ó Every age group has its own financial challenges,
but money pressures seem especially plentiful for young,
children, though it has numerous benefits, is also
expensive. Meanwhile, young parents are often saddled
with mortgages and student loans. Many are trying to
save for their childrenís college ó and for their
more, all of this hits before their peak earning years
in their 40s and 50s.
Gunn and Peter Ehlert, of suburban Seattle, have most of
those "life cycle" financial challenges on
their plates, plus a few more.
from a financial planner to young parents: Save 10
are raising two sons: Mason, 3, and James, 6 months.
and Ehlert have steady tech careers, but they have also
contended with a layoff, contract work with limited
benefits, and a new home that came with surprises, such
as costly repairs and a squirrel living in the garage
also have an annual child-care bill of about $48,400.
feels like the last four years or so itís been
absolutely crazy," said Gunn, 36. "Weíve
been in survival mode."
prompted Gunn to ask for some free financial advice. The
Puget Sound Chapter of the Financial Planning
Association matched the couple with Richard Marshall, a
certified financial planner with a Seattle-area office
of Vestory, an investment-advisory firm.
pored over the coupleís finances and delivered a
doing pretty well," he said. "Theyíve been
able to save a fair amount for their age and they seem
to be dedicated to the concept of saving."
he added: "Itís just that the day care blows them
out of the water a little bit."
Gunn and Ehlert chose careers in the well-compensated
is a technical writer working for Microsoft through a
staffing agency. Ehlert, 42, is a program manager at the
downtown Seattle office of The Walt Disney Co. He got
the job several months after he was caught in a layoff
at Microsoft in 2014.
they earn between $192,000 and $197,000 a year before
Gunn is eligible for paid time off through her employer,
the staffing agency, she hadnít worked enough hours to
qualify before taking leave in April for the birth of
James. That reduced the familyís income for more than
couple bought their home in 2013, and the property is
currently worth about $685,000. But they also owe
$308,000 on the mortgage, and they had to spend about
$50,000 in unexpected repairs on the house, which was
built in 1973. They have no other debts.
Gunn and Ehlert have about $400,000 in various
investment accounts, most of which are for retirement
and college savings for their sons. They also have about
$146,000 in checking and savings accounts.
far, the couple are on track for their retirement
savings, Marshall determined. Two trouble spots remain,
first is the cost of day care, which, at more than
$4,000 a month, exceeds the coupleís monthly mortgage
weekdays, Mason and James spend a little more than 10
hours daily in a day-care center. Day care for James is
an additional $460 a month because he is an infant.
and Ehlert agonized over their decision to put their
sons in day care so that both of them could work. They
miss their children during weekdays. But they like their
day-care center, and they can better save for their sonsí
college educations and their own retirements if both of
them are working.
least their day-care expense comes with a sunset clause:
It goes away when Mason and James are old enough to go
to school. Until then, Marshall advised the couple to
reduce their savings a little to cover the extreme
second trouble spot concerned college. Marshallís
projections showed that Gunn and Ehlert arenít saving
enough to fully cover the cost of their sonsí college
four-year degree at a public university for Mason could
cost about $176,800 if he enrolls, as expected, in 2029,
Marshall estimated. For the younger James, the price tag
could be about $220,300 if he enrolls five years later,
in 2034. That adds up to about $397,100 for both boys.
based his sobering estimates on an annual average
increase of 4.5 percent in the cost of a college
projections showed that, at their current savings rate,
Gunn and Ehlert would run out of college savings during
their sonsí senior years. It was news to them.
they have time to adjust, and the scheduled end of day
care is part of the solution.
their day-care expenses drop, Gunn and Ehlert should
pour the freed-up money into their sonsí 529
college-savings plans, Marshall advised. Instead of
saving $315 a month for each boy, the couple should
begin saving $515 a month for Mason and $565 a month for
also urged Gunn and Ehlert to max out their
contributions to their individual retirement accounts
and their 401(k) programs when their day-care expense
goes away. Whatever money is left over should go into
their investment accounts.
and Ehlert were grateful to Marshall for reminding them
that their enormous child-care bills are temporary. The
couple were so consumed by day-to-day challenges that
they began to lose their long-term perspectives.
they say, their perspective is back and they see a range
of options for the future.
been a relief," Gunn said.