--- title: Retirement Financial Plan Sample - Renew Wealth Management description: An interactive sample financial plan from Renew Wealth Management showing retirement, tax, investment and estate analysis for a hypothetical household. author: Super User --- Interactive # Retirement Financial Plan Sample Independent RIA Comprehensive financial plan ## Pre-Retiree & Amanda Sample A fiduciary, tax-centric roadmap for a $7.3 million household earning $866,000 a year, with 28% of its investable wealth in one company's stock. We stress tested the plan 1,000 times, built a three-year exit from the concentrated position, and moved $4.4 million into tax-free territory before required distributions begin. Prepared by **James M. Simon, CPA, CFP®** Ages **52 / 50** Target retirement **2032, ages 60 / 58** Analytics by **RightCapital** 0% Probability of success ### Proposed plan funds $30,000 a month of retirement spending through age 90 in 97 of 100 simulated markets. 84% today→97% proposed Net worth $7.33M $8.46M assets, $1.13M mortgages; excludes $940K unvested RSUs Invested assets $5.70M Projected $10.6M at retirement in 2032 Household income $866K Salary, bonus, RSU vesting, consulting, rental Roth strategy value +$4.6M More after-tax wealth vs. doing nothing All figures are hypothetical and come from the sample household's inputs. Hover or tap any chart for detail. ### What you own $8,456,000 in total assets ### How it is taxed $5,701,000 across three tax buckets ### Emergency liquidity Target is 6 months of expenses for a single-employer household Monthly spend $25,400 Target $152,400 $185,000 on hand$32,600 surplus Cash and money market. We would keep the surplus in Treasury bills rather than a bank, and treat the $1.45M diversified brokerage account as the second line of defense. Account by account detail | Account | Owner | Type | Balance | | --- | --- | --- | --- | | Checking, savings and money market | Joint | Cash | $185,000 | | Diversified brokerage account | Joint | Taxable | $1,450,000 | | Employer stock, vested (TCO) | Pre-Retiree | Taxable | $1,620,000 | | Pre-Retiree's 401(k) | Pre-Retiree | Tax deferred | $1,240,000 | | Nonqualified deferred compensation plan | Pre-Retiree | Tax deferred | $310,000 | | Amanda's 401(k) | Amanda | Tax deferred | $410,000 | | Pre-Retiree's rollover IRA | Pre-Retiree | Tax deferred | $385,000 | | Amanda's Roth IRA | Amanda | Tax free | $92,000 | | Health savings account | Pre-Retiree | Tax free | $46,000 | | Kelly's 529 | Amanda | Tax free | $148,000 | | Primary home, Alexandria | Joint | Real estate | $1,850,000 | | Rental townhouse, Arlington | Joint | Real estate | $720,000 | | Primary mortgage (5.25%, 2053) | Joint | Liability | ($820,000) | | Rental mortgage (4.10%, 2049) | Joint | Liability | ($310,000) | | Net worth | $7,326,000 | | | | Unvested RSUs, 3 tranches through 2027 | Pre-Retiree | Memo | $940,000 | ### Proposed plan Median ending portfolio $20,845,000 at age 90 Probability 97% Retire at 60 / 58 Monthly spend $30,000 Social Security Age 70 Shaded band is the 25th to 75th percentile of invested assets by age; the line is the median. Illustrative shape drawn from the plan's start, retirement and ending values. ### What we changed Eight levers, one coordinated plan | Lever | Current | Proposed | | --- | --- | --- | | Retirement age | 62 / 60 | 60 / 58 | | Retirement spending | $28,000 / mo | $30,000 / mo | | Employer stock | Hold | 10b5-1 sale plan, 36 months | | Social Security claim | Age 67 | Age 70 | | Deferred comp election | $0 | $100,000 / yr, 10-yr payout | | Mega backdoor Roth | None | $46,000 / yr after-tax 401(k) | | Withdrawal order | Pro rata | Taxable → deferred → Roth | | Roth conversions | None | Fill the 24% bracket, ages 60 to 72 | Saved by 2032 $2.1M Portfolio growth $2.8M At retirement $10.6M ### Stress test Probability of success under nine shocks, proposed plan The last bar is the one that