor continues to manage the couples overall portfolio, and importantly, is working diligently to (1) deliver in-retirement advice on how best to drawdown income from their holdings in the most tax efficient manner, (2) offer direction on when to begin receiving Social Security and whether to acquire long-term care insurance and, (3) guide them on completing all of the various Fidelity, TIAA and IRA withdrawal forms to jumpstart the flow of income.

Because the Drake’s were struggling to manage multiple advisory relationships, BBA stepped in at their request as their primary.

Proactively reaching out as needed to their CPA, Estate Planning attorney and others, helped ensure that all of the couple’s other financial professionals are working collaboratively to help the Drakes realize their goals for a worry-free retirement.

Conclusion / Summary

This case study highlights how we coordinate and optimize our clients’ entire financial lives. We select the investments available to help ensure that every dollar that is invested is placed in the right vehicle, be it a Roth IRA, workplace retirement plan, or after-tax investment account. Then at retirement, we advise on the best withdrawal strategy from the various accounts to minimize taxes and maximize the growth of the overall portfolio.

Free Consultation

If Ron and Linda's situation sounds similar to your own, we would love to explore your situation and discuss how BBA could help alleviate your issues and pain points, and ultimately help you build confidence in your financial future. Please do not hesitate to reach out and schedule a free consultation with one of our advisors. We look forward to hearing from you soon!

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