Over the course of our meetings here are the planning topics Scully and I covered:

Emergency Fund Establishment – I recommended a savings account that gave Scully a better return on her cash. I estimated it would grow by a few hundred dollars per year more than her current account. We decided upon a specific amount of money, to set aside, that gave her peace of mind so she would be better able to handle an emergency.

Spending and Savings Plan – Scully had always been a consistent saver so she hadn’t paid a lot of attention to her savings because it came naturally to her.

I recommended she set up automatic transfers from her checking account to an investment account so that she could capture much of her recent raise in savings. This way she didn’t have to worry about where to put the money that was accumulating in her checking account.

She realized she could afford the travel she wants but would have to make adjustments to do so, so that she was still on track with retirement savings. This gave Scully clarity about how much she could spend on vacations and travel and not feel guilty she wasn’t saving for retirement.

Student Loan Repayment Plan – We discussed the pros and cons of paying off her student loans. She decided she would pay some off now and the rest monthly. She committed to increasing her retirement savings by the amount she was paying toward this debt, once it was paid off.

This didn’t amount to a large cost savings. However, paying off some of the debt ahead of schedule would save her a few $100 in interest payments. Additionally, Scully was happy to finally simplify and shift monthly payments to be invested and have, most of her, loans behind her.

Employee Benefits Review – I reviewed the employee benefits information Scully provided. She was already taking advantage of some benefits but I noticed she was offered an account that has tax advantages. We discussed the benefits and limitations of this kind of account and we decided on an appropriate contribution amount. I estimated this would save her about $500 per year in taxes.

I was also concerned that the disability insurance offered to her would not adequately cover her current income if she were unable to work. Therefore, I recommended requesting quotes for additional coverage.

Disability Insurance

In our third meeting we discussed the quotes Scully requested. I reviewed the features offered on the policy and I made recommendations for which ones are most appropriate for her. She was relieved to know that a larger portion of her income would be protected if she couldn’t work because of an illness.

She had seen family members struggle because of this and, because she is single, felt it was all on her shoulders. The annual premium is expensive but she feels the coverage is worth it to have additional protection in place. Of course, a disability would mean a lot of adjustments and difficulties but, If there was a need this coverage could allow her some independence, more choices and could potentially pay over $700,000.

Home Purchase / Real Estate Analysis

I showed Scully potential costs involved with home ownership given two scenarios. I recommended she practice this expense, to see how owning a home would affect her savings and spending plan. By doing so she could also create additional savings she could use for her down payment. She thought that might be a challenge but was curious to try increasing her savings to test if this was a goal she really wanted to pursue.

Cash Flow Projection / Financial Independence

My analysis found that given Scully’s current savings rates she is on track to be financially independent in her late sixties. Much will change between now and then but it was a comfort to Scully to know she is reasonably on track at this point. I recommended she open an investment account and set up automatic transfers each month to this account. That way she wouldn’t have to constantly monitor her long-term savings amounts.

In order to increase her savings and reduce her tax burden, she also needed to max out the contributions to her employer sponsored retirement account, potentially reducing her taxes by over $1,000 each year.

Investment Review and Recommendations

I reviewed Scully’s retirement accounts from her old employers. I made recommendations for consolidation. Not only did this simplify her accounts but also, it reduced the cost of the fund fees she was paying. This will save her about $400 this year. Over the lifetime of her investments, which is multiple decades, this has the potential to be thousands and thousands of dollars in savings. Even if we assumed her investments stay stagnant, it will be, approximately, an additional $4,000 over the next 10 years, without any ongoing effort on her part.

I also coordinated the investment options offered to her through her current employer sponsored plan with her other accounts. Four accounts felt like a lot to coordinate for her, but I gave Scully the specific funds and dollar amounts for each account with instructions, in her Investment Worksheet so she knew exactly what to do.

We discussed my investment philosophy as it applied to her situation. Scully was relieved to know there was a strategy she could stick to in strong economic times as well as a recession. She was curious to learn more so I recommended one of my favorite books on investing.

It is challenging to determine the value added by choosing appropriate investments, maintaining that mix, making tax effective decisions related to investments and sticking to a long term strategy. According to Michael Kitces from The Kitces Report Volume 3, 2015 it is between .35% to 2.69%. For Scully, in dollar terms, this is $280 to $2,150 per year, given she has about $80,000 currently invested. These numbers will grow as Scully continues to save.

We’ll monitor her investments annually and make adjustments according to Investment Parameters I created for her.

Tax Guidance

Scully has always done her own taxes and that has worked well for her. I let her know I can recommend an accountant in the future if things get more confusing. We didn’t have much to cover in this area but we were able to reduce her taxes by increasing contributions to tax advantaged accounts; an estimated $1,500 per year, in total.

Estate Planning

We discussed estate planning briefly. I pointed out a few things for her to consider and recommended attorneys for her to contact.

Additional Questions

Scully also had questions about her credit card rewards. I recommended a resource to help her search for and compare competitive cards as well as thoughts on the effectiveness of rewards.

Another thing that is very important to Scully are the non-profit organizations she volunteers with. She would like to continue to give and we discussed some ways she might consider doing this.

Scully is diligent about putting action items in place. She updates me on each action item before every meeting, which helps us make the best use of our time. When she has a question she emails. Although some of the paperwork was frustrating, she made a lot of progress.

She felt like our work together has taken her from being “just a saver, to an investor.” Now that most of her Action Items are in place we put a meeting on the calendar in six months time so that we can continue to track her progress, make adjustments and build on the work we’ve done. She is excited to test the cost of home ownership in her budget and re-examine that goal once she has done so.

This example is meant to give you an idea of my approach to financial planning, the types of topics I address with clients and the value of a holistic planning prospective.