Case Study: Joe and Peg
Joe and Peg have been working with our firm for over 15 years. When they hired us to help them with their financial plan, they had little confidence in their ability to retire at the normal age of 65. Although they each had good paying jobs, were well educated, and had been saving faithfully during their working years, they just didn"t think a successful retirement would be something they were going to be able to accomplish. This scared them, and kept them from doing many things they wanted to do, such as travel and take extended vacations.
However, Joe and Peg had been doing several things correctly, which greatly helped them accomplish their goals. They didn"t max out their credit limit on the purchase of their homes. Instead of buying the most expensive home they could qualify for, they kept their mortgages low enough (they only had 2 homes during their marriage which gave them tremendous equity growth) that it only took one of their incomes to pay the mortgage. That gave them enough flexibility in their budget to consistently save quite a bit of money each month, in addition to contributing the maximum to their employer"s 401(k) plans. The other thing that added to their success, was investing some of their savings into investment vehicles that didn"t lose money when the recession hit in 2008. This enabled them to keep their goals on track by compounding their interest growth through that time period, when most everyone else was losing 30-40% of their portfolios.
In their words, the most important part of their success was a result of working with us when we helped them set realistic goals and expectations for their future. This gave them a very specific date and income flow that they knew they had to achieve in order to be successful. Their retirement was no longer a fuzzy distant thought, but rather an actual concrete plan that could be realistically achieved. During the years, we stayed focused on their goals and continued to adjust their 401(k) accounts, in relation to their other investments in order to stay fully diversified and balanced in their objectives. They always knew where they were and how they were going to accomplish their goals. This gave them the realization they could actually relax financially and travel more often, and do some of the other things that made their life more well-balanced and fulfilling. Part of their long range plan was to build a beautiful retirement home in the mountains of Colorado. Not only did they realize this dream, but they now have more than enough income to live the lifestyle they longed for, and a very strong investment portfolio that cannot lose money when the market takes another heavy downturn. They get to go to sleep every night knowing their lives have turned out better than they planned for, but never really believed it could happen.