Case Studies
Case Study #1 - Young Couple with a new baby
Josh & Brittany are married professionals in their 30’s that just had their first child.
Goals:
- Saving for their forever home
- Preparing for their child’s education
- Developing a clear plan for their future retirement
Challenges:
- They are both contributing to their 401k plans at work, but they are unsure if they are invested properly and if they are saving enough.
- How much should they be saving for their child’s education each month?
- Will they have enough for a down payment on a home?
Strategy & Recommendations:
- We compiled a list of their expenses, assets and income in order to develop a financial plan that analyzed their current situation and outlined a roadmap to attain their goals.
- We reviewed various scenarios to determine the best course of action.
- We looked at their current 401k contributions and maximized the company match options. We made recommendations on their investment options to ensure they were appropriate for their age, risk tolerance and long-term goals.
- Discussed different saving options for college and their respective tax benefits. Determined an appropriate monthly savings plan based on public vs private university tuition & costs.
- Opened a Roth IRA to start a tax-free income stream at retirement with the flexibility to use contributions for home purchase or emergencies.
- Worked together to discuss estate planning and the need for a Will. Determine the appropriate amount of life insurance needed to take care of family needs if anything were to happen to one of them.
Case Study #2 - Pre-Retirees looking towards retirement
Tim and Linda are pre-retirees that have worked and saved all their lives. Their kids are grown with children of their own and they are wondering “When can we retire?”
Goals:
- Live a comfortable life in retirement with at least one big vacation trip per year.
- Start a savings plan for their grandkid’s college education.
- Be able to make donations to some charities they support.
Challenges:
- They have savings scattered in old employer’s 401k plans, inherited stocks & an investment property they may want to sell.
- Can they afford to pay health insurance if they retire before Medicare starts at age 65?
- Do they need Long-term care insurance?
- How can they reduce their tax burden?
Strategy & Recommendations:
- We outlined their monthly income needs in retirement and ran a financial plan to see how long their assets would last at different income levels.
- In-depth discussions were made to review their current health and that of their family history. We determined whether long-term care insurance was appropriate, their eligibility and the associated costs.
- We consolidated their retirement & stock accounts to simplify statements and reduce fees. Their investment objectives and risk tolerance were discussed to determine how best to position their entire portfolio.
- We established 529 College Saving accounts for each grandchild with automatic contributions.
- We educated our clients on Required Minimum Distributions (RMD) and Qualified Charitable Distributions (QCD) in retirement.
Case Study #3 - 40-Something Couple in a blended family
Connor and Sarah were both previously married with children. Their newly blended family created questions on how best to align their finances for the future. Connor has worked for the same company for 20 years and was offered a pension buyout package. He is concerned his job may be eliminated. Sarah inherited an IRA from a deceased parent.
Goals:
- Ensure their children are taken care of in case something happens to one of them.
- Determine best use of inheritance.
- Be on-track for retirement
Challenges:
- Should they keep their finances separate or not?
- Would it be best to take a lump-sum distribution buyout or create a monthly income stream from Connor’s employer?
- Should Sarah take a distribution from the inherited IRA? What are the tax consequences?
Strategy & Recommendations:
- As with most of our clients, developing a financial plan was key to insuring they are properly situated for retirement.
- We established a joint account to save 3-6 months worth of expenses to cover any unexpected job loss or financial emergency that might arise.
- We compared the long-term effect of lump sum buyout vs. a monthly income stream and determined which would be in the client’s best interest for the future.
- Since Sarah will need to deplete the inherited IRA over a 10-year period, some funds will be used to contribute to a new Roth IRA annually. This will create a tax-free income stream in retirement. Remaining funds will be added to the children’s existing 529 plans. We insured distributions did not move them to a higher tax bracket.
- Since the couple has a mortgage on their home, life insurance was recommended to cover the mortgage balance and pay for any shortfall in educational expenses.
- Worked with an estate attorney to ensure each spouse is supported during their lifetime, but that the remaining assets go to the proper heirs to avoid potential disinheritance. Updated beneficiaries on all accounts to reflect their newly blended family.