Meet Martin & Gina
AGES
Martin, 43, Gina, 41
LIFE STAGE
Younger Business Owners
Their Story
Martin and Gina are busy professionals with a young family. Martin is a professor of architecture at the local university and Gina owns a design business. They have three kids ranging in age from two to seven years old. Gina’s business started as a “side hustle,” but when she began to net more than their combined salaries, she left her corporate job. Gina’s business does not yet have any employees, but Martin is considering leaving his position to support her business.
The Challenge
Martin and Gina sought out a financial planner in Redondo Beach to help them make decisions with their respective careers, stay on track for their kids’ future expenses (including college), and plan for their own retirement “someday.” Most of all, they want to enjoy the years while their kids are growing up. They want the flexibility to attend their kids’ events and travel together as a family.
The Plan
STEP 1
Gina and Martin met with a financial planner in Redondo Beach to start their planning. Martin will stay in his position for at least a few more years to ensure the family has a stable income while Gina continues growing her business. He will stop teaching during the summer session and will scale back his research duties so that he can take over some of the administrative tasks for Gina’s business.
STEP 2
Gina’s old SEP-IRA will be rolled over into a new Solo 401(k) plan. This new plan will allow her to max out her contributions and also make after-tax contributions, which can be used for a “mega-backdoor Roth contribution” (a tax planning strategy she and Martin weren’t familiar with before). As a part-time employee, Martin will join the Solo 401(k) plan and will also make mega-backdoor Roth contributions.
STEP 3
Their wills will be updated to name Martin’s sister and her husband as the guardians of the kids. At the same time, healthcare directives and power of attorney documents will also be updated.
With the help of Navigoe, they will create a living trust, wills, and power of attorney documents. They meant to do this since the kids were born but never found the time. Navigoe’s fast, in-house process had them with completed documents in a week, which was a huge relief.
STEP 4
They didn’t want money set aside for the kids to be exclusively earmarked for college, so we passed on 529 plans. Instead, they will make larger contributions to their joint trust brokerage account with the understanding that this money might be used for future education or other expenses for their kids.
STEP 5
A large term life policy and disability insurance policy will be taken out on Gina since she is the primary income earner and the business cannot continue without her.
STEP 6
Most importantly, Navigoe’s financial planners in Redondo Beach helped put a cash flow plan into place so that Martin and Gina can feel confident they are saving enough for the future while budgeting sufficient amounts for travel and other discretionary expenses along the way.
The Result
Martin and Gina have newfound confidence in their financial situation. They did not realize how stressed they were about completing their estate planning until it was done. The guilt they once experienced when they booked expensive trips is gone now that it is part of their intentional spending plan.
With Martin involved in the business, along with a financial advisor on call, Gina is freed up to focus on her design work rather than the business's administrative tasks. And they don’t have the anxiety or pressure of Martin quitting his job completely.
Their kids are involved in everything from soccer to karate to dance. Martin and Gina are able to attend nearly every game and recital. Six years from now, when the kids are a bit older, they will take a summer off for their dream trip to Europe where their passions for architecture and fashion will be shared with their kids.
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