Case Study: Jim and Karen
“Dear Saxony Advisors,”
We’ve both worked hard for a long time, and retirement is finally starting to feel real. I (Jim) have been an engineer at Boeing for nearly 35 years, and Karen has spent most of her career in human resources for a local healthcare company. Our daughter just had her second child, and we’re excited to spend more time helping out — but we also want to travel and enjoy the next chapter of life together.
We’ve done our best to save and live below our means. Between our 401(k)s and what we’ve invested in our family trust account, we feel like we’re in decent shape. But the closer we get to retirement, the more we realize how many moving pieces there are — taxes, Social Security, inflation, and the possibility of another big market drop.
We’re not looking for a get-rich plan. We just want to make sure our money lasts, that we’re being smart about taxes, and that we’re not missing something that could cost us later.
We’d love some clarity and confidence in knowing how to turn what we’ve saved into income we can actually live on.
Sincerely,
Jim & Karen
Chesterfield, Missouri
Their Situation at a Glance
401(k)s: Jim: $950,000 • Karen: $320,000
Revocable Living Trust Account: $180,000
Social Security (Est.): Jim: $3,100/month at 67 • Karen: $2,000/month at 65
Emergency Fund: $40,000
Home: Valued at $520,000, mortgage-free
Debt: None
My Take: Two Paths Toward the Same Goal
When I first met Jim and Karen, what stood out to me wasn’t how much they’d saved — though they’ve done very well — but how intentional they were about what comes next. They don’t want to waste their retirement years worrying about every market swing, but they also don’t want to look back ten years from now and wish they had done things differently.
Like many couples I meet, they have two clear priorities:
Create consistent income they can rely on.
Leave something meaningful behind for their family.
The challenge is that these two goals often pull in opposite directions. The more income you take early, the less you leave behind — and vice versa.
So, we walked through two different retirement paths:
Route One: The Simple & Steady Plan
This plan is built around simplicity and peace of mind.
Jim and Karen would start Social Security as soon as they retire — at 65 and 63 — and draw directly from their retirement accounts to cover the remaining income gap. Their portfolio would remain moderate, roughly a 50/50 blend of stock and bond funds, with 2–3 years of expenses set aside in cash or short-term instruments for stability.
Their annual income goal is around $100,000, after factoring in Social Security.
They’d start with a 4% withdrawal rate from their savings — a reasonable and historically sustainable number — adjusting slightly over time for inflation.
This approach works well for one simple reason: it’s easy to follow.
There are no major tax conversions to manage, no complex product layers, and no waiting periods for Social Security. The income begins right away.
The tradeoff:
Taxable income will rise later when Required Minimum Distributions (RMDs) begin.
If markets decline early, they may need to reduce spending.
Most importantly, there won’t be much legacy value left behind. Their accounts will steadily decline to support their lifestyle, leaving primarily their home and trust assets for the next generation.
Still, for many people, this plan is perfectly fine — it provides stability, structure, and simplicity.
Route Two: The Legacy-Focused Plan
The second route takes a little more planning, but it creates both long-term tax advantages and a stronger legacy.
Here, Jim and Karen would delay Jim’s Social Security until age 70. Karen would claim hers earlier, providing a base layer of income, but they’d bridge the gap with withdrawals from their trust account and partial Roth conversions from Jim’s IRA.
This strategy serves several purposes:
It allows their Roth balance to grow tax-free for future use or inheritance.
It reduces future RMDs, lowering taxable income in their 70s and 80s.
It boosts Jim’s eventual Social Security benefit by roughly 24%, providing a higher survivor benefit for Karen.
We would also carve out a portion of their retirement assets into a buffered annuity or RILA, giving them partial downside protection without giving up growth potential — especially useful during those early retirement years.
By their mid-70s, their tax-efficient income sources would be spread across three buckets:
Social Security (partially tax-free),
Roth assets (completely tax-free), and
Traditional IRAs (with reduced balances and smaller RMDs).
The outcome:
They still meet their income goals comfortably.
They retain flexibility for future healthcare costs.
And most importantly, they have the ability to leave behind a meaningful legacy — in both Roth and trust assets — for their children and grandchildren.
The tradeoff is that it requires more active coordination between withdrawals, conversions, and timing. It’s not complicated once set up, but it’s not a “set-it-and-forget-it” approach either.
The Bottom Line
Both routes can work. The first offers simplicity and instant income, the second offers flexibility and legacy.
For Jim and Karen — and for most couples like them — the “best” plan isn’t just about math. It’s about how they want to live their retirement years and what kind of footprint they want to leave behind.
That’s why we design every plan with both sides of the equation in mind: income you can count on today, and a legacy that lasts tomorrow.
Ready to Build Your Plan?
If you’re approaching retirement and wondering which route makes sense for you, start with a conversation.
You can schedule a complimentary Retirement Income Review to see how your savings, taxes, and Social Security can all work together to support your goals.
Disclosure: This case study is hypothetical and for illustrative purposes only. It does not represent an actual client and should not be construed as investment advice. Investment decisions should be based on an individual’s goals, risk tolerance, and financial circumstances. Past performance is not indicative of future results. Any investment or strategy discussed may not be suitable for all investors.
