Securing Linda's financial future through strategic planning.
Linda's deferred compensation was structured to pay out over 10 years, but she was concerned about fluctuating interest rates impacting the actual value of those future payments. She needed a clear understanding of the implied forward rates embedded in her plan to make informed decisions about her retirement and estate planning, especially given her blended family and specific bequest intentions.
Using the Forward Rate Calculator, we analyzed the current yield curve and calculated the implied forward rates for each year of Linda's deferred compensation payout. This revealed potential periods of lower-than-expected returns, prompting us to explore strategies like early partial withdrawals (with careful tax planning using the Tax Equivalent Yield Calculator) to mitigate risk and potentially re-invest into higher-yielding assets. We also assessed the creditworthiness of the firm offering the deferred compensation by using the Credit Spread Calculator.
The Forward Rate Calculator allowed us to input current spot rates and derive the market's expectation for future interest rates, providing a clearer picture of Linda's potential returns. We also integrated data from the Tax Equivalent Yield Calculator to accurately estimate the impact of taxes on any early withdrawals or reinvestments.
$275,000 increase in projected retirement income through optimized payout strategy and risk mitigation.
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