At the Center for Wealth Management, we have worked tirelessly over the years to help employees of DTE Energy transition seamlessly into retirement. Below are a few case studies of actual clients who wanted to retire early and needed some help hammering out a comprehensive retirement plan that would fully support them after their working career ended. We hope that these examples are useful to you as you consider your long-term financial goals and your retirement.
Pension And Social Security Timing For DTE Couple
We recently met with a client who had several questions related to his pension and Social Security. His first question was, “When is the best time to retire to get the most out of my pension?” Next, he asked, “Which pension survivor option would be best for both my wife and me?” Finally, “When should we begin withdrawing Social Security?”
Plan And Outcome
The DTE pensions are based on an average of the last several years’ salaries. Because of this, it is often best to wait until the end of the year to retire instead of retiring in the middle of the year. This is because this year’s salary will replace a previous lower year’s salary when calculating the average.
For this couple, we first determined how much they wanted to live on while they were both alive. We created a second scenario and adjusted these numbers to show the wife surviving the husband. We utilized our retirement cash flow projection software to analyze these two scenarios. This couple’s preference was to emphasize the wife’s comfort should she survive him. We paid close attention to her income and needs and based on that we were able to determine which survivor option worked best for them.
When determining when to start collecting Social Security, we first ran a breakeven analysis. We ran the analysis with various life expectancies: 80, 90, and 100. We considered their health, investments, return on investments, and inflation. Also, the wife did not qualify for her own benefit from Social Security, so she’ll receive income based on his earnings. We used all of this information to determine the most comfortable option for them.
Healthcare For DTE Retirees
Healthcare is a top concern for retirees. Over the past decade, DTE has changed their retirement healthcare benefits, and many employees confuse the old and new rules. Additionally, if you are not eligible for an employer-sponsored retirement healthcare plan, you can purchase a plan under the Affordable Care Act with estimated costs of more than $650 per person. This is about two to three times what people are used to spending on their healthcare plans while working.
We recently met with a client who was absolutely certain that neither he nor his wife would have access to healthcare coverage in retirement. Even though they preferred to retire before age 65, his plan was to retire at 65 or later because of the healthcare costs.
Plan And Outcome
We used the DTE employee benefit resource database, called YBR, to determine that he did qualify for retiree healthcare. We were also able to show him what the current rates were for the healthcare plan.
Some of our clients decide to forgo the DTE coverage because their spouse’s employer may have a lower cost retiree healthcare plan. It is important to know that some of these retirees and their spouses may qualify for a Retiree Reimbursement Arrangement. There are some rules that need to be considered, especially if you want to ensure that your spouse will get the benefit. For this client specifically, he did qualify for both the retirement healthcare and the reimbursement, and because of this, he was able to retire earlier than he thought he could.
Good Income, Saved For Retirement, High Credit Card Debt
This couple made a good income of $250,000 per year, dutifully saved into their 401(k)s, but had accumulated $100,000 in credit card debt. Their main objective in coming to see us was to develop a financial planning strategy that would enable the husband to retire earlier because he no longer enjoyed his job.
This couple was initially hesitant to share their finances with an advisor because of the high amount of credit card debt. Many people have an issue in their financial situation that they struggle to share with an advisor, which prevents them from initially sitting down with us. Frankly, the obstacle is even more of a reason to make an appointment with us; we can help you remove the problem more efficiently and achieve your financial goals quickly.
Plan And Outcome
This couple paid off their credit card debt within two years by reducing some vacations and liquidating some investments and reserves. Their success encouraged them to continue paying off their debt. They kept going and paid off their home, which allowed them to save more. Shortly after that, the husband retired at age 54 from his job and started living his passion—tutoring—and eventually his wife retired at the end of 2020.
Single Mother Uncertain About When She Can Retire
We recently sat down with a single mother who wanted to retire but was not sure if she had saved enough in her 401(k). We ran the retirement projections on her current savings and pension, and unfortunately, it did not support the lifestyle she wanted in retirement. She needed us to help her determine what her options were.
I really appreciate this type of client; all too often I find that people work longer than they must because they are uncertain about when they should retire. Due to this uncertainty, people often work until they have no doubt in their mind, and then they still work one more year just to make certain!
However, you would be surprised to learn that many people can retire sooner but they just have not taken the time to sit down with a professional to work through the numbers to construct a proper cash flow retirement plan. Our financial planning software provides our clients with information about future costs, such as Medicare and taxes. This ensures that our clients are provided with the proper information they need to make an appropriate decision on when to retire.
Plan And Outcome
This individual had a nice salary and a good pension, but she had not been able to save as much as she needed to in her 401(k) because of some of life’s curveballs. So, we ran a cash flow retirement projection and determined that she would need to work for several more years beyond her retirement target date if she wanted to maintain her high lifestyle throughout retirement.
With the help of the cash flow retirement projection, she ultimately decided that she would rather sacrifice some of her lifestyle in her retirement and retire at her original date. She also began saving more to make up for past years in which she had not saved as much. This strategy is designed to allow her to retire on time with a desired retirement lifestyle.
Single Mother And Grandmother Eligible For Severance
This client wanted to know if she could retire before age 62 as she was eligible for the MCN severance. Retiring soon was important because she was expecting her first grandchild. Could the severance make up for the reduced pension and several years without Social Security?
Plan And Outcome
We built a cash flow projection to help determine how her cash flow would change throughout her retirement. With the help of this model, we were able to see the financial projections of the reduced pension, the MCN severance net proceeds, Social Security, and withdrawals from her 401(k).
We were able to show her that she could retire earlier than age 62 and how the MCN severance could help bridge the gap before she was 59.5 for IRA withdrawals and 62 for Social Security.
*Center for Wealth Management is not endorsed by or affiliated with DTE.
**These are case studies and are for illustrative purposes only. Actual performance and results will vary. These case studies do not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted.
Are You Ready For A Different Financial Future?
Whether you feel like you are ready to retire tomorrow and need someone to double-check your financial plan, or if you feel like retirement is still years away, our team at Center for Wealth Managementis here to help with all your financial planning needs. Feel free to call us at
Robert Moore is senior partner, financial planner, investment advisor, and co-owner of Center for Wealth Management, an independent, fee-based wealth management company based in Troy, MI. With more than 15 years of experience, Rob provides customized advice and solutions that are in the clients’ best interest. He strives to always go above and beyond his clients’ expectations, helping them retire with more security than they had before, and invest their time and energy in what’s most important to them. Rob specializes in working with DTE Energy employees, helping them maximize their benefits so they can reduce taxes, prepare for retirement, and protect their families through a comprehensive planning process. Rob graduated from Michigan State University and holds the CERTIFIED FINANCIAL PLANNER™ professional and Chartered Financial Consultant® (ChFC®) designations.
Rob is known as a diehard family man who enjoys spending time with his beautiful wife, Jill, his daughter, Brookelyn, and his son, Brayden. When he’s not working, you can find him playing basketball once a week, squeezing in a round of golf, and watching college football and basketball with friends and family. He is passionate about enriching the lives of others through his church involvement and service at a community addiction program. Learn more about Rob by connecting with him on LinkedIn.