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Dan & Maria

Maria and Dan need to plan for when he retires as a Colonel.

Background

Dan, 47, is a Colonel in the Army currently assigned to the Operations Directorate (J-3) on the Joint Staff located in the Pentagon. He flew the Apache assault helicopter and did three deployments to Afghanistan and Iraq. He has an MBA.

Maria, 42, is a Registered Nurse working at the Fairfax Hospital. A few years ago she got her master’s in nursing specializing in clinical care and has an outstanding student loan of $125,000.

Dan and Maria have three children: Scott (16 years old), Emmy (8 years old), and Dan Jr. (5 years old).

Questions

Dan has less than a year until he retires from the Army. They are potentially facing numerous changes and many decisions that have significant financial consequences. Dan is worried about providing for his family should he not have a job lined up by the time he retires. They are also wondering if they should stay in the same location for their children’s current schooling. Finally, they’re thinking about college expenses, given that Scott is only two years away from graduating high school.

Analysis

Dan has $200k in his TSP, and Maria has $85,000 in a 401(k) plan. Their 529 plans hold $25,000 and $10,000 for Scott and Emmy respectively, and their savings account has $5,000. Dan and Maria currently rent their home for $3,800 a month, which is offset by Dan’s military housing allowance of $3,570. However, his housing allowance will go away when he retires.

Dan's current military pay excluding housing allowance is $12,528/month. His estimated military pension will commence upon retirement at $5,674/month (a 55% reduction in his income). Maria earns a gross of $7,500/month. Their total debt, excluding Maria’s student loan, is $42,000.

Outcome

After completing a cash flow analysis, I helped them create a short-term financial plan covering the next 6 months based on expected changes to their cash flow. Dan was offered a position 3 months following his retirement, so we evaluated his offer. Additional planning included tax planning, college savings plan and additional retirement planning.

Dan and Maria opted for continuous financial planning to include investment planning.

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