You are a financial advisor to the Jones family (John 82, Jenny 81). Create a write-up (no bullet points except the introduction of the family) for the following challenges and give specific and appropriate recommendations for their age and situation. The case study file article and an outline are attached. Approx 4-5 pages, 12 font size.
Joneses family:
Parents: John, 82 Jenny, 81 (Lives in Midwest)
Children: Jenna, 49 (Widowed) James, 47 (Married)
Grandchildren: Jonathan, 18 Jack, 16 Josie, 12
Income:
Joneses are now retired, John (retired at 63) a former human resources director, Jenny (retired at 62) was a former accountant.
● Both have pensions
● Both have social security benefits
● Annual income from social security is $65,000
Assets:
House: Two-story, four-bedroom single-family home.
Worth: $475,000 (paid off)
Peak: $575,000
Vacation Home:
Worth: $300,000 (paid off)
Peak: $400,000
Cash:
Worth: $250,000
Peak: $500,000
Debt: Property taxes
Worth: -$7000/year
Investments:
John’s brother helped set up a portfolio for retirement, now run by a large national discount broker.
Savings: Invested in a portfolio of mutual funds
Mutual funds: $250,000 (from cash)
● 30% domestic equities (Large & Mid-cap)
● 10% international equities
● 40% bonds (Treasuries & Corporate)
● 20% money market account
Current Status:
Until the Joneses reached their 80’s they had an active retirement.
● Take two major trips per year
● Spent summers in vacation home
● Volunteers in the community
● Plan to pay $10,000 in grandson’s college costs
Challenges:
Jenny has Emphysema, and has trouble climbing the stairs of home.
John has Alzheimer's, though it is still in the early stages.
1. Jenna is concerned if her father is still able to take care of his mutual fund portfolio.
2. Jenna wants to put her parents in an assisted-living community, however:
a. Jenna doesn’t know how assisted-living communities work
b. She doesn’t know how much they cost or if they can afford to pay
c. She wants to sell the home to pay for the assisted living community.
Possible Recommendations for the Family:
Real Estate
● Priority: Move John and Jenny to an assisted-living facility
● Prepare house for sale with minor fixes
● Expected net profit after sale: $445,000
Income
● Current income: $65,000 from pensions, savings, and Social Security
● Potential income from the rental of vacation home
● drawing down investment principal for future expenses
Portfolio
● Current allocation: 40% stocks, 60% bonds
● Recommended shift to 20% equity, 80% fixed income
● Expected yield: 3% after management fees
Assisted Living
● Estimated cost: $5,000 to $6,000 per month
● Anticipated stay: 5 to 7 years or longer
● Expenses to increase as caretaking needs grow
Estate Planning
● Review wills and estate documents
● Update wills if needed
● Discuss inheritance wishes for children and grandchildren
Legal Documents
● Power of attorney for financial matters
● Health care power of attorney and living wills
● Standard wills and revocable living trusts for clarity and empowerment
Vacation Home
maintenance costs versus wider living options with sale proceeds
● John and Jenny's desire for the home to remain in the family
● Consider renting the vacation home to cover upkeep and taxes
● Possibility of using the vacation home as a source of funds for caretaking expenses, if needed
Jonathan's Education
● Consider the financial implications of supporting grandson Jonathan's college education
● Evaluate if pre-gifting to a Section 529 plan is still feasible
Daily Bill Paying
● online bill-paying service for convenience and organization
● electronic bill storage and viewing for easier management
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