Take ScreenShot on the Social Security for Stanley and Ellen using this link

https://www.socialsecurity.gov/planners/retire/AnypiaApplet.html

Finn 3272 Life Insurance and Professional Financial Planning Stanley and Ellen Johnson Case Study Spring, 2016 Stanley and Ellen Johnson are both age 32. Stanley is a claims representative for a property and casualty insurance company and Ellen is a human resources administrator with a regional bank. Both Stanley and Ellen began their current careers in 2002. Stanley's date of birth is May 28, 1983. Ellen's date of birth is July 25, 1983. Stanley and Ellen have two children, Tommy, age 5 and Allison, age 3. Both children are presently in day care during week days. Stanley and Ellen's parents and other relatives do not live in the community. When the children begin public school at age 6, they will stay at school in the afternoons in the Charlotte-Mecklenburg After School Enrichment Program. The children will return to Day Care or be engaged in summer camps during the summer months when school is not is session. Please see Moodle (Finn 3272-001) for the Charlotte-Mecklenburg Schools brochure on the After School Enrichment Program, including program features and costs. The 2015 annual income for the family was $101,772 with Stanley's salary at $52,191 and Ellen's salary at $49,581. As of January 1, 2016, Stanley's salary was adjusted to $53,757 and Ellen's salary was adjusted to $51,068. Each expects average annual salary adjustments of 3.0 % in the future. The Johnson family is fortunate that Stanley has an excellent benefits program through his company, which is a financially stable, regional insurance company. 1 Finn 3272 Life Insurance and Professional Financial Planning Stanley and Ellen Johnson Case Study Spring, 2016 Stanley's benefit package includes medical, dental and vision insurance for the family, a defined contribution 401(k) retirement plan, and group life insurance. The annual deductible under the medical plan is $3,500 for the family per calendar year. Prescription drug coverage is provided subject to $22 co-pay per generic prescription. Dental coverage pays 100% of the expenses for routine dental care and cleaning and 60% of the expenses for other dental services. Vision coverage pays for an annual eye exam plus the customary cost for prescription lenses for each covered family member if services are provided by a participating provider within the vision plan network. Stanley's group life death benefit is $50,000. Ellen is the primary beneficiary of the group life insurance, and the children are named as the contingent beneficiaries. Stanley also has a $50,000 individual term life insurance policy with Ellen as the primary beneficiary and the children as contingent beneficiaries. Stanley contributes $800 a month to the cost of the family group health insurance and his group term life insurance. He also contributes 2.0% of his monthly salary to the 401(k) retirement plan and the company match is 1% of salary. The company will match 50 % of the employee's contribution to the 401(k) subject to a maximum company contribution of 3%. The vested accumulation in his retirement account, as of 12-31-2015, is $8,800, and he expects long term appreciation in the account to average 6.3% annually. 2 Finn 3272 Life Insurance and Professional Financial Planning Stanley and Ellen Johnson Case Study Spring, 2016 Ellen contributes 1.0% of her monthly salary to a Qualified Thrift and Savings 401(k) Plan for bank employees and the company match is 1.0% of salary. The company will match 100 % of the employee's contribution to the 401k subject to a maximum company contribution of 6%. The vested accumulation in Ellen's retirement account, as of 12-31-2015, is $4,100, and she expects long term appreciation in the account to average 5.8% annually. Ellen has opted out of medical, dental and vision coverage with the bank, since the family is covered under Stanley's group benefits program. The Johnson's own a $250,000 home with a $196,628 mortgage balance as of January 1, 2016 (original mortgage was $200,000). The mortgage is financed through Wells Fargo with an effective date of January 1, 2015. The mortgage is subject to a 4.25% APR fixed rate with a 30 year term. The monthly mortgage payment is $984 (principal and interest). See the Wells Fargo web site: http://partners.leadfusion.com/tools/wellsfargo/pathway/pw_home02/tool.fcs for a detailed mortgage amortization table based on the $984 monthly payment. Property taxes on the home and lot are $3,549 annually and the annual homeowners insurance premium is $891. Property taxes and homeowners insurance are escrowed at $370 per month. The present home was built in 1988 and has three bedrooms. 3 Finn 3272 Life Insurance and Professional Financial Planning Stanley and Ellen Johnson Case Study Spring, 2016 The Johnson's have two vehicles as follows: a 2013 Chevy Impala, which is a company furnished vehicle and a 2008 Honda Civic valued at $14,000 with a January 1, 2016 loan balance of $8,251 (original loan in 2015 was $11,000). The current mileage on the Honda is 75,000. The auto loan rate is 4.85 % APR (annual percentage rate) with a 48 month term, and the monthly loan payment is $273.58. The effective date on the auto loan is January 1, 2015. The company furnished vehicle may be used for personal as well as business purposes, and the company pays all operating costs, including gas, repairs, maintenance and insurance. Stanley is charged for personal mileage, and he deducts this cost from his weekly expense report. Stanley has a personal savings account, invested in certificates of deposit with a current balance of $3,000. This account has an average annual return of 1.74%. Stanley and Ellen's joint checking account carries an average balance of $2,500. Credit card balances currently total $8,000 with an annualized rate of 15.24%. Stanley and Ellen have sought your help as a Financial Planning Advisor. You are to meet with the Johnsons in order to establish the family's cash and income objectives with a focus on college savings as well as developing a retirement program. Stanley and Ellen both wish to retire at the end of the calendar year in which they reach age 67 with a 4 Finn 3272 Life Insurance and Professional Financial Planning Stanley and Ellen Johnson Case Study Spring, 2016 retirement income of 85% of their pre-retirement