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PlanLab Case Studies

PlanLab Case Studies. Education, Stock Options, Lines of Credits, Sweeps, Pay Expenses with a Specific Asset, Retirement Distributions.

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PlanLab Case Studies

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  1. PlanLab Case Studies Education, Stock Options, Lines of Credits, Sweeps, Pay Expenses with a Specific Asset, Retirement Distributions

  2. Age 44 Male Age 44 Female Daughter Janice Age 17Goals: Janice to attend UNC Mountain Cabin for RetirementContinue current lifestyle life style expenses $7,750 increasing at 3% annuallyEdward’s Salary $15,000 monthly 3% average annual increase Stock Options 5,000 shares of Microsoft at $30 / share Edward & Sandra McBride

  3. Exercise Stock Option in 10 Years • Incentive • Stock Lookups • Exercise Schedule • Sell shares to pay • Sell shares for cost of taxes • How to use resulting shares

  4. Cash Flow Snapshot Quick, on-screen Summary of expenses and shortfalls Cash flow visual summary Net Worth visual summary Failure in 5th Year Not severe Net Worth continues to grow

  5. Without Education Effects of Janice receiving a full scholarship

  6. Add a Line of Credit • Balance • Rate • Maximum Credit • Minimum % Payment • Minimum $ Payment • How to use it -- restrictions

  7. Transactions Used

  8. Sweeps and LOC Better, but still a small shortfall prior to retirement Consider – Freeze Sandra’s Roth IRA; Created a Traditional IRA instead; Made deductible contributions; Use Traditional IRA as last available asset for cash flow (check to be sure it is after 59 ½)

  9. IRA Deduction Preserves Other Assets Freeze Sandra’s Roth IRA; Created a Traditional IRA instead; Made deductible contributions; Use Traditional IRA as last available asset for cash flow (check to be sure it is after 59 ½)

  10. PlanLab – A Calculator for Evaluating Financial Concepts • Fee Based Financial Concepts • Concepts for the Flat World • The World is not flat – its Round • PlanLab can show how “Flat Concepts” work in the “Real Round” world!

  11. Howard and Helen HeapAges 45 and 45

  12. Options • Current Situation • Monthly Mortgage of $1,231.43 for 30 years • H.E.A.P. • Line of Credit for $25,000 • Use $10,000 now and every 6 months to pay mortgage in “advance” • Repay LOC at $1,666.67 monthly • Increase Monthly Payments • Pay $1,666.67 instead of $1,231.43 monthly • Vanishing Mortgage • Buy UL to pay off mortgage at death • Use CSV to pay off mortgage early • Invest Instead • Use $1,666/67 - $1,231.43 or $435.24 for investing

  13. Comparing the Options * Immediately upon death

  14. Class Dismissed

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