Case Study - Russ & Donna

Real People

Russ & Donna Kemp are in the prime of their careers. They both work for large companies and are consistently hitting their career goals. The only problem was when it came to their financial goals; they did not know where to start. Are we on the right track? We have been saving, but what’s the number we need to get to for retirement?

Both Russ and Donna have been working corporate jobs and accumulated sizable benefits in their respective companies. Although these seemed like great benefits, how will they utilize them? How will this impact what they will need during retirement? How can we maximize what we get from our companies?

As soon as their daughter was born, Russ & Donna started saving for college. As their daughter grew, so did her ambitions. How much will college cost in the future? They researched college savings options online, but was their 529 plan getting the job done?

All these questions led Russ & Donna to reevaluate their finances. They felt they were off to a good start but recognized the need for someone to help put a plan in place. That’s when they reached out to us.

Real Goals

• Russ & Donna wanted to know how much they needed to retire comfortably.
• Once retired, Russ & Donna wanted to purchase a vacation property where they could leave behind the hustle and bustle of living in a big city.
• They wanted to make sure they have enough saved for their daughter's college education, even if she decides to go to graduate school.

Russ & Donna’s current plan of maxing out their 401(k) and saving in their current 529 plan was a good start. However, they were not on track to achieving their goals or getting to their “number” by the time they wanted to retire. We also noticed some room for improvement when reviewing their company benefits, investment portfolio, and 529 plan. It was time to get to work. 

Real Results

One thing Russ & Donna didn’t realize about their current situation was that rising inflation, tax rates and several inefficiencies (costs, taxes, etc.) were adding risk to their situation.  After finding this out, we helped them create the following plan:

• We were able to calculate how much they needed to retire and the timeframe it would take to accumulate this wealth.
• After reviewing their current and future cash flow situations, we were able to help them put away more towards their goals by maximizing their contributions to their 401(k)s, after-tax investment accounts, backdoor Roth IRAs and 529 plans.
• Given their current savings were solely being allocated to their 401(k) plans, Russ & Donna were projected to have a large tax burden when purchasing their vacation home upon retiring. By making some adjustments to their savings, we were able to substantially decrease this projected tax burden.
• Although Russ & Donna were thinking about their long-term future, they also had short-term goals. We designed a portfolio that could help provide for any short-term needs while allowing enough growth for future college expenses and retirement.
• By analyzing Russ & Donna’s projected social security, pension, and other corporate benefits we were able to show Russ & Donna how to maximize what they get from these benefits.   
• When reviewing their current 529 plan, we noticed that the plan’s expenses were eroding their savings. We helped Russ & Donna switch to a lower-cost provider that saved them thousands over the long term. 

Russ & Donna were off to a great start but needed some help taking their finances to the next level. Creating a comprehensive plan enabled them to accumulate assets more efficiently, create passive income during retirement, and combat risks such as rising inflation and tax rates.

Disclosure: This narrative represents a hypothetical client situation. Results are not typical or guaranteed. Any results achieved or implied in this narrative are not necessarily the most common outcome. Information presented is believed to be current and should not be viewed as personalized investment advice. Information presented in this narrative should not be viewed as an offer to buy or sell any securities or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation.