Don is 37 years of age and he works as a senior manager at a local company. He earns 95,000 annually and his take-home pay after deductions is $5,200 monthly. Don is happily married to Jean, they have two children Jerry (age 9) and Patty (age 7). Jean also 37, works full-time earning 63,000 annually . Jean’s take-home pay after deductions is $3,400 each month. They own a home in Waterloo valued at $525,000 their mortgage is with the TD Bank and the current balance of their mortgage is $279,000. The monthly mortgage payments are $1,200 dollars. The property taxes on their home are $350 monthly with homeowners’ insurance costing $100 monthly in a typical year they spend an average of $340 monthly on Home Maintenance. The monthly bundle cost of their home phone,/cell phone/ internet/ cable is $330. The bills they were each month from water/natural gas, and electric/Hydro are $260 and $230 respectfully. As a growing family of four they spend $650 each month on groceries. Patty and Jerry are part of the before and after school programme at their school. This service cost $860 each month music lessons and Minor Sports cost $200 monthly. This service cost $860 each month. Music lessons and Minor Sports cost $200 monthly. In terms of their vehicles, they own a Honda Accord valued at $20,500 and a Chrysler van valued at $10,000. They have a $7,000 Loan on the van. The loan payment on the van is $500 monthly and the insurance payments $100 per vehicle. On average, vehicle maintenance and repairs amount to $100 per month. Total gasoline cost both vehicles are $500 monthly. Don and Jean enjoy entertainment, dining out and annual holidays. Each month they spend approximately $250 on entertainment (theatre and sporting events), $400 on restaurant., and set aside $200 for their annual vacation. They also spend $200 monthly on recreation (sports and gym memberships,) and $100 monthly on beer, wine and spirits. On a monthly basis they spend $300 total on clothing, $40 on term life insurance ($100,000 for Don and $100,000 for Jean), and $80 on personal pharmacy items. Don and Jean estimate they spent an additional $480 per month on miscellaneous items. Don and Jeanne recognize the importance of post-secondary education for their children and would like to accumulate $16,000 to assist with their educational costs by the time Jerry turns 18. At this point in time, they have not set aside any money for education. In terms of retirement, they would ideally like to retire when Donna 55 although they do not know whether this is financially feasible. They feel a retirement income of $70,000 (gross) would be required. Don and Jean want to ensure their retirement income will last until they reach the age of 95. Inflation is expected to be at 3% throughout their retirement period. Don′s current employer has no Pension Plan. Jean has a Define Benefit Plan based on her factor of 1% and an average of best three years of service. Jean Currently has 12 years of service in the plan the normal retirement age for her pension plan is age 65 and the plan is indexed to inflation once retirement begins. Don has a “locked in RRSP” valued at $6500. Their current RRSP balances are $40,000 for Don and $15,000 for Jean. Prior to having children, they had been contributing a significant amount each month to their RRSP however, since the kids were born, they have reduced their monthly RRSP contributions to $100 monthly. Both Don And Jean will be eligible for the maximum CPP retire benefits, provided they both continue to maintain their present income levels until retirement. Don and Jean were born in Canada and will qualify for OAS (Old Age Security) In terms of premature death ,. Jean and Don both agreed they would like to have significant life insurance to ensure all debt is paid off, and provide a target income of 100,000 dollars to the survivors (combined) until Patty reaches the age of 18 Assume all assets and debt balances are as of December 31st of the previous year Part 1 Goals, Cash Flow and Net Worth, Note this report should be professionally completed, as if you were presenting it to Don and Jean. Use word doc and charts (or equivalent) in preparing the report 1. Develop a minimum of four financial goals for Don and Jean. These goals should be S.M.A.R.T in nature and also prioritized. Write them in a way that would make sense to the client (NOT USING THE SMART format but in a paragraph form that covers the SMART POINTS) 2. Create a cash flow statement for Don and Jean 3. Create a net worth statement for Don and Jean Part 2. 4. Complete an educational needs analysis for Don and Jeanne, clearly indicating the amount they are required to invest monthly to meet their goal. 5. Complete a capital needs analysis (CNA) for Don and Jeanne to meet there insurance goals. ( Include the cost of the insurance coverage) 6. Complete a budget (monthly basis) for Don and Jeanne ensure this budget reflects the implications of any savings, investment and insurance recommendations that have made during your review. 7. Complete a post retirement budget for Don and Jeanne. 8) Recommendations. (ie Should they delay retirement date, increase their RRSP Contributions etc..)