matters. A 50% drop in TCO costs the current plan 19 points; after the sale plan it costs the proposed plan 2. ### Retirement income is stable $12.4M of lifetime retirement spending, zero projected shortfall Deferred compensation pays out over the first ten years, Social Security arrives at 70, and the portfolio covers the rest. After 2047 every withdrawal comes from Roth accounts. Illustrative composition. Vested shares $1.62M 28.4% of invested assets, cost basis $1.08M Unvested RSUs $940K Vesting 2025 to 2027, taxed as wages at vest Embedded gain $540K Long-term, taxed at 20% plus 3.8% NIIT Target weight 5% Reached by the end of 2027 ### The 36-month exit Each year's sales, gifts and vests, with TCO's weight in invested assets under each year Sold under 10b5-1 planGifted to donor advised fundNew RSU vests The 10b5-1 plan is filed in a trading window and executes automatically each quarter, which removes insider-trading risk and the temptation to wait for a better price. Each year's sales are sized to stay under the 37% bracket. ### Four ways out, and what each costs Per $100,000 of TCO with $33,000 of basis | Strategy | Tax today | Used for | | --- | --- | --- | | Sell outright | $15,900 | The bulk: 20% + 3.8% NIIT on $67,000 gain | | Gift to donor advised fund | −$38,000 | $31,500 a year, the household's normal giving, paid in shares instead of cash | | Sell highest-basis lots first | $6,200 | 2024 tranche: lots vested in 2022 and 2023 | | Exchange fund (7-year lockup) | $0 | Considered and rejected: fees and illiquidity exceed the deferral benefit | ### RSU vesting calendar Shares are taxed as ordinary income the day they vest; we sell at vest to avoid adding to the position Supplemental withholding is only 22% on the first $1M, so every vest leaves a 15-point gap to the 37% rate. The plan funds it with quarterly estimates. Expected return 8.4% → 7.6% Current vs. target, annualized Volatility 16.8% → 10.9% Single-stock exposure drives the current figure Diversified 72% 28% sits in one stock Equity / fixed 70 / 30 Target 65 / 35, glide to 55 / 45 by 70 ### Asset allocation Current: 70% equity / 30% fixed income Expected return 8.4% Volatility 16.8% Typical 1-yr range −8% to +25% ### Risk and return map Where each asset class, the single stock and both portfolios sit A single large-cap stock carries roughly twice the volatility of the index it belongs to with no higher expected return. That is the whole case for diversifying: same return, half the risk. ### Allocation by asset class Current weight vs. target weight CurrentTarget ### Range of one-year outcomes What a good year, a typical year and a bad year look like on $5.7M Bars span one standard deviation either side of the expected return. A 2008-style year on the current mix costs about $1.9M; on the target mix, about $1.3M, and none of it is tied to one company's earnings call. ### Asset location Which account each asset class should live in | Asset class | Best home | Why | | --- | --- | --- | | U.S. and international stock index funds | Taxable | Low turnover, qualified dividends, step-up at death | | Bonds and REITs | 401(k) and IRA | Ordinary income sheltered until withdrawn | | Small cap and emerging markets | Roth | Highest expected growth compounds tax free | | Municipal bonds | Taxable, working years only | Exempt at the 35% bracket; swap to taxable bonds after retirement | Rebalancing trades to reach the target, after the TCO sale plan completes | Asset class | Current | Target | Action | | --- | --- | --- | --- | | U.S. Equities (incl. TCO) | 61.4% | 44.0% | Sell $992,000 | | International Equities | 6.2% | 14.0% | Buy $445,000 | | Emerging Markets | 1.1% | 4.0% | Buy $165,000 | | Real Estate | 0.8% | 3.0% | Buy $125,000 | | U.S. Bonds | 18.3% | 25.0% | Buy $382,000 | | International Bonds | 0.0% | 5.0% | Buy $285,000 | | Cash | 12.2% | 5.0% | Sell $410,000 | ### Rental townhouse, Arlington 2024 