CASE STUDY
Navigating early retirement following a health event with $2M saved
After a significant health event, a high-earning professional in his early 50s began questioning whether continued full-time work was the right path. A comprehensive review of retirement income, taxes, estate considerations, and future liquidity needs helped clarify the options available.
Challenge
Following a health crisis, the client wanted to understand whether stepping away from a demanding career was financially feasible. Because much of the household’s wealth was concentrated in retirement accounts, the decision involved balancing near-term income needs with tax considerations, future inheritance expectations, and long-term financial flexibility.
Approach
To evaluate the available paths forward, the planning process incorporated multiple areas of the clients’ financial lives:
Retirement Income Analysis
Modeled retirement scenarios and assessed whether existing assets and projected income sources could support anticipated spending needs.
Rule 72(t) Review
Evaluated the use of substantially equal periodic payments under IRS Rule 72(t) as a potential way to access IRA assets before age 59½ without the standard early-withdrawal penalty, while reviewing the associated restrictions and compliance requirements.
Inheritance Planning
Discussed how a potential future inheritance could affect retirement income decisions, liquidity needs, and tax planning strategies.
Roth Conversion Assessment
Analyzed whether Roth conversions aligned with the couple’s current tax situation, cash flow needs, and long-term objectives.
Tax and Cash Flow Planning
Reviewed the household’s changing income profile and developed a framework for evaluating spending, taxes, and withdrawals over time.
Career Transition Considerations
Explored how part-time or lower-stress employment could fit within the broader financial plan and affect retirement income strategies.
Broader Financial Planning Review
Considered additional factors including insurance coverage, business structure decisions, debt management, estate planning, concentrated stock positions, and real estate holdings.
Outcome
The planning process provided a clearer picture of the financial tradeoffs associated with early retirement. By examining retirement income, tax implications, liquidity needs, and future planning opportunities together, the couple gained a more informed framework for evaluating their next steps and adapting as circumstances evolve.
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