ending income. Assume a normal life expectancy of age 86 for both spouses and no Social Security cost of living adjustment. Stanley and Ellen established a will, shortly after the birth of their first child; however, the will has not been reviewed or updated since that time. They do not have a Revocable Living Trust, General Power of Attorney, a Health Care Power of Attorney or a Living Will. After establishing the financial planning objectives, you must analyze all available information and develop a financial plan and a personal risk management program (insurance program) along with recommendations for implementation. With the help of their accountant, the Johnson's have completed personal financial statements consisting of a statement of financial condition and a statement of cash flow and taxable income. For planning purposes, you should assume an average annual inflation rate over the next 35 years of 2 %, an average return on investments (other than 401k Plans) of 6.09%, and no cost of living adjustment for the Social Security survivor and retirement benefits. 5 Finn 3272 Life Insurance and Professional Financial Planning Stanley and Ellen Johnson Case Study Spring, 2016 Group Project Requirements & Grading: (1) Group organization and member evaluations: Each class member must join a case study group by January 22. Groups may range in size from 3 to 5 students. Until April 4, group members may vote to drop a non-contributing member from the group. Group members must document the decision using the Group Project Peer Evaluation Worksheet and notify the dropped member and the instructor immediately upon making a decision to drop a member. Any student dropped from the group is responsible for completing the project independently with no extension in the project deadline. At the completion of the project, each student must complete a Group Project Peer Evaluation Worksheet in order to rate the performance of each group member. Individual team members may receive a lower grade or a higher grade than the group grade, subject to the team members efforts based on peer evaluations. The maximum penalty for lack of participation or poor participation is a failing grade. (2) The final project must be completed in Microsoft Word with spreadsheets in Excel (3) Be sure to document all references, including sources of data and other resources. 6 Finn 3272 Life Insurance and Professional Financial Planning Stanley and Ellen Johnson Case Study Spring, 2016 (4) The report must reflect the efforts of your group and not the efforts of others. A failing grade will be assigned if plagiarism is evident. Please refer to the UNCC Code of Student Academic Integrity and the UNCC Code of Student Responsibility. (5) Each group should complete the Excel spreadsheets as the topics are covered throughout the semester. (6) Groups are encouraged to schedule a conference with the instructor to discuss the project and review progress to date. (7) In addition to the Excel spreadsheets, the final project must include a detailed narrative which provides recommendations for meeting the family's financial planning objectives.. (8) Please send the final project to the instructor by email attachment and include the names of group members on the cover sheet. The final project must be received by 5:00 pm on April 26. (9) Report content and grading weight for each section of the project is as follows (please organize your report based on this outline): (a) Five Year Projected statement of cash flow - 10% (b) Dynamic analysis spreadsheet for each spouse showing total income and cash needs less total liquid assets and SS survivor benefits- 20% (c) Projected cash needs spreadsheet - 5% (d) Projected liquid assets spreadsheet- 5% (e) Projected social security survivor benefits -5% (f) Retirement income analysis including income objective, available resources including SS benefits, personal savings and 401k and projected deficit - 20%.. 7 Finn 3272 Life Insurance and Professional Financial Planning Stanley and Ellen Johnson Case Study Spring, 2016 (g) A written financial plan with recommendations for implementation - 35% (10) Steps to follow in completing the project. Step 1: Download the Excel prototype from Moodle and follow the prototype format to create the Excel spreadsheets. Step 2: Calculate the Social Security benefits (retirement, survivor, and disability) for each spouse. Use the SS calculator from the SS website http://www.socialsecurity.gov/planners/retire/AnypiaApplet.html In completing the calculator worksheet, the retirement benefits must be projected in future dollars. Use the projected survivor benefits to complete the social security survivor section of the Excel spread sheet. Step 3: Complete a six year Statement of Cash Flow projection beginning with January -December, 2015. Please yellow highlight any recommended adjustments in expenses in the annual cash flow projections. The ultimate objective is to convert the family from a deficit to a break even position with savings allocated to insurance premiums, college savings, retirement savings and paying off short term debt. Step 4: Complete the Cash and Liquid Assets spreadsheets. Link these spreadsheets to the \"Deficit\" spreadsheets for Stanley and Ellen. The Deficit spreadsheets provide an overall projection of the family's income needs, cash needs and liquid assets and are used to determine the amount of life insurance needed to meet the family's financial planning goals. Step 5: Complete the retirement planning spreadsheets in order to analyze how Stanley and Ellen can meet their retirement income objectives. 8 Finn 3272 Life Insurance and Professional Financial Planning Stanley and Ellen Johnson Case Study Spring, 2016 Step 6: Complete the narrative which provides recommendations for meeting the family's financial planning objectives. Please organize the narrative using the following headings: Family Budget Recommendations, Life Insurance, Disability Income, College Education Savings, Retirement Savings, Legal Issues (Trust, Wills, and Powers), Investment Strategy and Tax Strategy. You should also recommend a specific insurance company for each recommended insurance policy based upon the company's financial rating and reputation for customer service. It is not necessary to repeat the facts of the case in the narrative, and the narrative should not exceed seven pages double spaced. 9