Your Money Matters More

Case Study in Retirement Planning - Part 1

This is the first in a series of blogs that will follow a couple, called Jack and Diane, who are approaching retirement.

 

Family Background

Jack is a business owner, and Diane is an anesthesiologist.  They have four children, one of whom is a special needs child. This gives us ample fodder for this series of articles that we are going to do in this blog.  Following this couple from age 50 through the birth of their first grandchild and business planning succession, funding of their retirement, estate planning and estate equalization for those children who don't work in the business.  They will also need to make provisions for the special-needs child.  And they will also develop some lifetime gifting programs.

Through this blog, you can follow the couple as they journey through the many facets of retirement and estate planning.  Please stay connected to learn how all of these things are accomplished to help Jack and Diane arrive at retirement with their financial arrangements in order and a sense of well-earned peace of mind.

Diane participates in a 403(b) plan at her work for a not-for-profit hospital.  Her annual salary is $250,000.  Jack has amassed a large portion of his money in a 401(k).  His annual salary through the furniture store he owns is $175,000.

Family Statistics

John (Jack) Davis, age 50, furniture store owner

Diane Davis, age 50, anesthesiologist, member of anesthesiology group

Child:  Gregory, age 25, married, no children – is involved in furniture business

Child:  Lynn, age 23, married, expecting first child – not involved in furniture business

Child:  Allison, age 20, in college, working part-time at furniture business

Child:  Timothy, age 16, special-needs child

 

Jack and Diane's Balance Sheet

Assets
Jack’s 401(k)	$350,000
Diane’s 403(b)	$450,000
Furniture Store	$1,750,000
Primary Residence	$450,000
Investments	$200,000
Duplex (rental property)	$125,000
Personal Property	$225,000
Total	$3,550,000
Liabilities
Mortgage on Residence	$250,000
Mortgage on Duplex	$125,000
Total	$375,000
Net Worth	$3,175,000

 

 

 

Since this is the first in a series of articles, Be sure to check back and stay tuned to see how we deal with family and business issues and successfully bring Jack and Diane to retirement.

Following the Economic Recession, Will There Be Inflation or Deflation?

I keep hearing all this talk about inflation. But what I think is really occurring is deflation. Prices are actually going down on things, although you would expect otherwise because the government is printing money at unprecedented rates. And we have been taught to respond to that and expect the situation to be just the opposite.

Out of Work and No Buying Power

However, many people are out of work and are engaged in other activities other than buying. As a result, retailers are left with excess inventory and in turn must charge less to move the items. In a recent article in the Wall Street Journal, entitled "Prices Drop but Threat of Deflation Is Remote" on May 15, 2009, it suggests that a myriad of prices fell, except for housing.

We Could Experience Deflation for a While

Industrial output is said to have tumbled 1.7% between the months of March and April, above the rate that had been estimated of 1.5%. Because of these events and manufacturers using up excess inventory, I don’t believe that inflation will happen for some time to come. Contrary to the aforementioned article, deflation will exist for the near future.