— After deciding to get married in July, Suzie Kwon
and Kevin Driscoll started thinking about combining
their money, and their talk soon turned to shared dreams
when the Seattle couple’s financial anxiety began to
31, and Driscoll, 30, want to save up for a house, pay
off Kwon’s student debt and sock away money for
retirement. They also want to plan for children and have
enough money left over to travel.
began to look a little overwhelming.
was a lot of little moving pieces all at once that we
have to manage now," Kwon said. "We wanted to
get an expert’s opinion."
regular readers of The Seattle Times’ Money Makeover
project, Kwon and Driscoll decided to apply for a free
makeover. The Financial Planning Association of Puget
Sound worked with The Times and put out a call for a
planner who would advise the couple at no charge. Trish
Howe, a financial planner with an office in Seattle’s
Fremont neighborhood, volunteered.
people often contend with a blizzard of financial
decisions as they form households and make plans for the
future. All of this occurs when their earning power is
lower because they are early in their careers.
kind of comes down the chute all at once," Howe
said of the financial decisions facing young adults.
Kwon and Driscoll have chosen promising careers.
December Kwon earned a master’s degree in occupational
therapy from the University of Washington. She’s
currently working as an on-call occupational therapist
at a Seattle hospital. Her pay before taxes and
withholding varies, but it averages about $72,000 a
is an analyst for the industrial-engineering department
of a Puget Sound aerospace company. His income before
taxes and withholding is about $90,000 a year.
combined income puts them at nearly twice King County’s
projected 2016 median household income of $84,897,
according to data the state Office of Financial
Management released in March. The median household
income in King County has increased 24 percent in five
couple’s income has not shielded them from financial
owes about $82,000 on 13 student loans with interest
rates ranging from 2.6 to 6.8 percent. Her studies
launched her career, but Kwon also sees the debt as an
obstacle to other goals, such as homeownership.
the thought of buying a house is another source of
anxiety in Seattle because of soaring home values. The
couple want to buy a house in the city, yet double-digit
increases in prices often make it seem like a receding
dream. The median price for a single-family house in
Seattle is now $729,000.
20 percent down payment for a home at the current median
price would be $146,000.
very discouraging," Driscoll said.
the other hand, Driscoll is off to a good start on his
retirement savings. He has about $119,000 in his 401(k)
and another $2,500 in a Roth individual retirement
has a securities portfolio with about $38,800 in stock,
and the couple keep about $9,000 in a reserve account.
also has a workplace 401(k) account, but it contains
less than $200 because she just started her career.
identified Kwon’s student debt as the couple’s most
pressing issue. Retirement is 40 years away, Howe
reasoned, and homeownership will be part of their
retirement nest egg.
then surprised the couple when she looked at how much
Driscoll was contributing to his 401(k) and said,
"He’s saving too much."
was socking away $18,000 a year into his retirement
account, the maximum allowed for his age. Howe advised
him to reduce his annual contribution to 8 percent of
his salary, or about $8,800 a year, enough to take full
advantage of his employer’s matching contribution.
freed up a little over $9,000 a year.
and Driscoll are frugal enough to have a monthly surplus
from their paychecks. That surplus, combined with the
money that used to go to Driscoll’s 401(k), means they
can spend $2,000 a month on paying down the debt and
save another $2,000 a month for a house.
urged the couple to systematically pay off all 13
student loans, starting with the most expensive debt, in
this case two student loans with an interest rate of 6.8
those loans are paid off in about six months, the couple
will tackle the next most expensive student loan, and so
on. At that rate, all of the interest-bearing student
loans should be gone by the end of 2020.
the same time, the couple can accumulate a down payment
on a home by socking away $2,000 a month, or $24,000 a
addition, Howe suggested that both Kwon and Driscoll
augment their down-payment fund by opening Roth IRA
accounts and each contributing $5,500 a year.
savers have already paid taxes on money deposited in
Roth IRAs, the Internal Revenue Service is more lenient
about withdrawals. Roth IRA contributions — though not
earnings — can be withdrawn at any time without taxes
or penalties. That makes a Roth IRA a promising vehicle
for saving a down payment, Howe said.
couple’s combined annual savings for a down payment
— $11,000 in their Roth IRAs plus $24,000 — adds up
to $35,000 a year. If they stick to the plan, Kwon and
Driscoll should have more than $100,000 for a down
payment in three years.
they’re in a house, they can increase their retirement
accomplishing two major goals within five years,"
Howe said. "Retirement is going to be an ongoing
and Driscoll have already started acting on Howe’s
recommendations. Driscoll has reduced his 401(k)
contributions and opened a Roth IRA. Kwon plans to open
her Roth IRA soon.
Howe’s plan, Driscoll said, "We’re pretty much
going to follow it to a T."