4000 Legato Road
Alice and Steve are busy corporate executives who also have two teenage children.
The clients are in their mid-thirties and want to have a third child in the next few years. Meanwhile Steve’s company is undergoing major organizational changes that have him on the lookout for a possible career shift.
Since the couple doesn’t always see eye to eye on things, Alice thinks now might be a good time for them to create a real Plan for Financial Comfort. When they come to their IFP advisor for just such a plan, we consider six steps to help turn their dreams into practical goals.
Step One is cash flow. Between Steve’s student loans and Alice’s credit card bills, they have hundreds of thousands of dollars in debt. We can show them how to pay that off while sticking to a budget and maintaining their emergency fund for unexpected costs.
Step Two is tax reduction strategies. Last month Alice had solar panels and energy-efficient windows installed on their house. Steve just made a generous donation to a cancer research charity in honor of his late mother. And the couple has been talking about increasing their portfolio’s allocation to municipal bonds. We could pinpoint the appropriate tax credits, deductions or exemptions these opportunities present.
Step Three is preservation of income. Alice and Steve own three residential properties in an area prone to damaging seasonal storms. They also both have a history of serious medical illness in their families. IFP may determine a need for stronger insurance coverage, in case their homes or their health takes a serious hit.
Step Four is retirement planning. Ever since they began contributing to their company 401(k) plans, Alice and Steve have left the settings unchanged. IFP might encourage them to increase their contribution levels and to opt for asset allocations that take full advantage of compound interest during their remaining working years.
Step Five is college funding. Their daughter is 14 years old and their son is age 13. That gives them at least three years to build up tax-advantaged savings accounts. And if they do have a third child, starting early can make an even bigger impact. We would develop that plan and act as their conscience in implementing it.
Step Six is family protection. With multiple residences to bequeath to their children, and changes in their own health to consider, Alice and Steve need to know that the courts will not decide what happens to their family. IFP can work with their attorney to craft a plan that factors in guardianships, beneficiaries, wills, healthcare proxies and power of attorneys.
Once the process is complete, Alice and Steve can gain confidence knowing that their finances are prepared for whatever life throws at them.
This is a hypothetical example and is not representative of any specific investment. Your results may vary