You are the financial planning team that has been assigned to a new client, the Diego family. You have been asked to create a comprehensive financial plan for the family. This should include (at least) the following information and analysis: Analysis of their current state (budget, balance sheet, insurance, net worth) College funding strategy Retirement strategy including sources of income, investment strategy, and retirement income analysis Estate plan including insurance needs Here are a few details about the Diego family: Rick Diego is 30 years old. He is an electrical engineer at Lockheed Martin and earns $80,000. His company provides a defined benefit pension plan where he will be eligible to receive approximately 30% of his salary upon turning 65. This is based on his salary in the year prior to retirement (assuming he is still employed at Lockheed) or his annual salary based on the year he left the company. Lockheed also offers a 401k plan where they match his contributions dollar-for-dollar up to a maximum of 6% of his total compensation. He expects to receive annual salary increases of 3%. Though he may not stay with his current employer for his entire career, he would like to retire from full-time employment at age 65. Julia Diego is 30 years old. She is a financial analyst for a small San Diego-based wealth management firm. She earns $30 per hour and works 20 hours per week. The company does not offer a pension plan but she is eligible to contribute to the 401k plan. The company will match her contributions dollar-for-dollar up to a maximum of 6% of her total compensation. She plans to return to a full-time position once her children are both in school. She would like to be able to retire at age 65. Maggie Diego is 2 years old. Jack Diego is 3 years old. The Diego family receives health care insurance from Lockheed. Rick must contribute 30% of the total cost of insurance. They have a $1,500 annual family deductible but after that, the plan pays 100% of health care expenses. Rick assumes that this will continue until retirement. The Diego’s would like both of their children to attend USD in the future. The Diego’s own a home in San Diego valued at $650,000. They bought the home 5 years ago with a new $500,000 conventional 30-year mortgage at 3%. They would like to move to a larger home for $950,000 within the next year. In retirement, they plan to sell their home and downsize to a home that will cost 50% less. Upon retirement, they would like to have at least 70% of their pre-retirement income (pre-tax). The family spends $5,000 on vacations each year. They also support their local church. Rick and Julia expect to live to age 85 and would like to leave their children an inheritance.
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