operating statement | Gross rent, $4,200 a month | $50,400 | | --- | --- | | Taxes, insurance, HOA, maintenance, management | ($14,400) | | Mortgage interest | ($12,600) | | Cash flow before principal | $23,400 | | Depreciation, 27.5 years on $520,000 | ($18,900) | | Taxable income, Schedule E | $4,500 | Equity $410,000 Cash-on-equity return 4.1% Cap rate 5.0% ### Keep, sell or exchange After-tax wealth from the townhouse over 15 years, three paths Keeping it is fine. Selling in 2033, the first low-income year after retirement, nets $45,000 more than selling now because the gain lands in the 15% bracket instead of 20% plus NIIT. A 1031 exchange into a triple-net property only wins if you want to stay a landlord at 75. $22,900 **Suspended losses are not an issue.** With AGI over $150,000 any rental loss would be suspended, but the property is profitable, so depreciation is fully used each year. 2033 **Best year to sell.** No wages, no RSUs, conversion room already planned around it. Depreciation recapture of $190,000 at 25% is unavoidable; the appreciation gain is what we can control. ### Inflows vs. outflows Stacked income sources with total spending as the line Earned incomeDeferred comp payoutSocial SecurityPortfolio withdrawalsTotal outflows (line) **Working years · 2024 to 2031**Income of $866K growing 3% a year. Taxes take about $270K, savings about $240K including the deferred comp election, and the household still lives on $305K with room to spare. **Bridge years · 2032 to 2043**No paychecks. Deferred comp pays $55K a year through 2041, the brokerage account covers the rest, and $4.4M converts to Roth at 24%. **Retirement · 2044 to 2064**Two Social Security checks claimed at 70, modest RMDs on what remains in the IRA, and Roth withdrawals that never show up on a tax return. ### Year by year 41 plan years, future dollars | Year | Ages | Earned income | Deferred comp | Social Security | Total inflows | Living expenses | Education | Savings | Roth conversion | Taxes | Total outflows | Portfolio withdrawal | Net flow | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | Modeled from the plan's stated inputs: $866K household income growing 3%, 2.5% inflation, retirement in 2032, Social Security at 70, $30,000 a month of retirement spending, the deferred comp and Roth conversion schedules above, and the plan's tax assumptions. The full RightCapital engagement produces this table directly from the projection engine. Working years ### Defer and gift at 35% $100K deferred comp, $61K 401(k), $46K mega backdoor Roth, $8.3K HSA, and $31,500 of appreciated TCO to a donor advised fund in place of cash gifts. Bridge years ### Convert at 24% Fill the bracket every year from 60 to 72, paying the tax from the brokerage account. $4.4M moves to Roth. Retirement ### Live on Roth, stay under IRMAA RMDs fall from a projected $320K a year to $85K. Medicare premiums stay in the base tier. ### Watch the money move tax buckets Drag the year to follow the conversion schedule Plan year2024 · ages 52 / 50 Converted $0 Taxable $3,070,000 Tax deferred $2,345,000 Tax free $286,000 TaxableTax deferredTax free (Roth and HSA) ### The bracket we fill Federal brackets, married filing jointly, inflated to the selected year Blue is ordinary income already on the return; orange is the conversion sitting on top. In working years the 35% bracket is full before any conversion, so there is nothing to do. After 2032 the only ordinary income is deferred comp and dividends, and the 24% bracket has $300,000 or more of room every year. Total converted $4.42M Conversion window 2032 to 2044 RMD at 73 $85K vs $320K ### The conversion timeline $4.42M moved from IRA and 401(k) to Roth across thirteen years, each sized to the top of the 24% bracket **2032 to 2041 · $3.1M**Deferred comp payout of $55K uses some bracket room, so conversions run $250K to $380K a year and grow with the brackets. **2042 to 2044 · $1.3M**Deferred comp ends and Pre-Retiree's Social Security starts. Three final conversions of $430K each finish before RMDs begin at 73. **2045 onward · $0**What remains in the IRA, about $2.2M, produces RMDs of $85K that cover part of spending without pushing income over the Medicare thresholds. ### With conversions vs. without Tax-deferred balance by age, and the required distributions it would force at 73 Tax deferred, proposed planTax deferred, no conversions (modeled)Forced RMDs with no conversions Left alone, the IRAs and 401(k)s grow past $8M by 73 and force $320,000 of taxable income every year on top of Social Security, which lands the household back in the 32% bracket and the top Medicare tier for life. ### Tax paid now vs. tax avoided later Why writing a check at 24% beats being forced to write one at 32% Tax on conversions ≈ $1.06M After-tax gain +$4.6M Payback 4.3 : 1 Tax on conversions assumes 24% federal on $4.42M converted, paid from the brokerage account so every converted dollar keeps compounding tax free for up to 30 years. Virginia tax is avoided entirely if the conversions happen after a move; see the tax report. ### Conversion schedule and balances Stacked balances by year with annual conversion amounts TaxableTax deferredTax freeConverted that year (line) ### Ending wealth, after tax Age 90, proposed strategy vs. pro rata withdrawals with no conversions Advantage +$4,610,000 Tax free share 100% vs 31% Hypothetical 2024 return ## What the first year looks like on the 1040 Married filing jointly, Virginia residents, one dependent. The return reflects $830,000 of W-2 pay including $220,000 of RSU vesting, the first $570,000 tranche of TCO sales, the rental, $39,400 of deductible mortgage interest, and $31,500 of charitable giving paid in appreciated shares. Every figure below is illustrative. 35% Marginal federal rate Plus 3.8% on investment income and 5.75% to Virginia: 44.55% on the next dollar of gain 23.0% Effective federal rate $193,540 of tax on $842,400 of adjusted gross income, after the deferred comp election 31.2% All-in tax burden Federal, Virginia and payroll taxes as a share of $866,400 gross income ### Form 1040 walk From gross income to the balance due | Income | | | | --- | --- | --- | | 1a | Wages, bonus and RSU vests (after $61,000 of 401(k) and $100,000 deferred comp) | 669,000 | | 2b | Taxable interest | 4,800 | | 3a | Qualified dividends | 22,400 | | 7 | Long-term capital gain (TCO sales, $570,000 proceeds, highest-basis lots) | 150,000 | | 8 | Rental income, Schedule E | 4,500 | | 9 | Total income | 850,700 | | 10 | HSA contribution | (8,300) | | 11 | Adjusted gross income | 842,400 | | Deductions | | | | 12 | Itemized: SALT $10,000, mortgage interest $39,400 (capped at $750K of debt), charitable $31,500 | (80,900) | | 15 | Taxable income | 761,500 | | Tax and credits | | | | 16 | Tax on ordinary income ($589,100) | 146,935 | | 16 | Tax on qualified income at 20% | 34,480 | | 19 | Child tax credit (fully phased out above $440,000) | 0 | | 23 | Net investment income tax (3.8% on $181,700) | 6,905 | | 23 | Additional Medicare tax (0.9% on wages over $250K) | 5,220 | | 24 | Total tax | 193,540 | | Payments | | | | 25 | Federal withholding (22% on RSU vests leaves a gap) | (118,000) | | 26 | Estimated payments | (60,000) | | 37 | Amount you owe | $15,540 | Virginia income tax of roughly $47,100 is paid separately. The $15,540 balance due is the RSU withholding gap; the plan raises estimates to the safe harbor next year. Mortgage interest above the $750,000 debt cap, about $3,650, is not deductible. ### Where the income came from $842,400 of adjusted gross income ### Tax owed in each bracket Ordinary income stacked through the brackets, 2024 married filing jointly The 35% bracket carries $35,578 and every dollar of qualified income is taxed at 20% because ordinary income already exceeds $583,750. The deferred comp election keeps $100,000 out of this bracket entirely. ### Where every dollar went $866,400 of gross income, including RSU vests and the rental | Tax | Amount | Share of gross | | --- | --- | --- | | Federal income tax | $193,540 | 22.3% | | Virginia income tax | $47,100 | 5.4% | | Social Security tax (6.2%, capped) | $17,273 | 2.0% | | Medicare tax (1.45%) | $12,035 | 1.4% | | Total taxes | $269,948 | 31.2% | ### Four moves that shaped this return Same household, same income, federal tax with and without each move ### What the return tells us $12,000 **Give shares, not cash.