Case Study: Financial Planning for a Couple with One Child
John and Emily are a married couple in their mid-30s with one child. They have a combined annual income of $250,000 and a goal of retiring early. They came to us at Flores Wealth Planning to create a comprehensive plan and an action plan to achieve their goals.
Flores worked with John and Emily to create a comprehensive plan that included the following steps:
- Retirement Goals
We worked with John and Emily to identify their retirement goals, which included retiring at age 55 with $2 million in retirement savings. We also discussed their lifestyle goals in retirement, such as traveling and spending time with family. - Retirement Income Needs
We analyzed John and Emily’s current expenses and projected their future expenses in retirement to determine their retirement income needs. We took into account factors such as inflation and the cost of healthcare. - Retirement Savings
We reviewed John and Emily’s current retirement savings and projected their future savings based on their current savings rate and expected investment returns. We also identified opportunities to increase their retirement savings, such as maximizing their contributions to tax-advantaged retirement accounts. - Investment Strategy
We worked with John and Emily to create an investment strategy that was aligned with their retirement goals and risk tolerance. We discussed strategies for diversifying their portfolio and helping to maximize their returns while possibly minimizing their risk. - Social Security Strategy
We reviewed John and Emily’s Social Security benefits statements provided by SSA.gov and identified strategies for maximizing their benefits based on their retirement goals and expected retirement timeline. - Tax Planning
We reviewed John and Emily’s tax situation and identified strategies for minimizing their tax liability both today and in retirement. We discussed topics such as tax-advantaged retirement accounts, Roth conversions, and using a 529 plan to save for their child’s education while also receiving a state tax deduction. We also identified opportunities to reduce their tax liability today, such as optimizing their tax withholding and maximizing their tax deductions. By minimizing their tax liability today, we were able to free up additional cash flow that John and Emily could use to invest in their retirement savings or other financial goals. - Estate Planning
We recommended John and Emily work with an estate attorney to create an estate plan that included a last will and testament, trusts, and other important documents. We also discussed topics such as asset protection and legacy planning. - Insurance Planning
We reviewed John and Emily’s insurance coverage and identified opportunities to optimize their coverage, such as increasing their life insurance coverage and adding disability insurance.
Using the information gathered from the above steps, we created a comprehensive plan for John and Emily that included an action plan with specific steps and timelines to achieve their goals.
The action plan included the following:
- Increase Retirement Savings
We advised John and Emily to increase their retirement savings by maximizing their contributions to their tax-advantaged retirement accounts. - Diversify Investment Portfolio
We advised John and Emily to diversify their investment portfolio to help maximize their returns and possibly minimize risk. We discussed options such as investing in index funds and other passive investment vehicles. - Minimize Taxes
We advised John and Emily to implement tax planning strategies to minimize their tax liability both today and in retirement. We discussed topics such as tax-advantaged retirement accounts, Roth conversions, and using a 529 plan to save for their child’s education while also receiving a state tax deduction. We also identified opportunities to reduce their tax liability today, such as optimizing their tax withholding and maximizing their tax deductions. By minimizing their tax liability both today and in retirement, we were able to free up additional cash flow that John and Emily could use to invest in their retirement savings or other financial goals. - Estate Planning
We advised John and Emily to implement their estate plan to protect their assets and ensure their wishes were carried out in the event of their passing. - Insurance Planning
We advised John and Emily to optimize their insurance coverage to protect their family and their assets in the event of an unexpected event.
By creating a comprehensive financial plan with an action plan, we were able to help John and Emily achieve their goal of retiring early with $2 million in retirement savings. Our plan provided them with a roadmap for achieving their retirement goals and securing their financial future.
In addition, the use of a 529 plan allowed John and Emily to save for their child’s education while also receiving a state tax deduction in New York. This allowed them to save money on their taxes while also investing in their child’s future education.
Furthermore, the estate planning and insurance planning aspects of the plan provided John and Emily with peace of mind knowing that their assets and family were protected in the event of an unexpected event. They were able to rest easy knowing that their loved ones would be taken care of in the event of an emergency.
Overall, the comprehensive financial plan and action plan that we created for John and Emily allowed them to make informed decisions about their retirement savings, investments, and future goals. The use of a 529 plan, estate planning, and insurance planning ensured that they were optimizing their financial situation while also protecting their assets and loved ones.
Disclosure: Portfolio diversification is a strategy used to minimize risk by spreading investments across different asset classes and sectors. While diversification can potentially reduce risk, it does not guarantee profit or protect against loss. It is important to carefully consider your investment objectives, risk tolerance, and time horizon before implementing a diversified portfolio. Past performance is not indicative of future results.
Flores Wealth Planning does not provide tax or legal advice. Any information or advice provided by Flores Wealth Planning is for general informational purposes only and should not be considered as tax or legal advice. Clients should consult their own tax or legal advisors regarding their specific situation before making any decisions.
