Demographics
Clients: James
Age: 39
Occupation: Assistant Principal
Primary Goal: Make an informed decision about a job change, save for a home renovation project, contribute to niece’s college savings
The Situation
James is an Assistant Principal at the school he’s been working at since graduating from his masters program. However, he moved to the suburbs two years ago, and has been struggling with a 3-hour commute to school ever since.
James is eager to find a school closer to his home to minimize his long, expensive commute, but he worries about how transitioning to a new district might impact his financial future, from his pension projections to evaluating a new salary and different benefits options
Additionally, James has a few other financial goals in mind. He wants to renovate the kitchen in his home and would like to help contribute to his niece’s college tuition fund.
James is nervous about investing - right now he keeps his home renovation and college savings in a high-yield savings account, but isn’t sure if that is the right place. He knows that he’ll have different 403(b) options in a new district, and he’s worried about all the bad press he’s seen around high-fee 403(b)
The Approach
James wants help evaluating his job options so he knows what to expect moving forward. He’d also like a financial planner to help him figure out what to do with his current employer retirement accounts once he changes districts, as well as guidance getting his new accounts set up.
Thinking ahead to his goals of a home renovation and helping out with college savings, he would like to make sure he’s saving enough money in the right type of accounts.
The Results
The plan James got was exactly what he was looking for:
He got a retirement projection based on his current salary and investment contributions, and an outline of how his plan would shift if he enters a different pension plan or takes a salary cut
An evaluation of different salary and benefits options in neighboring school districts, and also how his monthly spending would decrease with a shorter commute (no tolls, less gas) and how that could balance out a lower salary
An action plan for his employer account rollovers for when he changes jobs, and recommendations for the best, lowest-cost 403(b) or 457(b) options in his new district. Avoiding one of the common high-fee 403(b) vendors can save James $100,000s in fees over his career.
A college savings strategy for his niece using a 529 that provides him with tax benefits and minimizes the impact on his niece’s potential financial aid package
A plan to fund his kitchen renovation in advance of starting construction
James had long been anxious about not truly understanding his pension and retirement benefits, and whether he was on track for his goals - it made him feel stuck in his current school commuting long hours forever! But after seeing his plan, he finally feels good about where he is at. He realized he was actually doing a lot of things right, which gave him the flexibility to essentially “spend” any difference in salary on improving his quality of life (AKA minimizing that commute!).