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Susan O'Brien
Kathy Eliuk
Blair Baert
Robyn Carson

Tel: 403-503-7748

Address
Eighth Avenue Place, East Tower
525 8th Avenue SW - Reception on 10th Floor
Suite 1100
Calgary, AB
T2P 1G1
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Growing Family



Client Scenario:


Jake (age 38) and Madison (age 39) are both lawyers with three young boys under the age of six. Their high incomes and frugal spending habits have allowed them to pay off their mortgage and accumulate significant retirement portfolios.

They both come from blue-collar families and paid their way through law school with a combination of part-time jobs, scholarships and student loans. While their hard work and investment in themselves has paid off handsomely, they are concerned about the rising costs of post-secondary education and want to save enough to fund each of their children’s education.

The couple also dreams of owning a vacation property and would like to purchase one while their children are still young, to enjoy many summers at the lake. They aren’t sure how much they can afford to spend without affecting their education and retirement goals.

Madison is a diligent budgeter and notes that their monthly expenses are climbing as their children get older. While they continue to save monthly for retirement, they wonder what kind of lifestyle their savings will provide in the future. They want to retire when Madison turns 60, but would be willing to work longer to secure their desired lifestyle, which includes a substantial travel budget for the first 10 years.

Lastly, they want to know whether their current insurance coverage is sufficient to protect themselves against the risk of disability, illness or premature death. If any of these situations arise, they want to make sure they can still pay for their children’s education, continue to live the lifestyle they’ve grown accustomed to and stay on track for retirement at age 60.

Key Goals/Priorities:
  1. Are Jake and Madison saving enough for their children’s post-secondary education?
  2. Can they afford to purchase a second property and still meet their retirement and education savings goals?
  3. Is the couple on track to retire at age 60?
  4. Do they have the right insurance in place to protect their lifestyle?
The Susan O’Brien Group Wealth Advisory Solutions:

Jake and Madison came to us from another advisor that focused solely on their investment portfolio. They saw tremendous value in our holistic planning approach and wanted a written financial plan that addressed their chief financial priorities and provided a realistic and attainable roadmap for achieving these goals.

As we do with all clients, our relationship with Jake and Madison began with a deep discovery to create a snapshot of their current financial position and identify their unique goals and aspirations. We then created their detailed written financial plan, including key recommendations and an action plan to align, integrate and implement every facet of their financial lives.

Education Planning
A key discovery finding was that Jake and Madison weren’t utilizing a Registered Education Savings Plan (RESP) to save for their children’s education. By taking advantage of generous government grants and catching up on missed contributions from previous years, we estimate their RESP will cover approximately 75% of the total education cost. The remaining 25% will be funded from their Non-Registered portfolio, to be withdrawn when the need arises.

Second Property Purchase
On an annual basis, we update a Family Wealth Plan for our clients that includes a net worth statement, a cash-flow analysis, a retirement projection and an estate analysis. This roadmap charts their progress towards their goals and allows us to test new assumptions or scenarios against the overall plan. For Jake and Madison, we provided a maximum amount they could spend on a second property that would still allow them to achieve their retirement and education goals.

Retirement Planning
Next, we examined the couple’s ability to retire at age 60 with an annual spend of $120,000 per year (in today’s dollars) after-tax, plus an additional $40,000 per year for travel from age 60 to 70. With the integration of the new RESP savings and the purchase of a second property, we were able to determine that they are on track to achieve 109% of their retirement goal, meaning they could spend up to $130,800 after-tax per year (plus an additional $43,600 for 10 years as a travel budget) in retirement to age 90. We factored in an annual inflation rate of 2.5%, meaning their lifestyle spending amount increases with inflation each year to account for rising costs.

Lifestyle Protection
Lastly, we analyzed the impact of a disability, illness or death on the feasibility of Jake and Madison’s Family Wealth Plan. Their best asset is their ability to earn an income until age 60, and their retirement and education goals rely on this. We found that the Disability Insurance they each have through their employers would be sufficient to replace their incomes to age 65 should the need arise. This income would allow them to continue to save for their children’s education, cover their monthly household expenses and save for retirement.

The same held true for life insurance; our needs analysis determined that the couple had sufficient coverage in case of premature death to replace the deceased’s income and provide a lump-sum tax-free benefit for the survivor so they can maintain their lifestyle while meeting their savings and retirement goals.

Our analysis did find a gap in the couple’s protection against the risk of illness. We recommended they purchase Critical Illness Insurance that would provide a lump-sum, tax-free cash benefit should they be diagnosed with a qualifying illness. These funds would allow them to take time away from work to recover, travel to the US for additional care if needed, and prevent any early withdrawals from their portfolio that would put their retirement plans in jeopardy.

Ongoing Stewardship
Jake and Madison were thrilled to work with us to create a holistic, personalized wealth plan that addressed their unique goals. Creating the plan is only the first step – we meet quarterly to ensure all of our recommendations are implemented, updated, reviewed and revised on a regular basis as they make progress towards their goals.