GOALS & CONCERNS 1. They want to have a proper insurance, investment, and estates portfolio. 2. They want their taxes analyzed. 3. They want to know the cost of college education for the two children so that they can approach Angel's father about fully funding 529 Plans. The current cost of education is $35,000 per year in today's dollars and the inflation rate is expected to be 5%. They expect the children to be in school for 6 years each, and while they don't know, they expect the 529 Plans investment rate of return to be 8.5%. 4. They want to plan for an early retirement (100% wage replacement ratio, excluding the trust income) at age 62, as they want to spend the autumn of their lives together traveling and visiting friends and family. Alan plans to save $18,000 per year in a 401(k) plan starting this year and to have an employer match of $6,000. They expect to live to age 90. 5. As neither of the Youngs currently have 40 quarters of Social Security earnings and because they are plan- ning to retire at age 62, they do not want to include any Social Security retirement benefits in their plan- ning. 6. They want to be debt free at retirement. INTERNAL INFORMATION THE RESIDENCE The current value of the residence is $550,000. The balance of the 30-year mortgage at 5.5% is $260,514. The land value is $150,000. The monthly payment is $1,703.37 and they have owned it for 8 years. They will not qualify for refinancing until Mr. Young has been employed for 12 months. INSURANCE INFORMATION Life Insurance Neither Alan nor Angel Young currently have any life insurance. Mr. Young expects to have $50,000 of group-term life insurance from his employer. Health Insurance They will be covered under Mr. Young's employers health plan, which is an excellent plan. However, the cost will be $1,000 per month for the family. The lifetime benefit per person is unlimited. Disability Insurance Neither Alan nor Angel Young currently have disability insurance. Mr. Young will have a long-term, guaranteed- renewable disability policy, provided by his employer, as of tomorrow for 65 percent of his gross pay, covering sickness and accidents with benefits to age 65. Homeowners Insurance The Youngs have an HO3 policy with endorsements for open perils and replacement value. They have a $250 deductible. The dwelling is covered for $300,000 and they have an 80/20 coinsurance clause. The premium is $2,400 per year. 2. Debt Management and Short Term Obligations Calculate the following; a. 15 year mortgage refinance b. The Emergency Fund Ratio C. The current Ratio d. Housing Ratio 1 e. Housing Ratio 2 GOALS & CONCERNS 1. They want to have a proper insurance, investment, and estates portfolio. 2. They want their taxes analyzed. 3. They want to know the cost of college education for the two children so that they can approach Angel's father about fully funding 529 Plans. The current cost of education is $35,000 per year in today's dollars and the inflation rate is expected to be 5%. They expect the children to be in school for 6 years each, and while they don't know, they expect the 529 Plans investment rate of return to be 8.5%. 4. They want to plan for an early retirement (100% wage replacement ratio, excluding the trust income) at age 62, as they want to spend the autumn of their lives together traveling and visiting friends and family. Alan plans to save $18,000 per year in a 401(k) plan starting this year and to have an employer match of $6,000. They expect to live to age 90. 5. As neither of the Youngs currently have 40 quarters of Social Security earnings and because they are plan- ning to retire at age 62, they do not want to include any Social Security retirement benefits in their plan- ning. 6. They want to be debt free at retirement. INTERNAL INFORMATION THE RESIDENCE The current value of the residence is $550,000. The balance of the 30-year mortgage at 5.5% is $260,514. The land value is $150,000. The monthly payment is $1,703.37 and they have owned it for 8 years. They will not qualify for refinancing until Mr. Young has been employed for 12 months. INSURANCE INFORMATION Life Insurance Neither Alan nor Angel Young currently have any life insurance. Mr. Young expects to have $50,000 of group-term life insurance from his employer. Health Insurance They will be covered under Mr. Young's employers health plan, which is an excellent plan. However, the cost will be $1,000 per month for the family. The lifetime benefit per person is unlimited. Disability Insurance Neither Alan nor Angel Young currently have disability insurance. Mr. Young will have a long-term, guaranteed- renewable disability policy, provided by his employer, as of tomorrow for 65 percent of his gross pay, covering sickness and accidents with benefits to age 65. Homeowners Insurance The Youngs have an HO3 policy with endorsements for open perils and replacement value. They have a $250 deductible. The dwelling is covered for $300,000 and they have an 80/20 coinsurance clause. The premium is $2,400 per year. 2. Debt Management and Short Term Obligations Calculate the following; a. 15 year mortgage refinance b. The Emergency Fund Ratio C. The current Ratio d. Housing Ratio 1 e. Housing Ratio 2