Clients Looking for the Off-Ramp Need Help Making the Turns

Part Three of a three-part series

One of Lois Crichton’s clients was heading for the off-ramp. The client and her husband had worked the numbers, and the turn signal was already blinking when they walked into Crichton’s office to announce their plans. Unfortunately, it was up to Crichton, of Crichton Wealth Management in Charleston, West Virginia, to put on the brakes.

The woman was 38, and her husband was 47. They were both attorneys with two small children at home, and they had been working diligently on their long-term financial plan, socking away the maximum every year into qualified retirement accounts to meet their lifetime goals. Now, though, she wanted to spend more time at home with the kids and thought that working part time doing interior design would cover their cash flow needs while she took time off from her legal career.

What they hadn’t figured on was what taking time off would do to their savings plan. That’s a common mistake women and couples make when eyeing the off-ramp, Crichton says.

“People only think about how they can cover their income today, but they don’t think about their long-term needs or how their inability to save will impact their retirement,” Crichton says.

Crichton, whose firm is part of Wachovia Securities, used the firm’s Envision modeling software to illustrate exactly what that lack of savings would mean for everything from paying for their kids’ college tuition to maintaining the lifestyle they had hoped would last through their retirement. By running the numbers through Envision, it was clear that the wife would eventually have to go back to work in a high-paying job or that the couple would have to make significant changes to their long-term goals.

“When I work with people on planning, I’m not looking at what they’re making and spending,” Crichton says. “I drive from the savings perspective.”

And that is a critical issue that often gets lost on the way out of the corporate world. Crichton’s goal isn’t to tell clients that they can’t take the off-ramp; it is to show them their options and explain the ramifications of their choices so that they can go into the next phase of their lives fully prepared.

That’s what happened when another client came in, ready to quit the workaday world. This client was 51 and had spent most of her professional life as a single mother. Now she was remarried, and she and her new husband were convinced they could live well on his salary until he retired. After that, they felt his pension of $36,000 a year, on top of their individual savings, would provide a very comfortable lifestyle.

“I had to ask her, ‘What happens if he dies tomorrow?’” Crichton says.