Case Study #3

Selling a Business and Entering Retirement

Name: David & Linda

Age: 66 & 65

Goal: David and Linda want expert guidance as they sell David’s practice and enter retirement. They know tax liability focused investing is key for them to have the proceeds of the sale last them the rest of their lives and passed down to their children.

Background: David and Linda have done very well financially for themselves. David started his own dental practice over 20 years ago and has grown it into a great local dentist office. After they sent their only child to off to college, Linda decided to go and work with David as an office manager 10 years ago. They have decided that now is the time to pursue selling their business to give them the time to travel together and do what they love most. They estimate they will get $3-$3.3 million from the sale.

The Challenge: Linda’s biggest fear is that their retirement account could go to zero during retirement without having an income.

They are not covered by a traditional “Pension Plan”, instead they have a 401K which they will use to fund their retirement along with the sale of the practice. An advisor help to make sure they do not run out of money by providing market downturn protection and a paycheck that pays for either of their lives.

Does a Roth Conversion make sense?
How to reduce the initial capital gains tax on the sale of the practice
When to turn on Social Security?
How do we create a lifetime income stream with part of the 401K assets?

The Approach: A good advisor will work with David and Linda’s CPA to see if implementing a Deferred Sales Trust in selling the practice would be right for them. This could defer the capital gains up to 20 years!

To ease Linda’s worries, they should create a Joint Lifetime Income Stream with a portion of their 401K by using a special Annuity designed for their situation.

Lastly, managing the remaining assets with a downside risk strategy to minimize losses in a down market in accordance with their risk tolerance. David and Linda have won with their retirement already, there is no reason to take big risks in the market.

Seeing a 30% decline of $2 million dollars is $600,000! David and Linda recognize they do not need to take unnecessary risk.

The Results: Linda has peace of mind because she fully understands and agrees with her financial plan. David is happy knowing their financial advisor is always a phone call away.

Having the support of the entire staff as they enter this new stage of life gives them security. While they are only going to retire once, a financial advisor and their team have helped hundreds retire successfully.

Note: The above case study is hypothetical and does not involve an actual Orion Financial, LLC client. No portion of the content should be construed by a client or prospective client as a guarantee that he/she will experience the same or certain level of results or satisfaction if Orion Financial, LLC is engaged to provide investment advisory services.

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