CASE STUDY Your clients are a couple both age 60. Their kids are all grown up, out of the house and each financially stable. They are still working and have a combined gross income of $90,000. Their medical insurance is through work and they also have group life and disability with their employer. Both have a 401k plan with their employer and are putting in 3% which is matched 100%. They want to retire at age 65 and want to make sure they are on the right path. The only debt they have is a mortgage, which will be paid off in two years. The principal and interest amount of their monthly mortgage payment is $1,100. Their risk tolerance level is conservative/moderate to moderate. They have an emergency fund that is in a savings account that would cover three months of expenses. One of the clients also has a Roth IRA that they put $100 per month into. They plan to retire at age 65, go on Medicare and collect social security at that point. The rest of their income needs will have to come from their investments and savings. With their budget they can currently invest/save another $2,000 per year. If possible they would also like to do something for their two small grandchildren ages 3 and 4.

give recommendations on what they should do based on the following:

*Where should they spend/invest based on their situation (not specific investments but categories such as a type of account (401k, IRA, savings account, etc.) or investment category (stock, bond, mutual fund, etc.)

*Make sure to base things on the risk tolerance level and time horizon of when they plan to need the money.

*Make recommendations based on debt repayment if thats part of the case such as credit cards, etc.

*Make any other general personal finance recommendations as you see fit based on the info in the case.

INFORMATION TO KEEP IN MIND

• Each case study will provide the dollar amount of what the people are currently investing and the amount they are able to add to that based on their budget. You don't have to do a budget because the information is given to you and you decide what they should do with the available money. Base your responses on the information in the case and what you feel would be best for them.
• A risk tolerance level is provided in each case so you don't have to complete one. Bank products such as savings accounts, money market accounts and usually the safest, followed by bonds, mutual funds, and stocks in terms of risk. Remember that mutual funds have a broad range from safer (conservative) to riskier (aggressive).
• Life insurance may or may not be part of a plan, but keep in mind that term insurance is cheaper and provides protection only, while whole life is more expensive but does have a savings component that is safe, although it is not for a short-term time frame like a regular savings or money market account. If included in any case study you do not have access to a life insurance illustration so you would only include how much they should spend towards the product and which product they would use.
• A sound financial plan usually contains three main parts of where to put money based on when they plan to use the money:

1) Short-Term: money that can be used quickly if unexpected expenses happen. This is separate

from the usual checking account which is used for regular bills. Short-term should be the "emergency fund" which should have enough to cover 3 months of expenses and be liquid (easily accessible, very safe). Examples are savings accounts and money market accounts.

2) Intermediate: money that can be used before retirement without incurring any penalties but is invested somewhere that has a chance to get a higher return than short-term emergency fund assets. Examples include CD's (1 month to 5 years: longer maturity typically has a higher interest rate), mutual funds, stocks, bonds, etc. that are not in a retirement account.

3) Long-Term: typically money that is invested for retirement. Examples include accounts such as Traditional and Roth IRAs and 401k Plans. Accounts are usually made up of mutual funds but can have other investments in the account as well.