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A P&G Case Study: Planning for Retirement

| August 03, 2016
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John and Elizabeth have lived in Cincinnati most of their adult life.  John, age 54, has been a lifelong P&Ger, moving Elizabeth and their two kids to the Lima area in Northern Ohio for a 2-year plant assignment in the late 90’s before returning back to Cincinnati.  Their son and daughter are both currently in college.  Elizabeth had stayed at home while the kids were younger and now works part-time at a local school.

As John now contemplates retiring, he often asks himself the following questions:

  • It feels like I have enough money to retire, but do I really, or will I fall short given my lifestyle?
  • I have a lot of P&G stock in my PST. Is it ok to keep it that way or should I do something about it?
  • If I have both common and preferred shares in my PST plan, are there any special opportunities available to me in planning my distribution?
  • I have P&G stock options coming due over the next several years, what is the best strategy for exercising them?
  • When the time comes to file for Social Security, should I file at the earliest possible time, at my full retirement age, or delay it as long as possible?
  • Will my retirement accounts be tied up in court when I die, or go directly to the people I want them to go to?

Fortunately for John, as those questions came to mind, he wrote them down and brought them with him to his first meeting with me at Hengehold Capital Management.  At our meeting John got to know how we think about planning for retirement, asset allocation, and investing, but importantly, we got to know John and Elizabeth’s life, their goals, their aspirations and fears.  The foundation to a financially independent future for our clients begins with an understanding of where they’ve been, where they are, and where they want to go.

Throughout the information gathering and onboarding process, we helped John and Elizabeth understand the concentration risk posed to them, as P&G stock made up a significant size of their retirement assets.  We helped them understand the process of Net Unrealized Appreciation (NUA) and the tax implications of electing that approach if they wanted to diversify their PST.  We ran statistical simulations to model the success rate of John retiring at age 55, including scenarios such as:

  • The stock market providing abnormally low returns
  • Inflation creeping higher than expected
  • A long-term care event happening towards the end of John’s life
  • Other spending/saving scenarios.

We discussed their estate plan and ensured they had all their beneficiary designations up to date.  We talked about Social Security decisions and how to best optimize their claiming approach when the time would come.  We spent a fair bit of time explaining tax location and how we recommend asset allocation through the lens of knowing how all of your accounts work within the framework of tax law.

We strive for a collaborative relationship with our clients.  As a fee-only Registered Investment Advisor, our loyalties are always aligned with our client’s best interests.  Our specialized tools will help those retiring from P&G or evaluating a separation package to better understand the consequences of the complicated decision that must be made.  We will help you get it right!

If you want to walk through this together or just talk about P&G, feel free to reach out to me at [email protected].

Date Posted: 8/03/2016 Advice provided in this article is meant for educational purposes only and financial education is important to us. This scenario is intended to illustrate services available at HCM and is not intended to be a testimonial or endorsement and is not intended to necessarily represent the experiences of other clients. This article should not be taken as advice to buy, sell, or hold P&G stock. Before making decisions regarding your personal financial situation, please consult an advisor or conduct your own due diligence. If you would like to discuss your P&G Retirement Income Plan with an HCM Wealth Advisor, please give us a call – 513-598-5120. Located in Cincinnati, Ohio, we serve clients in 23 states, and we’d love to help.


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