Case Study 1: Retiring Early to Travel the World

In this fictional case study, we walk you through a financial plan for two executives as they work on retiring early. Listen to the conversation our advisors had on episode 65 of our podcast, sharing how we would help them; or keep reading below!

Breakdown of the Case Study

Meet Nick & Noelle

Nick (58) and Noelle (56) are seasoned corporate executives — he’s in tech, she’s in healthcare. With five years until their target retirement age, they’ve accumulated substantial assets through years of high income and disciplined saving. But, they worry about how they will retire early without dealing with large withdrawal penalties or taxes on short term gains. Ultimately, they hope their retirement years are spent traveling the world and spending time with their grandkids!

Nick and Noelle had three clear objectives for their retirement plan:

• Maximize their executive stock compensation (including ISOs, RSUs, and a deferred comp plan)
• Minimize taxes throughout retirement — especially before RMDs begin
• Create a sustainable income strategy to fund their lifestyle: travel, time with grandkids, and legacy planning

The Challenges

Although confident in their savings, Nick and Noelle weren’t sure how to begin using their assets. They faced several technical and emotional hurdles:

• Complex asset mix:
  • Combined 401(k) accounts, totaling over $1M
  • Non-qualified brokerage accounts
  • Vested and unvested RSUs and ISOs
  • Defined benefit pension for Nick
  • Deferred compensation plan payout over 5 years for Noelle
• Tax inefficiency: Without a plan, they risked stacking income from pensions, RMDs, stock options, and Social Security — all at once — leading to a higher tax bracket in their 70s than while working.
• Healthcare gap: With retirement targeted at 60 and 58, they needed a plan for affordable health insurance until Medicare at 65.
• Uncertainty about when to use which accounts: They were paralyzed by fear of making a wrong move — especially with the volatile tax treatment of ISOs and RSUs.

Our Approach

To help Nick and Noelle feel confident stepping into retirement, we began with our comprehensive financial blueprint process:

Phase 1: Organization

We collected and reviewed documents from their HR portals and plan administrators to understand:

• Vesting schedules on RSUs and ISOs
• Payout structure of the deferred comp plan
• Pension income and election options
• 401(k) and after-tax contributions
• HSA balances and health plan options

We also collect other documentation and data (number of dependents, retirement accounts, properties, estate plans, etc). Then we map everything. This visual representation of someone’s finances, without any numbers, really helps us make sure we have the details we need to do comprehensive planning.

In this part of the process, we are able to identify gaps and opportunities. For instance, we realized they had a gap in insurance coverage! Their umbrella liability coverage was significantly smaller than their net worth, which we will address in their plan.

Phase 2: Strategy

With all the information we’ve reviewed, we start playing with the different decisions we could make. Using income modeling software, we projected various retirement scenarios including:

• Timing of Roth conversions
• Deferral vs. early withdrawal of company stock
• Capital gains realization from brokerage accounts
• Tax impact of delayed Social Security filing

This gave Nick and Noelle a clear understanding of the consequences of their actions. No longer do they have to worry about a short term decision having nasty long term repercussions. They can make informed choices for their income and tax bill, with a long term perspective.

Phase 3: Implementation

Once Nick and Noelle looked at the possible scenarios, we were able to build a plan that helped them achieve their goals in exactly the way they wanted. But that’s not the end. Now, we are walking alongside this couple year by year, checking items off their financial to do list. Just this past year, we were able to:

• Used their brokerage account and deferred comp first to fund early retirement
• Initiated partial Roth conversions during their low-tax “retirement gap years” (ages 60–70)
• Delayed pension and Social Security to maximize long-term income
• Scheduled ISO exercises to qualify for long-term capital gains treatment and avoid AMT triggers
• Consolidated investment accounts for easier monthly income draws and tax-efficient rebalancing

We meet with them multiple times a year to hear how they feel about their plan and update their goals or information. They rely on us to file their taxes and manage their portfolios so that they can be confident in the results. Noelle will occasionally shoot us a quick email with different financial questions, which we are able to answer for her right away.

The Results: Retiring Early & Traveling the World

With a plan in place, Nick and Noelle gained:

• Clarity: They now understand where income will come from each year and how much tax they’ll owe — no surprises.
• Confidence: They know their money can support their dreams of international travel and time with family.
• Control: Their plan adjusts as laws and markets change. We meet with them regularly to review, optimize, and adapt.

Now, Nick and Noelle have started “practicing retirement” — taking longer trips to Europe and the Pacific Northwest, and spending entire weeks with their grandkids without checking email. They’re not wondering if they’ll be okay. They know they will be. Their finances are no longer just numbers — they’re a tool to live out the life they envisioned.

Note: The above case study is hypothetical and does not involve an actual Financial Design Studio 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 Financial Design Studio is engaged to provide investment advisory services.

Are You Considering Retiring Early?

Here are some additional resources to help you dive deeper:

• Read our article Your Health Insurance Options for Early Retirement
• Read our article Why Corporate Executives Need to Plan for RMDs Today
• Listen to our podcast episode Will Social Security Run Out?
• Listen to our podcast episode How to Hack Your Travels
• Watch our video Five Things Successful Retirees Get Right

But if you’re tired of searching the internet for answers and hoping you get retirement right, what’s stopping you from taking the next step towards financial confidence? Our team specializes in using executive compensation to build tax efficient retirement plans.

Schedule your free zoom consultation with our advisors by clicking “get started.” Let’s build a plan that’s designed for your life, together.