AN INSURANCE PLANNING MINI-CASE / TUTORIALOUTLET DOT COM AN INSURANCE PLANNING MINI-CASE / TUTORIALOUTLET D | Page 2

earnings vary from month to month, she estimates that she will earn
$65,000 this year. She wants to retire at
the same time as John.
They also assume that their salaries will increase, on average, by
3.5% per year over their working lives.
This year they anticipate earning $600 in interest and non-qualified
mutual fund dividend distributions,
which will be reinvested. Expense Issues
Table VI.5 provides a summary of the Butterfields’ fixed (non-
discretionary) and variable (discretionary)
expenses. Home mortgage. They are eight years into a 30-year 7.5%
mortgage that had an original balance of
$228,850, with a current outstanding balance of $206,602.
Home equity loan. The loan balance was used to pay off credit cards
and purchase a vehicle for Troy to
use at college. Since the loan was first taken, they have accumulated
additional credit card debt. The
monthly payment is approximately 2% of the outstanding balance.
The credit line expires and will be due
and payable in seven years. They have paid $3,000 in interest over the
past year.
Auto Payments.
Auto 1: Balance is $8,500 with 2.5 years remaining.
Auto 2: Balance is $25,000 with 57 months remaining. Tax Issues
After reviewing their pay stubs, John and Haley calculated that their
total annual federal withholdings
and/or estimated tax payments totaled $20,250. Their state
withholdings amounted to $8,000. Social
Security withheld was $10,985. The Butterfields file taxes as “married
filing jointly” and have $30,241 in
itemized deductions for the year.
The Butterfields are eligible for a $5,000 state income tax deduction,
and five $1,000-personal exemptions
for John, Haley, and the children. The marginal tax bracket for their
state is 5.75%. Specific Client Goals
Under any circumstance, they want to provide 50% of the cost of
Holly’s and Naomi’s college