Editor's Note: This article is part of the Financial Advisor series "How I Solved It." Advisors describe a client with a problem and what they did to help.

Health-care costs can sometimes sabotage retirement plans, which makes it important to find a financial advisor who can help reduce such expenses.

A retiring couple in Rhode Island found such a planner in Steven Frazier, president of Frazier Investment Management in Wakefield, R.I., near Providence. About 80% of Frazier’s clients are entrepreneurs, many of whom are nearing retirement with substantial assets. Yet some still have difficulty funding all of their goals, including leaving money to succeeding generations.

This particular couple appealed to Frazier to help straighten out just such a problem. The husband and wife, both 62, were both able to retire this year with a gentle nudge from Frazier.

“Time was important to this couple because when they hit 62, they wanted to retire,” Frazier said. “They wanted to pay for travel and to leave their portfolio to their children. They also live near the beach in an expensive suburb.”

The couple had about $1.25 million in assets spread among a Roth IRA, a traditional IRA derived from 401(k) rollovers and other taxable assets. The total did not include their home. The couple calculated they needed needed $80,000 of income a year for living expenses, including health insurance. If they retired before Medicare kicked in at age 65, they needed to find a way to pay for health insurance for the three years in between retirement and Medicare, he said.

During those three years, the couple would receive about $40,000 a year from Social Security. The original plan was to take income from each of their assets, both taxable and nontaxable, without touching the principal, to get them to their $80,000 goal.

Their health-care search started with the state health-care exchange. During a planning session with Frazier, the couple found they were relatively close to qualifying as a couple for an Affordable Care Act subsidy. However, they could only do so if they earned less than 400% of the federal poverty income level, which is $65,840 in modified adjusted gross income for 2019.

Originally, the plan was to take $22,000 from the traditional IRA, but the advisor’s plan dropped that to $7,000, as income from the IRA would count towards the ACA limit. Instead, Frazier had the couple take the other $15,000 needed from their Roth IRA and from principal in their taxable account. ACA rules say funds from a Roth account do not count toward the ACA limit. This change brought them below the ACA $65,840 limit so they could qualify for a health insurance subsidy.

The drop in modified adjusted gross income qualified the couple for an almost $950 per month subsidy, or over 60% of the health insurance plan's monthly cost. It equated to more than $11,000 in annual premium savings. This subsidy fundamentally changed the annual expense calculation for the couple, requiring them to withdraw less on an annual basis from their accounts to cover their basic expenses.

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