Nearing or in First 10 Years of Retirement

Client Scenario


Paul decided to take a leap and start an architecture firm with a long-time colleague just before the dot com bubble burst in the late ’90s. The dream was always to be independent. It was risky, but the economy was booming, and the timing seemed right. He’d just turned 45, and technology was rapidly changing every industry.

In a short time, business began to stream in steadily. Leveraging technology, they were able to run the practice efficiently, and with great speed to market. They hired a small staff and won some projects that elevated the firm’s profile regionally.

Amid the success, he and his partner navigated a couple of intense recessions in their first decade. The Great Recession of ’08-’09 forced them to make tough decisions they never imagined they’d face. As a small business owner, he felt obligated to sacrifice where he could in order to maintain his fulltime staff. Cuts to his pay and benefits and those of his partner allowed them to maintain benefits for their employees.

Watching his IRA account dwindle in 2009, and ultimately recover in the next few years was a rollercoaster ride. Never willing to take on extraordinary risk without some back stop, he was helpless, and it made him queasy.

In his mid-sixties now, Paul is preparing to cash out his equity in the firm and begin the transition into retirement. His advisor, Eric, is concerned that his personal sacrifices have prevented him from saving at levels he planned. He recommends that Paul take on more equity risk in the coming decade so that he may meet his retirement planning goals. Paul wants some measure of protection for his money and is unwilling to be so exposed.

After running an illustration, Eric recommends that Paul take a portion of the IRA and invest it in a no-load, Fixed Indexed Annuity. That way, Paul is guaranteed not to take any losses on at least a portion of his portfolio, while taking advantage of some upside potential. This is especially critical in the “fragile decade”—last five years of work, and first five years of retirement—when market losses as assets are spent down can be very difficult to make up.


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