Long Term Family Planning

US Army Major Tongs age 32; Income $75,000

IT Specialist Tracy age 31; Income $80,000

Children: Daughter 10 and Son 8 years old

Goals:  Pay for kid’s college education and buy a place to live. Want to retire by age 62.

Major Tongs age 32 and his wife Tracy age 31 have been together for 12 years. They have a combined income of $155,000 per year.  They have a good family working relationship.  They have a son and a daughter that will be ready to start collage in 8 and 10 years.  This couple wants to retire at age 61 and 62. The Major will not leave the Army for another 10 years. When he does, he will receive 50% of his base pay.  His wife plans to work until age 62 then retire. 

Retirement program

Tracy invests $4,800 or 6% of her income per year. Her employer matches 100% of her income or another $4,800 per year. Her company is under a 10 year contract supporting a state computer system.  Over 10 years, she will have invested $96,000. Making an average of 8% in the Junk bond market, she will have $103,680 by age 41. If she continues her program until age 51 at 8%, she will have $1,036,800. By age 62, she will have using the same 8% return with the same amount of money $11,404,800. If she makes this goal, her families’ retirement should be secure.  

Home Living Expenses

The major’s money goes toward the mortgage and household spending.   They have the money to put down on a $350,000 home paying a 30 year mortgage of $300 per month.  In 30 years, they will be 61 and 62 years old. This will reduce retirement expenses or give them the option to sell the house and move to something more suitable.  They have an account set up to save money for new cars as soon as they buy the old car. They try to keep their cars for 10 years.

College funding

The major is going to get a degree in engineering on the GI Bill when he retires from the Army.  The couple contributes $12,000 per year each to the children’s college 529 program.  The children’s 529 Program allows the children to pay for college credit when they are purchased years before they have to be used. By doing so, they can get as much as a 50% discount on college credits.

They plan to have them go to college nearby so that they can live at home and drive to school in their own cars. By doing this, they can cut down on college expenses.