Dan and Millie’s Story

Dan and Millie were living in Manhattan when we began working with them.   Dan owned a design firm and Millie is an artist. Although they were far from wealthy, they paid a lot in taxes, federal, state, and local (New York City has an income tax).  Dan had opened a retirement plan for his company and contributed to it regularly. They did not own cars, lived in a rent control apartment, and needed a plan.

Dan and Millie found solace in a remote part of West Texas.  Millie loved painting landscapes.  Eventually, they purchased some 50 acres with a small house.  They dreamed of retiring in Texas, a state without income taxes, and building a studio for Millie’s artwork.  Without children, we advised Dan and Millie to forego funding ROTH IRAs (a unique estate planning tool) and instead opt for a strategy of aggressively funding pre-tax retirement plans.   Millie opened a SEP IRA to shelter her art income.  Building wealth for retirement which might include long-term care became a priority.

Dan inherited some zero coupon bonds from his mother.  Once they matured, they earned only a nominal rate of interest while continuing to grow tax deferred.  We advised that they accept those lower interest rates until they had moved to the land of no state income taxes.  Faithful to their retirement contributions, they worked and enjoyed their time in Manhattan while savoring their vision for the future. We provided a “probability of success” score in their financial plan.  Even with the deep crisis in 2008-2010 and even in 2020, Dan and Millie could see their retirement dream in place.

When retirement was close, Dan and Millie needed funds to move and to buy a pickup and a jeep.  While still residents of Manhattan, borrowing funds in lieu of selling assets made sense. Once residents of Texas, the construction of Millie’s art studio became front and center. Construction funds and debt repayment came from Required Minimum Distributions from Dan’s retirement account,   selling higher basis stock in their taxable account  and from cashing out those zero-coupon bonds.  These taxable events were realized over the course of three years. 

Seven years younger than Dan, we advised Millie to take a spousal social security benefit at age 62 while allowing her own benefit to grow until age 70.

Dan and Millie are enjoying life in West Texas. Dan gifted his company to his younger partner, but still works as a contractor for the firm. He mends barbed wire fences and sometimes chases down his neighbor’s cattle.   Millie continues to paint.