Tim and Jill Nguyen are retiring this year! Tim has worked for a utility company since his co-op job in college and has participated in all of the company's retirement savings plans. Jill has worked as an accountant since graduating from college. Although they never consulted a financial planner, they have been careful to keep their insurance policies updated, to keep debt to a minimum, and to save regularly. As a result, the Nguyens have a very large retirement

portfolioand now, without the restrictions of their companies' plans, lots of other investment options. Jill is concerned about "outliving" their money and wants to spend conservatively. Tim says, "I earned it, I'll spend it." With very different perspectives on their retirement budget, Tim and Jill think that consulting a professional might be a good idea to keep them on track through retirement. They haven't made too many plans, but they know they want to help pay for college costs for their grandchildren.

a. What assessments of their financial situation should Tim and Jill expect when working with a financial planner? Given their past efforts to plan their finances and control spending, will these assessments be necessary?(Select the best answer below.)

A.Tim and Jill should expect to provide the planner with their most recent paycheck in order to calculate how much money they make annually. These assessments will be necessary to ensure a smooth transition into retirement and to help them enjoy the future without worrying about finances.

B.Tim and Jill should expect to provide the planner with some information to develop an income statement. These assessments will be necessary to ensure a smooth transition into retirement and to help them enjoy the future without worrying about finances.

C.Tim and Jill should expect to provide the planner with sufficient information to develop an income statement and a balance sheet. These assessments will be necessary to ensure a smooth transition into retirement and to help them enjoy the future without worrying about finances.

D.Tim and Jill should expect to provide the planner with sufficient information to develop an income statement and a balance sheet. However, these assessments will not be necessary because they have done a good job planning and saving before.

Part 2

b. The Nguyens just received statements from their companies outlining the total value of their retirement savings. They can use this information:(Select the best answer below.)

A.to develop an income statement to determine the amount they are able to give their grandchildren for college.

B.to develop a balance sheet to determine their current net worth and to project future income and prepare a budget.

C.to develop a balance sheet to determine their future net worth and to project current income and prepare a budget.

D.to develop a balance sheet to determine the amount they are able to give their grandchildren for college and to calculate the down payment on a home in Florida.

Part 4

d. Since both their income and expenses will change, how would you suggest that they not "go overboard in living the good life," yet at the same time know they can afford some retirement luxuries?(Select the best answer below.)

A.Develop a balance sheet in accordance with their goals. Track assets to control spending. By identifying and pricing their goals, tracking their net worth, and budgeting to control spending, Tim and Jill will know exactly how much of the "good life" they can realistically afford.

B.Develop a budget in accordance with their goals. Track assets to control spending. By identifying and tracking their goals, budgeting their net worth, and pricing to control spending, Tim and Jill will know exactly how much of the "good life" they can realistically afford.

C.Develop an income statement in accordance with their goals. Track expenses to control spending. By identifying and pricing their expenses, tracking their net worth, and budgeting to control spending, Tim and Jill will know exactly how much of the "good life" they can realistically afford.

D.Develop a budget in accordance with their goals. Track expenses to control spending. By identifying and pricing their goals, tracking their net worth, and budgeting to control spending, Tim and Jill will know exactly how much of the "good life" they can realistically afford.

Part 5

e. Should they manage the investment portfolio themselves or should they find a planner to manage their retirement assets and help them develop a plan for what could be 30 years in retirement?(Select the best answer below.)

A.Whether or not Tim and Jill continue to work with a financial planner depends on their financial knowledge, time and commitment. Given the mismanagement of their financial situation to date, they may want to work with a planner if they do not want to run out of money during retirement.

B.Whether or not Tim and Jill continue to work with a financial planner depends on their net worth. Given their successful, independent, management of their financial situation to date, they may want to develop their own plan and have it reviewed by a planner if their net worth is over $1 million.

