Intro music. Fades.

Narrator: Welcome back to PreRetiree Lane. I’ve been watching as my former neighbors try to come to grips with the need to budget and plan for their lives and eventual retirements. And things seem to be moving along for Ron and Ava Maynhard and Ava’s childhood friend, their new financial planner, Austin Bryant.

Austin: I think we’ve put together a nice plan for you.

Ava: Tell us.

Austin: First, we’ll get you into some good term life insurance. We want to use the money you’ve been putting into whole life and build up an emergency fund, about 3 months of your income.

Ron: That much?

Austin: Yeah, that’s prudent. We don’t want you to have to take on any large credit card debt for an unexpected bill.

Ava: You can’t deduct that interest from your taxes, can you?

Austin: No. I’m also recommending that we take a look at your mortgage payment and interest rate to see if we can lower your monthly payments by refinancing. Any savings there, plus other savings I’ve identified in your budget, and I’m recommending that you both open a Roth IRA.

Ron: Why a Roth?

Austin: Well, for one thing, your interest accrues tax free. The money that goes in is after-tax dollars, but when you take it out during retirement, you won’t be taxed.

Ava: What about education funds?

Austin: With a Roth IRA, you can withdraw money down the road for your children’s education expenses without penalty.

Ron: Can we get the growth we need through a Roth IRA?

Austin: I recommend that through the IRA that we diversify how you invest contributions.

Ava: How do we do that?

Austin: Spread your contributions among stock mutual funds, some that provide a little more growth in exchange for a little more risk, and other funds that carry less risk to produce steady but potentially lower returns.

Narrator: It’s called asset allocation and diversification. I was big on that when I invested for my retirement. But you have to remember to match your goals to your allocations so that you match your risk with your savings needs. It’s a good idea, Ron.

Now they’re going to keep talking, but I feel pretty good about these kids. They seem to understand what they’re doing and how important it is.

Door bell rings.

Ava: I’ll get it.

Sound of door opening.

Ava: Mercedes.

Narrator: It’s Mercedes alright. She looks a little unhappy…like she needs a friend.

Mercedes: I don’t mean to bother you, Ava…I see you have a guest.

Ava: It’s my friend Austin Bryant. The financial planner. He’s helping us set up a savings plan for long-term goals.

Mercedes: That’s…wonderful.

Mercedes bursts into tears.

Ava: Honey, what’s wrong, why are you crying.

Austin: Um…look, I was going to stop at your neighbors’ anyway, why don’t I go over there now?

Ron: Maybe that would be a good idea. Sometimes Ava’s the only one who can calm Mercedes down.

Narrator: It’s that stuffy boyfriend of hers, I bet. She came to him for help and he’s cold as ice. Plus she’s got those creepy in-laws she’s in business with. No wonder the poor girl is crying. I’ll leave them in peace. Let Ava help. Think I’ll follow Austin over to Stu and Marta’s. They’ve got some issues when it comes to money, too.

Sound of door opening.

Marta: Hello, Mr. Bryant. Thanks for coming over. Sit down over here. I’m Marta. This is my husband, Stu.

Austin: You’re welcome. Call me Austin. Please tell me a little more about what your situation is.

Stu: It’s really not that complicated, Austin. We’re nearing retirement age and honestly, we’re not prepared for it. We don’t have the savings and we don’t have a plan on how to get it.

Marta: I plan to keep working. So it’s not really something I’m too worried about, but I want to support Stu—

Stu: That’s not how you felt the other day, then everything was my fault—

Narrator: Well Stu, you did take out a loan on your 401(k) retirement account and ‘neglect’ to mention it.

Austin: Frankly, Marta, even if you plan on continuing to work indefinitely, establishing a strong budget based on your goals while building up a retirement nest egg will be very beneficial. But first, I think we need to look at your current expenses and see where we can find some money to save.

Stu: We’re close to living paycheck to paycheck—we spend money on our kids’ education, we like new cars and vacations.

Marta: I expect a promotion soon that should include a healthy raise. That will help.

Austin: Sure, yes, but are there any places you think you could cut back, without too much pain?

Marta: Nothing really comes to mind.

Stu: What about some of what we give to the church?

Marta: No. That does so much good. (getting angry) Why don’t you go without buying those precious new golf clubs every year?  Or skip your annual golf outing to South Carolina for once?

Stu: (sarcastically) No…that does too much good. What about your parents?

Marta: What about them?

Stu: We’re paying for that deluxe care facility. Do they really need all of that? The place is like a resort.

Marta: Stuart Hunter, I can’t believe you’re even suggesting we spend money on ourselves instead of caring for mom and dad. That’s their home you’re talking about.

Stu: Hey, desperate times, Marta. Anyway, they probably won’t even care if we put them in a less expensive facility.

Marta: What kind of man are you? I can’t believe what I’m hearing! I feel like I don’t even know you anymore, Stu...

Narrator: There she goes, up and out. I think Stu stepped into it now. I’m really worried this is becoming about more than just money.

Published November 1, 2007

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