Case Study: Grace and Steve’s Journey to Financial Clarity

The Overwhelmed Attorneys

Grace, 39, and Steve, 41, are both successful attorneys working long hours at regional law firms. They grew up in rural east Tennessee in neighboring small towns and now they each earn more than $200,000 per year. Despite their significant income, they lacked a structured financial plan beyond maxing out their 401(k)s. With a $700K mortgage at 4.25% on a home worth about $1.4 million, they frequently debated whether to pay it off early or invest. Steve, an avid financial news consumer, wanted to explore alternative investments he had heard others in his firm discuss. Grace, however, preferred a more cautious approach. Their financial uncertainty, combined with demanding careers, led to stress and impulsive luxury spending, all while holding over $500,000 in cash with no clear direction. 

Challenges:

• No clear financial strategy for retirement or the cash they had on hand. 

• Disagreements about debt and investing.

• Impulse spending without clear financial goals.

• Stress and uncertainty about their financial future. 

The Turning Point: Gaining Professional Guidance

Recognizing the need for a strategic plan, Grace and Steve turned to a wealth management team for expert advice. Based on their goals and financial pressures, their advisor helped them complete a custom Wealth Roadmap, provided a clear, step-by-step plan of action, and scheduled three progress meetings per year to keep them on track. Grace and Steve then took advantage of:

1. Tax-Efficient Retirement Planning: The advisor recommended they start maximizing contributions to Roth 401(k)s for long-term tax benefits, as they’d likely be in a high tax bracket during retirement.

2. Optimizing Cash Flow: Rather than letting excess cash sit, they invested it in a taxable account, choosing to invest rather than pay off their mortgage early, given their low interest rate.

3. Dynamic Investment Strategy: The advisor crafted a diversified portfolio, growing their wealth outside of their 401(k)s while maximizing their retirement plan benefits.

4. Behavioral Coaching: They worked on curbing impulse spending, and reframing money as a tool for long-term freedom, not immediate relief. Knowing their goals and having a clear plan made this simple.

5. Retirement Planning: Together, they defined their retirement goals, estimating how much they’d need to save to maintain their lifestyle at age 65.

6. Mindset Shift: The advisor helped them understand the psychology behind their spending habits and guided them to intentional saving and investing.

7. Tax-Loss Harvesting: Implemented a program to convert short-term market fluctuations (losses) into tax deductions.

   
   

After: A Transformed Financial Life

With a written Wealth Roadmap, a step-by-step plan of action and scheduled advisor support, Grace and Steve eliminated much of the noise and anxiety in their lives. Two months later, they were on track for their goals. Grace had a systematic investment plan she was comfortable with and Steve had investment strategies he understood and aligned with their shared goals. They invested excess cash in a diversified portfolio and implemented a plan to pay down their mortgage systematically that fit with their retirement plans. Their investments grew, and they had a clear retirement plan. Emotionally, they felt empowered, no longer relying on impulse spending to cope with stress.

Conclusion: The Power of Financial Clarity

By optimizing their retirement plans, investing wisely, and shifting their mindset, Grace and Steve gained financial clarity and confidence. With a clear plan in place, they felt equipped to achieve financial independence and enjoy peace of mind on their terms.

Advisory Services offered through Luken Investment Analytics, LLC, a registered investment adviser. LIA does not provide tax or legal advice. This information is strictly for illustrative and educational purposes and does not intend to make an offer or solicitation for the sale or purchase of any specific securities. Investments involve risk and are not guaranteed.