[Noozhawk’s note: Second in a series. Click here for the first part.]

Last week we introduced Logan and Sarah Green, a couple who came to Mission Wealth Management seeking a financial makeover. We discussed their pressing priorities (retire or remodel?), money attitudes (live for today or save for tomorrow?), and their desire to develop a realistic time line for their goals.

Today we will discuss the Greens’ financial situation, including their assets, liabilities and income.


Logan has $1.6 million in retirement assets. He contributes the annual maximum but feels he is neglecting his investments as he rarely reviews or makes changes to his mutual funds. Since he is so close to retirement, he is unsure how much he should allocate to stocks and bonds, and he wants to know how much monthly income the accounts will generate in retirement.

Sarah has a SEP-IRA with $200,000 and a brokerage account that she inherited from her grandparents worth $285,000. Her brokerage account contains a low basis stock, which she hasn’t sold for fear of paying capital gains taxes. Sarah is wondering if they should use any of these funds for their home remodel.

In addition, they own and rent out a condo worth $450,000 in Los Angeles. After their expenses, including mortgage ($250,000), HOA dues, insurance, etc., the cash flow is break-even. They are weary of the headaches of being long-distance landlords, and are wondering if they should consider other lower-maintenance options for this property.

Other assets include their home (estimated value $1.4 million), $65,000 in Series EE bonds and $30,000 in the bank. Logan leases an Audi, and Sarah bought her Prius outright several years ago. They would like to know whether their bonds are still paying interest, and how much cash they should have in the bank to cover emergencies or unexpected expenses.


The Greens have an $800,000 mortgage on their home. Even though their loan-to-value ratio is good (57 percent), they feel that this is a large amount of debt with which to enter retirement. They are wondering if they should pay down some of the mortgage before Logan retires.

They have a credit card balance of $8,000, which they usually try to pay off every 60 to 90 days.

Asset and Liability Summary

The Greens have total assets of $4.03 million, total liabilities of $1,058,000 and therefore a total net worth of $2,972,000. Their “working assets” (exclusive of home and bank account) equal $2.61 million and represent about 65 percent of their total assets. They are wondering how this compares with other people in Santa Barbara, where many people feel “house rich” but “cash poor.”

Income and Expenses

Sarah earns about $45,000 a year, and Logan’s salary is $160,000 a year, plus he has royalties and consulting income of another $30,000 a year, giving them a combined household income of $235,000 a year.

Like most people, Logan and Sarah have no idea how much money they spend. They know that most of what comes in goes out, but they would like to have a better understanding of their fixed and discretionary expenses so they can decide whether they should cut back on some things today so they can have more income in retirement. They would like to know how much they can safely spend, both now and in retirement, and not face the risk of running out of money.


They have exceptional health and disability insurance through Logan’s employer, but they are unsure about how much life insurance they have. They are especially nervous about the fact that they don’t have long-term care insurance, as their priority is not to be a burden to their children if care is ever needed. They are wondering if they should consider buying long-term care insurance, and if so, the best time to buy it.


Logan and Sarah feel especially negligent in this area. Every year they scramble to get their taxes done, and they admit that they haven’t been as proactive in their tax planning as they should be. They would like to know if there is anything they should do to minimize taxes both now and in the future.

Estate Planning

Upon review of their estate planning documents, we determined that their wills are outdated, and that they don’t have durable powers of attorney. They would like to update their trust but want to have a better understanding of their finances first.

Charitable Giving

Logan and Sarah have recently become involved with the nonprofit Land Trust for Santa Barbara County. They enjoy working as volunteers together, and would like to devise a giving plan since this group has become very dear to them. They want to know how much they can afford to donate each year.

Now that we have laid out the Greens’ financial resources, we can begin to develop their financial plan. Stay tuned for our next column, where we begin to formulate projections and start addressing their pressing questions.

Click here for a related article.

— Dannell Stuart CFP, ChFC, CLU, CASL is business development director at Mission Wealth Management. She can be contacted at dstuart@missionwealth.com. Click here for more information.