Pryanka Lee, 54, has lots of concerns about her finances such as "should I chance taking $5,000 and investing it aggressively?" and "How well am I able to retire at age 60 or 62?" Lee is also very concerned about unemployment. Her income last year was $83,866, but she expects to earn only $27,000 this year. Earlier this year, she was downsized and took early retirement in order to keep his medical benefits. He was also laid off previously in the late 1990s. Right now, she is living "paycheck to paycheck."
Pryanka Lee is currently working in a series of temporary jobs with variable hours, so her monthly income is unpredictable. Her financial goal for the near term is to save as much as possible for retirement and accumulate liquid assets in case she becomes unemployed again. Within ten years, she wants to purchase a new $25,000 vehicle and take vacations costing $3,000 to $5,000 per year. After that, retirement is on the horizon. Lee would like to live off his investments and Social Security.
Fortunately, Lee has accumulated significant assets to help achieve her goals. His net worth is $700,200. This includes $406,172 in a former employer's 401(k), $102, 413 in seven different mutual funds, $5,750 in savings and checking accounts, and $25,865 in 14 certificates of deposit. Approximately 90% of Lee's portfolio is invested in growth or growth and income mutual funds, including five different Vanguard funds and five different Fidelity funds. Lee's $110,000 house is owned free and clear, along with $30,000 of property and a $20,000 car, and she has no other debts.
Lee's monthly expenses were not listed. She did note, however, that he put 15% of her salary, when she was working, into a 401(k). Currently, she invests all surplus funds in two Vanguard index funds. Lee's financial data is meticulously kept in a series of computer-generated tables. She is single, lives alone, and has no financial dependents.
As for insurance, Lee has $14,000 of life insurance. Her former employer pays all but $24 a month toward the cost of major medical health coverage and she has $500,000 of auto and homeowner's liability. She has never had disability coverage and wonders if she should buy a long-term care insurance policy since he will have nobody to care for him when he gets older. Lee has a will that was last reviewed in 1994.
Discuss the strengths and weaknesses of Lee's financial situation.
Correct any misinformation that Lee has about financial conditions.
Comments about Lee's cash flow.
Comments about emotional issues related to Lee's financial condition.