1. As Jamie Lee and Ross review their assets, can you tell them which will be valuable to them for income as retirement approaches?

2. Jamie Lee and Ross estimate that they will have one million dollars in liquid assets to withdraw from at the start of their retirement. They plan to be in retirement for thirty years. Using Exhibit 14-5: Dipping into Your Nest Egg chart in this chapter, how much can Jamie Lee and Ross can withdraw each month and still leave their next egg intact? How much can they withdraw each month that will reduce their nest egg to zero?

3. Jamie Lee and Ross have been hearing many stories recently about acquaintances that are passing away without leaving a will, which made Jamie Lee and Ross anxious to review their estate plan with an attorney. They do not want to think about eventually passing on, but they know it is an essential part to careful financial planning. It was suggested that they assemble all of their legal documents in a place where their heirs would be able to access them if necessary. What documents would you suggest that Jamie Lee and Ross make accessible?

4. Jamie Lee and Ross are now having the attorney draw up a will for each of them. What is the purpose of having a will? Do they need to have an attorney to draft a will? What type of will would you recommend they have, based on their marital/family status?

Starting Early: Retirement and Estate Planning

Jamie Lee and Ross now in their fifties, have plenty of time on their hands now that the triplets are away at college. They both realized that time has just flown by; over twenty four years have passed since they married!

Looking back over the past years they realized that they have worked hard in their careers, Jamie Lee as the proprietor of a cupcake café and Ross, self-employed as a web-page designer. They have enjoyed raising their family and strived to be financially sound as they are looking to retirement that is just around the corner. The saved regularly and invested wisely over the years. They rebounded nicely from the economic crisis over the past few years, as they watched their investments closely and adjusted their strategies when they felt it necessary. They purchase vehicles with cash and do not carry credit card balances, choosing instead to use them for convenience only. The triplets are pursuing their master’s degrees and have tuition covered through work/study programs at the university.

Jamie Lee and Ross are just a few short years from realizing their goals of retiring at 65 and purchasing the home at the beach!

Current Financial Situation:

Assets (Jamie Lee and Ross combined):

Checking account: $5,500

Savings Account: $53,000

Emergency Fund savings account: $45,000

House: $475,000

IRA balance: $92,000

Life Insurance Cash Value: $125,000

Investments (Stocks, Bonds): $750,000

Car: $12,500 (Jamie Lee) and $16,000 (Ross)

Liabilities (Jamie Lee and Ross combined):

Mortgage balance: $43,000

Credit Card Balance: $0

Car Loans: $0

Income:

Jamie Lee: $45,000 gross income ($31,500 net income after taxes)

Ross: $135,000 gross income ($97,200 net income after taxes)

Monthly Expenses

Mortgage: $1,225

Property taxes: $500

Homeowner’s insurance: $300

IRA Contribution $300

Utilities: $250

Food: $600

Gas/Maintenance: $275

Entertainment: $300

Life Insurance: $375