High Income, Not Rich Yet

Case Study: Ruth

Ruth, a 34 year old doctor and mother of 2, is married to a small business owner. Between the two of them, there is never enough time in the day to meet all of the demands. Ruth was looking for an advisor who would take the time to plan ahead for her, and quickly deal with the headaches that popped up along the way.

Concerns

  • Ruth had a staff of 7 and was constantly being asked when they were going to get a retirement plan at work.

  • Ruth and her husband are in the highest tax bracket and were also wondering what could be done to reduce their tax bill.

  • Ruth built up some debt when starting her practice, to include both student loans and medical equipment. She is trying to strike a balance between saving for the future and paying down debt.

  • Ruth has a CPA, a bookkeeper, an attorney, and an advisor at the bank. However, these folks never talk to one another, so Ruth always ends up as the “middle person”

Solutions

  • We set up a 401K plan at Ruth’s work with a profit sharing plan that benefits her employees while skewing the benefits to her and her husband.

  • We developed a monthly cash flow schedule to both pay down debt and save for the future in pre-determined amounts based on Ruth’s goal of retiring at age 60.

  • We established 529 plans for each of Ruth’s kids and set up automatic monthly deposits into each one.

  • We placed life insurance on Ruth and her husband to protect each other and pay off Ruth’s debts in the event of pre-mature death.

  • We placed disability insurance on Ruth and her husband to protect each other in case either of them becomes unable to work.

  • We made sure Ruth and her husband had estate planning documents in place, and that her assets were retitled to her newly formed revocable trust.

  • We found Ruth a new CPA that also offers bookkeeping and payroll services so that her taxes, 401k plan at work, and investments would all be coordinated.

Ruth and her husband are now on track to convert their high incomes into high net-worth status, in a faster and more secure way than before.

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