** The household already gives $31,500 a year. Paying it with TCO that has $10,500 of basis avoids $5,000 of capital gains tax and still produces the full deduction, worth about $11,000 at the 35% bracket. $37,000 **Deferred compensation at 35%, paid out at 24%.** Each $100,000 deferred saves $37,000 now and costs $24,000 later, and the difference compounds for a decade. The risk is the employer's credit; we cap the balance at two years of spending. $33,000 **RSU withholding is the trap.** Supplemental withholding at 22% on $220,000 of vests leaves a $33,000 shortfall at the 35% rate, which is most of the $15,540 balance due. Quarterly estimates set to the 110% safe harbor close it with no penalty. $46,000 **Mega backdoor Roth.** The plan allows after-tax contributions and in-plan conversions. $46,000 a year for eight years is $368,000 of Roth principal that never touches a bracket. Projections use 2024 brackets inflated at 2.5% per year and the plan's return assumptions. State tax, Medicare IRMAA surcharges and the 2026 bracket schedule are modeled in the full engagement. ### Life insurance need If Pre-Retiree passes next year Coverage gap $900,000 Unvested RSUs lost $940,000 Group life of $1.5M is two times salary and ends with employment. A $1M fifteen-year term policy, owned by an irrevocable trust, covers the gap and stays out of the estate. Amanda's survivor analysis shows no gap. ### Kelly's education Private university in 2029, graduate school through 2034 Goal coverage 100% Total cost $612,000 $12,000 a year into the 529 through 2028 plus a one-time $90,000 superfunding gift in 2025, which also moves $90,000 out of the taxable estate. Virginia allows a $4,000 deduction per account. ### Debt $1,130,000 across two mortgages | Loan | Rate | Balance | Payment | | --- | --- | --- | --- | | Primary home | 5.25% | $820,000 | $4,580 | | Rental townhouse | 4.10% | $310,000 | $1,500 | Interest on the first $750,000 of the home loan is deductible, which brings the after-tax cost of the 5.25% mortgage to about 3.4%. The rental loan is deductible against rent. Neither gets prepaid while the portfolio is expected to earn more, but a refinance below 4.25% would be taken. Monthly debt $6,080 Home paid off 2053 ### Umbrella and disability The two policies most $7M households are missing $5M **Umbrella liability.** A rental property and a net worth of $7M make the household a target. Current coverage is $1M. A $5M umbrella costs roughly $900 a year. 60% **Disability income.** Group long-term disability covers 60% of base salary to a $15,000 monthly cap and ignores bonus and RSUs. An individual supplement of $10,000 a month closes most of the gap through 2032. ### The family and where the money flows Household members, estate sequence and the final inheritance ### From gross estate to heirs Amanda's estate at the end of the horizon Funeral and admin $65,000 Probate $395,000 Federal estate tax $0 Probate is the avoidable number: $395,000 is 5% of the assets not yet titled in the living trust. Retitling the brokerage account and both properties takes an afternoon and cuts it to under $40,000. ### The exemption question Federal estate tax exposure at the end of the plan under three exemption scenarios Congress has changed the exemption four times in twenty years. A plan that only works under today's number is not a plan. Moving $90,000 into the 529, $150,000 a year into a spousal lifetime access trust, and the term policy into an ILIT removes about $6M of future growth from the estate at no income tax cost. ### Beneficiary map Who each account goes to, and what we still need on file | Account | Balance | Primary | Contingent | | --- | --- | --- | --- | | Pre-Retiree's 401(k) | $1,240,000 | Amanda | Name trust for Kelly | | Deferred comp plan | $310,000 | Amanda | Confirm | | Pre-Retiree's IRA | $385,000 | Amanda | Name trust for Kelly | | Amanda's 401(k) | $410,000 | Pre-Retiree | Name trust for Kelly | | Amanda's Roth IRA | $92,000 | Pre-Retiree | Kelly | | HSA | $46,000 | Amanda | Confirm | | Brokerage and TCO (joint) | $3,070,000 | Survivor | Retitle to living trust | | Both properties | $2,570,000 | Survivor | Deed to living trust | | Group life insurance | $1,500,000 | Amanda | Consider ILIT | Kelly is 13. Retirement accounts should name a trust for her benefit as contingent, not her directly, so a $4M inheritance at 18 is managed, not handed over. ### Document checklist Reviewed at the plan date Document Pre-Retiree Amanda Will with testamentary trust for Kelly ✓ Created ✓ Created Revocable living trust ✓ Created ✓ Created Durable power of attorney ✓ Created ✓ Created Health care proxy and living will ✓ Created ✓ Created Beneficiary designations ✓ Reviewed ✓ Reviewed Spousal lifetime access trust Proposed Proposed Irrevocable life insurance trust Proposed n/a ### Why the inheritance is mostly tax free Kelly must empty an inherited IRA within ten years. Under the current plan she would inherit $8M of tax-deferred money and pay roughly 37% on it. Under the proposed plan almost all of it is Roth, withdrawn on the same schedule with no tax at all. 1 #### File the 10b5-1 plan and start giving TCO shares instead of cash Sell $570,000 of the highest-basis lots this year under a pre-arranged schedule, and fund the family's $31,500 of annual giving with the lowest-basis shares through a donor advised fund instead of cash. Cuts TCO from 28% to 19% and saves $12,000 of tax on the gift alone 2 #### Elect $100,000 of deferred compensation for 2025 Enrollment closes in December. Choose the ten-year payout beginning at separation so the income lands in the 24% bracket years. $37,000 saved now, $13,000 net after payout, every year 3 #### Turn on the mega backdoor Roth and both backdoor Roths After-tax 401(k) contributions of $46,000 with automatic in-plan conversion, plus $7,000 each through nondeductible IRAs. Pre-Retiree's rollover IRA must be moved into the 401(k) first to avoid the pro rata rule. $60,000 a year of new Roth principal 4 #### Fix the withholding on RSU vests Set quarterly estimates to the 110% safe harbor and request additional withholding on the base salary to cover the 15-point gap on every vest. Eliminates the annual surprise and any penalty 5 #### Add $1M of term life in an ILIT, a $5M umbrella, and supplemental disability Three policies, roughly $9,000 a year combined, that protect the plan against the three things it cannot otherwise absorb. Closes the $900,000 survivor gap and shields $7M of assets 6 #### Retitle the brokerage account and both properties to the living trust, update contingent beneficiaries, and superfund the 529 Paperwork, not strategy, but it is where most of the $395,000 of probate cost and the risk of a 13-year-old inheriting outright actually live. Saves $355,000 of probate and moves $90,000 out of the estate Your own plan ## See what this looks like with your numbers. A complimentary consultation with a fee-only fiduciary who is also a CPA. We serve executives with equity compensation, federal employees, military veterans and retirees. James M. Simon, CPA, CFP® · This email address is being protected from spambots. You need JavaScript enabled to view it. · 703-737-2220 [Schedule a call](https://calendly.com/jsimon-jhe/complimentary-consultation)