A couple in their late 50s seeks advice on investing a $1 million inheritance while ensuring a comfortable retirement. Their current plan, heavily reliant on cash and GICs, falls short of meeting long-term needs. A financial planner recommends a more balanced portfolio and explores alternative strategies like selling their home or using life insurance for their son's inheritance.
Mark and Rebecca, a couple in their late 50s and early 60s, are approaching retirement with a unique challenge: a substantial $1-million inheritance on the horizon. Currently, they run a jointly held consulting company, drawing a combined $130,000 annually after taxes and pension contributions. They aim to retire in five years, maintaining a spending goal of $80,000 per year.
Having recently paid off their mortgage and with their son now financially independent, they are at a crossroads in their financial planning. Their primary concern revolves around the inheritance, which they intend to leave to their son. However, they also recognize the potential need to utilize a portion of it for their own retirement. This dilemma has led them to seek guidance on the best way to invest the inheritance safely and effectively, especially given the current volatile market conditions.They are currently relying heavily on cash and Guaranteed Investment Certificates (GICs), resulting in a low projected rate of return of 2.24 percent. This conservative approach, while minimizing risk, presents a challenge in meeting their long-term retirement needs. Matthew Ardrey, a certified financial planner, was consulted to evaluate their situation and provide tailored recommendations. He analyzed their current assets, income sources, and projected expenses, taking into account factors like inflation, life expectancy, and potential investment returns.Ardrey's analysis revealed that their current plan, while seemingly sound, falls short in the long run. To ensure a financially secure retirement, he recommended a shift towards a more balanced investment portfolio, aiming for a 5.22 percent return. This strategic shift could significantly improve their chances of success, allowing them to comfortably meet their retirement goals. He also explored alternative options, such as selling their paid-off home later in life to provide an additional financial cushion or utilizing a joint last-to-die life insurance policy to guarantee a tax-free inheritance for their son. These suggestions aimed to address their concerns about market volatility and provide a safety net for their long-term financial well-being. Ultimately, Ardrey emphasized the importance of factoring in the inherent uncertainties of life and investments, advocating for a financial plan that could adapt and thrive in the face of unforeseen circumstances.
RETIREMENT PLANNING INHERITANCE INVESTMENT STRATEGY PORTFOLIO MANAGEMENT FINANCIAL ADVICE
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