New Families: Balance Family Life Quality with Longer-Term Goals

New Families: Balance Family Life Quality with Longer-Term Goals

by | Sep 12, 2020 | Building Wealth, Case Studies, Integras Insights

Meet Karen and Michael. They have two young daughters and recently upsized their home.

Karen and Michael were referred to us after sharing their need for financial expertise. They were renting their first home but wanted to sell and invest the proceeds. Karen has a secure corporate job and Michael is a successful freelance writer. They had significant savings, in part to compensate for Michael’s irregular income. They felt they were behind on retirement and saving for their girls’ educatio

Integras Analysis

We agreed that there was more than enough in savings to cover Michael’s unpredictable income and that they could direct some excess cash and discretionary income to investments. Karen’s employer offers great health and disability benefits but the life insurance is expensive. We compare coverage from almost all major carriers and guide clients through the application and approval process. After reviewing income, expenses and objectives we crafted a comfortable plan to help them reach their goals.

Recommendations

  • Sell the first house and increase Karen’s retirement contributions
  • Pay off car loans and contribute to Roth IRAs
  • Establish a high-yield online savings account with automatic drafts for mortgage, car loans & investments
  • 529 accounts for the girls with initial investments and monthly contributions. In Georgia, the Path2College plan offers state tax deductions on the first $4,000 per child, per year
  • Set up term life insurance

Results

  • Karen increased her retirement contributions to the deductible maximum (currently $19,500)
  • The girls’ 529 accounts are growing tax-deferred and distributions for education (limited to $10,000 annually for private K-12) are tax-free!
  • Term insurance is the best way to replace anticipated income and if you’re healthy, individual policies are usually significantly cheaper than employer options
Young Professionals: Establish Healthy Investing Habits

Young Professionals: Establish Healthy Investing Habits

by | Sep 12, 2020 | Building Wealth, Case Studies, Integras Insights

Meet Megan. She’s in her early 30s, single (for now) and fairly stable in her career, although she may change employers.

Like most younger professionals we work with, Megan was unsure how to get started. She had a couple of previous company retirement accounts and a Roth IRA she started years ago. She had accumulated a sizable bank account but was unsure how to invest, especially after seeing her parents experience mixed results.

Integras Analysis

Our conversations determined that she was living within her means, needed a cash “safety net” (for unexpected car repairs or job search) and besides retirement hopes one day to start a family and own a home.

Recommendations

  • A modest increase to her retirement contributions, to better fund her primary goal, retirement. A 2% increase for someone earning $100K typically lowers bi-weekly take-home by about $50
  • Set aside a “safety net” savings account for unexpected expenses
  • Allocate her remaining cash into two strategic accounts. First, a moderate account seeking 4% to 5% returns for goals in the next 3-5 years. Then, a growth account seeking appreciation over the 5-10 years it might be before settling down
  • Consolidate her former company plans

Results

  • With her “safety net” in place, Megan started an automatic bank draft of $100/month to her moderate account and is comfortable making the monthly maximum (currently $500) to her Roth IRA. Besides tax-free growth, once you’ve owned a Roth for five years you can withdraw up to $10,000 without penalty towards a first-time home purchase!
  • We consolidated her former company plans and helped allocate her current employer’s 401(k)
  • Now, her retirement investments complement each other, and she has a track to meet her primary goal