Essentials of Personal Financial Planning

CHAPTER 13 PLANNING VEHICLES FOR RETIREMENT

CASE STUDY

James and Marian Wilson are in their mid-50s. They were married right out of college over 31 years ago. Up until now, life has been hit or miss, financially. Neither James nor Marian has stayed with an employer for more than five years—the grass always looked greener elsewhere. As a result, they have little or no retirement savings. However, they managed to put three kids through college without any student loan debt, and their home, where they intend to stay for the foreseeable future, is fully paid off.

Several years back, the Wilsons began a research company. It’s nothing formal, just a sole proprietorship researching tax case law for law firms, but their reputation has spread and their business has flourished. Today, they have more requests from law firms than they can handle. The Wilsons, in light of the demand, have continued to raise their fees—pushing their most recent net earnings to $500,000. They work from a home office with minimal overhead (the largest expense is an Internet service provider) and annually draw $120,000 from the business to support their lifestyle.

The Wilsons ask you if there is anything that can be done to reduce their tax burden, save money for the future, and perhaps guarantee some type of income at retirement, which they hope will be at age 67.

LEARNING OBJECTIVES

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