Client Case Study #6

Recent Retirees – Jim and Catherine, worried about security in retirement

Jim and Catherine met with Rockwood in February 2008, after their son insisted they do so. They worked hard their entire lives and had a distinct vision of how they wanted to enjoy their retirement years. In particular, they relished the idea of spending more time with their kids and grandkids and wanted to be able to fully-fund several family vacations.

Always fiscally conservative, they virtually eliminated their debt and had a majority of their investment portfolio (including retirement plan rollovers) in fixed income assets. When they officially retired, their intentions were to live off all the income generated from their portfolio without touching the principal except for emergencies.

They worked with their broker to construct a portfolio that they thought would produce the income they needed to supplement Social Security and meet their retirement needs.

Unfortunately, Jim and Catherine were not investing as conservatively as they believed. The bond funds and unit investment trusts that their broker had sold them invested predominantly in high-yield (junk) bonds – and their portfolio had suffered an alarming loss in 2008. They had already started to discuss the prospect of going back to work.

Along with investment losses (high-yield bonds as an asset class dipped 26% in 2008), Jim and Catherine were also paying extraordinarily high fees and commissions that were further preventing them from enjoying the retirement they had always wanted.

Understanding their wishes and concerns, Rockwood helped Jim and Catherine develop a new investment plan built upon a sustainable withdrawal strategy and a portfolio that properly compensated them for the risks they bear. Implementing this strategic investment plan gave them the confidence to abandon any thoughts of going back to work.

Currently, it can be difficult to get Jim and Catherine into the office for regular progress meetings, since they are frequently traveling and visiting their family.

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