C.Whether or not Tim and Jill continue to work with a financial planner depends on their financial knowledge, time and commitment. Given their successful, independent, management of their financial situation to date, they may want to develop their own plan and have it reviewed by a planner as confirmation that they are on the right track. Because successfully managing a large investment portfolio takes a great deal of time and knowledge, the Taylors may want to avail themselves of the help of a professional investment advisor.

D.Whether or not Tim and Jill continue to work with a financial planner depends on their financial knowledge and net worth. Given their successful, independent, management of their financial situation to date, they may want to develop their own plan and have it reviewed by a planner as confirmation that they are on the right track. Because successfully managing a large investment portfolio takes a great deal of time and knowledge, the Taylors may want to avail themselves of the help of a professional investment advisor.

Part 6

What kind of relationship with the planner and method of payment might work best for them?(Select the best answer below.)

A.They may prefer to find a reputable planner with appropriate credentials and a degree from an accredited university. It will be important for them to shop around to find someone with whom they feel comfortable. A commission-based planner might be the best choice, especially if their current investments are doing well and the Nguyens are not interested in making big changes that would generate sales, and commissions, for the planner.

B.They may prefer to find a reputable planner with appropriate credentials and experience. It will be important for them to shop around to find someone with whom they feel comfortable. A fee-only planner might be the best choice, especially if their current investments are doing well and the Nguyens are not interested in making big changes that would generate sales, and commissions, for the planner.

C.They may prefer to find a reputable planner with appropriate credentials and experience. It will be important for them to shop around to find someone with whom they feel comfortable. A commission-based planner might be the best choice, especially if their current investments are doing well and the Nguyens are not interested in making big changes that would generate sales, and commissions, for the planner.

D.They may prefer to find a reputable planner with appropriate experience and a referral from a neighbor. It will not be important for them to shop around to find someone with whom they feel comfortable. A fee-only planner might be the best choice, especially if their current investments are doing well and the Nguyens are interested in making big changes that would generate sales, and commissions, for the planner.

Part 7

f. Do the Nguyens need to track their expenses more or less closely once they retire? Are their big expenses likely to remain the five reported by the average household?(Select the best answer below.)

A.The Nguyens should track their expenses more closely because underspending without replacement income can be disastrous. In the event of an unexpectedly bad financial situation or a long downturn in the economy, they would not have the time or resources to rectify their misfortune and achieve their goals. Their big five expenses are likely to be the same as the average U.S.

householdtaxes,

food, housing, medical care and transportation. Most retirement benefits will be taxable, as will other investment earnings. Depending on the age of the house or appliances, repairs or replacements may be necessary.

B.The Nguyens should track their expenses less closely because overspending without replacement income can be disastrous. In the event of an unexpectedly bad financial situation or a long downturn in the economy, they would not have the time or resources to rectify their misfortune and achieve their goals. Their big five expenses are likely to be the same as the average U.S.

householdtaxes,

food, housing, medical care and transportation. Most retirement benefits will be taxable, as will other investment earnings. Depending on the age of the house or appliances, repairs or replacements may be necessary.

C.The Nguyens should track their expenses more closely because overspending without replacement income can be disastrous. In the event of an unexpectedly bad financial situation or a long downturn in the economy, they would not have the time or resources to rectify their misfortune and achieve their goals. Their big five expenses are likely to be the same as the average U.S.

householdtaxes,

food, housing, medical care and transportation. Most retirement benefits will be taxable, as will other investment earnings. Depending on the age of the house or appliances, repairs or replacements may be necessary.

D.The Nguyens should track their expenses more closely because overspending without replacement income can be disastrous. In the event of an unexpectedly bad financial situation or a long downturn in the economy, they would not have the time or resources to rectify their misfortune and achieve their goals. Their big five expenses are likely to be different from the average U.S.

householdtaxes,

food, housing, medical care and transportation. The big five expenses for retirees are: taxes, medical care, vacations, food, and golf course membership fees.