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The secret to living your dreams
Journal of Financial Planning
10/19/2005
Originally Published:20051001.
It's being prepared for life's "what ifs": a surprise addition to the family; a medical emergency; a business setback or beyond-your-wildest-dreams success. Meet three couples who are living their dreams with the help of financial planners-professionals who examined their circumstances and fiscal health, helped them set realistic goals, and have kept them looking ahead, financially ready for whatever life throws their way.
Because Bob continues to earn money, and the couple had four different retirement plans along with Social Security income, financial planner Paul Fain, CFP,® of Asset Planning Corporation, helped the Cothrans consolidate, simplify and streamline. "Like many people at retirement, the Cothrans faced a lot of the 'what now?' questions," says Fain. "Typically, people ask: 'How much can we spend? What will our expenses be? What can we expect from our investment portfolio over the next 20 or 25 years?' Our job is to create a solid financial plan that sets the 'stage' for their next act."
"Set design empowers performers to practice their art," says Bob, who has created hundreds of designs for plays around the country, from Shakespeare to modern comedies. "Paul is our designer. Because of his help, we have confidence that we can continue to practice our own art."
A "FOUNDATION" FOR THE FUTURE
After 35 years in the business of manufacturing recreational vehicles, Don Krah saw countless people living their retirement dream of travel. "Customers much younger than I would stop by on their way to Alaska," says Don, who lives in Bristol, Indiana. "I was a little jealous, and also very mindful of my father's death at age 57. Both things made me think hard about what I really wanted out of life."
What Don and his wife, Lois, wanted was to give generously to their church and its support of missionaries and seminary students. After selling their business, the Krahs sought financial planning help that would realize multiple goals: increase their charitable giving, create a legacy for their grown children, and save taxes. They hadn't realized that the wealth they'd directed into annuities would significantly increase their children's tax burden at the Krahs' deaths, nor that their out-of-pocket charitable contributions could be restructured using tax-liable securities for even greater benefit.
Financial planner Aaron Coates, CFP,® and his partners helped the Krahs' church establish a foundation for members to use for special gifts toward missionaries and ministry students who the church previously supported out of general funds. Coates manages the system that allows the Krahs to give from their portfolio on a tax-advantaged basis, which dramatically reduces current taxes and expected estate taxes and will likely result in an even bigger future portfolio. The Krahs' son and son-in-law serve on the foundation's board with other church members, learning investment principles and the value of wealth.
"We never expected that we'd be able to accomplish our charitable goals while we were alive," says Don. "But we're receiving the joy of it now. The foundation is helping a dozen men with families, those who might not otherwise be able to return to school and prepare for ministry. Perhaps the biggest gift, though, is to see our children getting experience in financial stewardship."
THE GRADUATE: 216 MONTHS AND COUNTING
This is the number: 216 months from cradle to campus. And these are the other ones: $171,384 to send a child to a top private college and $71,508 for four years at a state university, including $9,000 for "pizza money". That's today's dollars. Most parents have a vague, and uneasy, sense of the numbers, but not many set up a college savings plan while the future graduate is in utero.
Scott and Nicole Carver of Elkhart, Indiana, gave themselves a few extra months to get a handle on college costs by setting up their plan when Nicole was pregnant with their first son, now 1 ½. A birth, a new Social Security number, and a beneficiary switch later, the Carvers are well on their way to securing the education future of their two children. Their desire for a strong financial future began even before they considered parenthood with a simple question to financial planner Aaron Coates, CFP,® of Compass Wealth Advisors: How much will we need to retire? The answer: What do you want your life to look like?
"We had no idea that a planner would even work with us when we were just starting out and in the 'building' phase," says Scott, who is a certified registered nurse anesthetist (CRNA). "We certainly didn't have a lot of money at that point but we had a strong desire to put a plan in place that would give us the future we want." The Compass team helped the Carvers take care of the "basics"-life insurance, disability income insurance (the Carvers had neither and needed to protect Scott's income while Nicole stays home with their children), college savings plans. They've also helped them work through life-and-money "issues"-guardianship for their children, how to factor in the needs their parents may have as they age, the future of Scott's practice.
"Educated professionals such as the Carvers need a 'filter' for the overwhelming amount of financial information out there," says Coates. Scott appreciates Compass's team approach that, like the operating rooms in which he works, has each member bringing specialized expertise to their financial care.
Two years of working through an always-evolving plan has not only given the Carvers a foundation for future financial independence-the couple is now saving about 15 percent of their annual incomeit's given them the peace of mind they need. "We both sleep better now," says Nicole. "And with two small children, we have plenty of other reasons to be up at night."
SHAKESPEARE: NOT SHUFFLEBOARD
Rosalyn Cothran works three days a week as a speech and language pathologist in an elementary school, and her husband Bob has almost more requests for his skill as a theater set designer than he can handle. This busy Knoxville, Tennessee, couple is not in the early stages of establishing careers. They're actually seven years into retirement.
When they "officially" retired from their jobs, the Cothrans sought a financial planner's help to relieve them of what they considered a "terrifying burden"-managing their retirement income and making plans for their estate-so that they could continue to, well, work. "It's such a joy," says Rosalyn.
Adds Bob, who is now Professor Emeritus of Theater Arts at the University of Tennessee, "Neither of us has the slightest gift, or inclination, for financial management. We knew we needed a professional who could shepherd us through this phase. Although we obviously needed 'technical' skill, of highest importance to us was finding a planner who shared our sense of the real bottom line: Is our money directing us or is it allowing us to direct ourselves to do what's important in our lives and those of others?"
(C) 2005 Journal of Financial Planning. via ProQuest Information and Learning Company; All Rights Reserved
Copyright © 1995-2003 Pinnacor and its data suppliers. All rights reserved.
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