Today is January 1, 2014

The Family

Alan and Angel Young both 36 years old

My Young recently accepted a job making $93K a year

Mrs. Young currently unemployed

Two children (ages 4 & 2)

Dog and a cat

Both are licensed lawyers and have been married for eight years

The Extended Family

Mr Young has a mother in her 60s who is living far away and is modestly self sufficient

Mr Young has two siblings both married and self sufficient

Mr Young inherited $400K from his late Uncle Fred who was 100 years old when he died and had worked everyday of his life. He has spent the inheritance down to $200K

Mrs Young has one brother who is married, wealthy and has two children

Mrs Youngs mother is a pharma distributor and lives in another state she is 60 and self sufficient

Mrs Youngs father lives in the same town as the Youngs and her brother self sufficient and healthy

Mrs Youngs Father (Trust 1)

Mrs Youngs father set up a trust for the benefit of Mrs Young. Her brother is trustee but it is really controlled by the father. The trust distributes $30K/year to Mrs Young. The balance is $700K and it has an average earnings rate of about 8.5% per year for the last 10 years. There is no plan to increase distributions.

Economic Info

Inflation averages 3% for last 20 years and expected to continue at 3%

Bank lending rates: 15 year 3.25%; 30 year 3.75%; Any closing costs associated with refinance are 3% and included in refinanced mortgage

Expected rate of return 8.5%

Residence

Current value $550K; Balance on 30 year mortgage at 5.5% $260,514; Land value $150K; Monthly payment (P&I) $1703.37; Owned home for 8 years; Not qualify for refi until Mr Young in new job 1 year

Insurance

Life - No life insurance; Mr Young expects $50K group term from new employer

Health Covered under Mr Young employer plan; Cost $1K/month for family

Disability No disability; Mr Young will be covered for LTD provided by employer at 65% of gross pay

Homeowner HO3 with open perils and replacement value; $250 deductible; Dwelling covered $300K with 80/20 coinsurance clause; Premium $2400/year

Auto - $250 deductible; 100/300/50; Premium $1800/year

Assets

Bank account $28K JT

Inherited portfolio $200K H

Brokerage account $67K W

401K $32K JT

Residence $550K JT

Auto 1 $40K W

Auto 2 $25K JT

HH Items $150K JT

Liabilities

Mortgage $260514 JT

Other Financial

Annual contributions to 401K $17500

SS Taxes $7115

Federal WH $10384

State WH $3715

Property tax $3000

Tuition to preschool $15K

Utilities $2400

Entertainment $7500

Cable $1200

Clothing $2000

Auto maint/gas $3000

Food $9600

Investments

Investment portfolio $200K

Brokerage account includes gifts from Mrs Youngs father invested in money market account at 0% earnings

401K from Mr Youngs prior job invested in index fund

PASS Score = 26

Estate Info

No estate planning documents

Goals and Concerns

Want proper insurance, investment and estate portfolio

Want to know cost of college education for the 2 children so they can approach Mrs Youngs father about funding a 529 plan. Current cost of education $35K in todays dollars with expected 5% inflation. Expect children in school six years each and expect rate of return 8.5%

Want to plan for early retirement (100& WRR, excluding trust income) at age 62. Mr Young to save $17500/yr in 401K with an employer match of $6K. Expect to live to age 90. Do not include SS benefits in planning.

Want to be debt free at retirement

Analysis

1 - Prepare personal financial statements and pie charts using the data given