Meet Martin and Gina
Their Story
Martin and Gina are busy professionals with a young family. Martin is a professor of architecture at the local university and Gina owns a design business. They have three kids ranging in age from 2 to 7. Gina’s business started as a “side hustle” but when she began to net more than their combined salaries, she left her corporate job. Gina’s business does not yet have any employees, but Martin is considering leaving his position to support her business.
The Challenge
They sought out a financial advisor to help them make decisions with their respective careers while staying on track for their kids’ future expenses, including college, as well as their own retirement “someday.” Most of all, they want to enjoy the years while their kids are growing up. They want the flexibility to attend their kids sporting events and school programs and travel together as a family.
The Plan
Step 1
Martin will stay in his position for at least a few more years to ensure that the family has a stable income while Gina continues to grow her business. But he will stop teaching during the summer session, and will scale back his research duties so that he can take over some of the administrative tasks for Gina’s business.
Step 2
Gina’s old SEP-IRA will be rolled over into a new Solo 401(k) plan. The new plan will allow her to max out her contributions and also make after-tax contributions, which can be used for a “mega-backdoor Roth contribution.” As a part-time employee, Martin will join the Solo 401(k) plan and will also make mega-backdoor Roth contributions.
Step 3
Their wills will be updated to name Martin’s sister and her husband as the guardian of the kids. At the same time, healthcare directives and power of attorney documents will also be updated.
Step 4
They didn’t want money set aside for the kids to be exclusively earmarked for college, so we passed on 529 plans. Instead, they will make larger contributions to their joint trust brokerage account with the understanding that this money might be used for future education or other expenses for their kids.
Step 5
A large term life policy and disability insurance policy will be taken out on Gina since she is the primary income earner and the business cannot continue without her.
Step 6
Most importantly, a cash flow plan is put into place so that Martin and Gina can have the confidence of knowing that they are saving enough for the future, while budgeting sufficient amounts for travel and other discretionary expenses along the way.
The Result
Martin and Gina have a new found confidence in their financial situation. The guilt they once experienced when they booked expensive trips is gone now that it is part of their intentional spending plan. With Martin involved in the business, Gina is freed up to focus on her design work rather than the administrative tasks of the business. But they don’t have the anxiety or pressure of Martin quitting his job completely.
Their kids are involved in everything from soccer to karate to dance. Martin and Gina are able to attend nearly every game and recital. Six years from now, when the kids are a bit older, they will take a summer off for their dream trip to Europe where their passions for architecture and fashion will be shared with their kids.
