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Case Study 1


Financial Planning

The Challenge

Suppose a widow in her fifties was faced with the recent passing of her husband. He had been the primary bread winner while she was self-employed part time. With two children out of college and one still in high school, concerns were having enough assets to continue to support herself, maintain their home and contribute to the youngest child’s college education. She needed guidance on her investments and how to protect the proceeds from the life insurance policy, his retirement accounts and a partnership payout from his employer. In addition to providing for current needs, she was concerned about being able to retire comfortably and needed to understand her options for collecting social security.

The Approach

To help address her concerns, Matson Financial Advisors, Inc., would gather financial data to prepare a formal, written financial plan that would analyze the current situation and how to solve for retirement and education savings goals. We would help assess all sources of income, all available assets, spending needs today and in retirement as well as potential college costs based on private and public universities. The plan would provide her a number of difference scenarios to  review the impact of different levels of college spending, the timing and ability of her retirement, and options for the timing of social security benefits.

The Recommendations

  • Summary and recommendations of next steps to help meet her goals would be provided to the client.
  • Establish a retirement account to consolidate husband’s retirement accounts into her name.
  • Establish a non-retirement account for proceeds from insurance policy and partnership payout.
  • Invest assets in an allocation appropriate for her needs and risk tolerance.
  • Recommend an appropriate level of college funding to consider for her youngest child.
  • Discuss timing for eventual sale of residence.

*Some IRAs have contribution limitations and tax consequences for early withdrawals. Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59 1/2, may be subject to an additional 10% IRS tax penalty. For complete details, consult your tax advisor or attorney.