hypothetical Case study 2

Drew: Age 45

Career Change vs. Security

Case Studies

The Challenge:

After two successful decades in corporate HR, Drew feels unfulfilled in her career and dreams of making a change. She loves the financial security her job provides, but after the divorce she keeps wanting to know when it will finally be her turn to pay more attention to her own fulfillment.

She’ like to explore a career change that would bring her back to why she chose her field in the first place: to help create well-being for people. Drew just inherited some money from her grandmother, plus she has a bunch of stock options that could help fund a smoother transition.

Yet she’s a single parent to her 12 year old daughter – wouldn’t leaving her stable high-income career be irresponsible?

Goals:

Assess Drew’s current financial trajectory and understand the tradeoffs she’d be making if she left her stable career
Figure out a tax-efficient plan for withdrawing the money out of the inherited IRA
Make a plan for the stock options
Make a plan for funding her daughter’s college education

The Approach:

As a first step, Drew’s planner ran a financial projection and determined that if Drew continued on her current path, she could retire securely in 15 years.
They then came up with several scenarios for a different path that Drew felt far more excited about. These included staying in her field but doing it for a social impact startup, taking an extended sabbatical, and/or switching to an entirely new career altogether.
After forecasting out each of these scenarios, Drew had a clear idea of the tradeoffs: How much longer she’d have to work, how much she’d have to reduce living expenses, and/or how much less she’d have to fund her daughter’s education.
Through this work, Drew felt confident enough to take some action. As a first step, she decided to take a 6 month sabbatical to rest and reset.

Together, Drew and her financial planner designed a plan that accomplished the following:

Designed a cash flow plan to fund living expenses during her sabbatical
Deep dived into expenses to find ways for Drew to get more intentional with her spending and prepare for the possibility of leaving her high-income job
Implemented an investment strategy that aligns with her values while generating a return
Created a tax-efficient withdrawal strategy for the inherited IRA
Super-funded a 529 for her daughter’s education with part of the inheritance money
Made a plan for exercising the stock options that balanced tax efficiency with managing for concentration risk
Kept the plan flexible with the goal of keeping all options available to Drew as she contemplates her future

The Results:

Drew spent her sabbatical traveling in Southeast Asia with her daughter. In addition to making some lifetime memories, the trip gave her much-needed time for introspection.

She came out with the conviction that while she needed to make a change, she could do so in a risk-managed way. Drew plans to stay in her job for the near-term to keep building up her nest egg, but she is committed to doing one thing every week that will help her figure out her next career move.

With these steps, Drew feels re-invigorated. And with her financial planner as a trusted sounding board, she feels confident about moving forward in her journey- even as the destination is not yet clear.

Please note that this case study is purely hypothetical and does not pertain to any existing clients of Modern Family Finance. It is important to understand that no aspect of the content should be interpreted as a guarantee that you, as a client or prospective client, will achieve similar results or levels of satisfaction if you engage Modern Family Finance for financial advisory services.

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