planners like to see smooth waters for clients in their
50s: saving lots in the best earning years of oneís
career, avoiding new debt, paying off the mortgage by
retirement or soon thereafter.
Christopher and Robyn Reagan of South Pasadena, Calif.,
have weathered a storm of big events.
had just gotten to a point where we could afford to live
in this house," said Christopher Reagan about the
coupleís 73-year-old, three-bedroom, two-bathroom home
in South Pasadena, purchased in 1998.
my daughter got pregnant, my son got into college and my
wife lost her job," he said.
financial planner Delia Fernandez, founder of Fernandez
Financial Advisory in Los Alamitos, Calif., the Reagans
are an example of the increasingly common problem of
older parents juggling college costs and retirement
never want my parent clients to sacrifice their own
retirement for their kidsí education," Fernandez
said, "and if they are not careful, they are going
to do that."
Reagans, both 52, also show how quickly a family can go
from "white-knuckling, middle-class status,"
as Robyn Reagan put it, to something less.
are the classic example of a family that has tried to do
as much as they can for their children and now find
themselves up against it," Fernandez said.
a few years ago, the Reagans were headed in a different
Reagans were high school sweethearts who started dating
in 1979, their senior year. They were married in 1987
and there is still a telltale gleam when they look into
each otherís eyes.
attended the University of California-San Diego and Nova
Southeastern University, and she went to Pitzer College
and the University of California-Los Angeles.
Reagan was the primary wage earner, bringing in about
$72,500 working for a nonprofit.
the first nine years as a parent, Christopher Reagan was
a stay-at-home dad.
then became a teacher, he said, because "it was the
best way to have a schedule that meshed perfectly with
my childrenís." Now he teaches at the same middle
school in Pasadena he attended in his youth.
financial complications hit suddenly and multiplied
Reagansí daughter, in her 20s, gave birth to a son in
March 2012. Because neither the daughter nor her partner
had jobs, the Reagans opened their home and supported a
family of five for about a year.
Reagansí son began attending Boston University. He got
$26,800 in scholarship money to help defray the cost of
tuition, room and board, which totaled slightly more
Reagans had refinanced an existing home equity loan with
the ultimate goal of remodeling their home enough to
raise its value. Had that happened, they would have had
the option to sell or refinance their mortgage. Instead,
some of that money went to pay for their sonís college
Robyn Reagan lost her job in June after the federal
funding for her position ran out.
a year and a half," Christopher Reagan said,
"what had been smooth sailing had been tossed
Reagan, meanwhile, is finding out how tough it is to
find new work past age 50.
have applied for 57 different positions," she said
recently. "Iím also looking for part-time work
because nothing else is coming up."
couple are living on Christopher Reaganís salary of
$52,500 a year and finding that it isnít nearly
realize we need to plan for our retirement," Robyn
Reagan said, "but my 403(b) accounts are our only
from $214,000 in retirement accounts, the Reagans have
$260,000 in assets. Most of that is in the $235,000
value of their home.
liabilities are steep, at $277,246. The $135,000 they
owe on their home equity line of credit is more than
what they owe on their mortgage ($85,500).
is more than $31,000 outstanding in loans for their sonís
addition, the Reagans have $21,300 in credit card debt,
and $9,300 is owed in lease payments on their Prius V,
at the rate of $423.35 a month.
Reagan saw himself retiring from teaching at 55. He has
a dry, self-deprecating wit that keeps people laughing,
seemingly with little effort on his part.
took this career because of my children, and that just
isnít necessary anymore," he said. "Iíd
like to start a second career that will earn more money,
because what I earn now isnít enough."
would love to make a living as a writer, putting that
wit and his experiences as a teacher to good use.
is an old Irish name, and in some of their imaginings
the couple have dreamed of retiring in Ireland and
said the couple need to make immediate changes.
they need to sharply reduce spending to adjust to the
current reality of a household earning $52,500.
asking for them to budget their spending before they
spend it," Fernandez said, "and to have a
plan. And they need to work on that plan together every
the thoughtful father, Christopher Reagan had leased a
Prius V, thinking it would be needed to help transport
his temporarily larger household. The lease is far too
expensive, particularly "when you have lost more
than half your income," Fernandez said.
Reagans had been paying more than what they owed on
their mortgage every month, usually a good thing. But
now, Fernandez said, the couple need to stop doing that
as they tighten their belt and concentrate on debt with
higher interest rates.
13.48 percent interest rate on the coupleís credit
card, Fernandez said, "is costing them big every
wants them to negotiate a lower payment and interest
rate. The National Foundation for Credit Counseling is a
logical step, she said.
foundation has the inside track with creditors,"
Fernandez said, "and can often get interest rates
down to help pay off debt faster. They also can help
renegotiate home loans."
Reaganís father has generously offered to help with
the grandsonís college debt. Fernandez said the couple
Dad to pay for spring college costs," Fernandez
said. "Thatís coming up in December."
option: Use the fatherís help to get out of that
expensive Prius lease.
Reagan "needs to go back to the dealership and see
what it would take to get out of this lease,"
of other bills also makes sense, Fernandez added, saying
that "any reduction in ongoing bills is a great
also wants Robyn Reagan to consolidate her retirement
accounts into a plan with much lower fees than she now
currently paying 0.96 percent on her mutual funds inside
those accounts; she can get that down to 0.2 percent or
less," Fernandez said.
Reagan also will need to land a job paying at least
$73,000 a year to maintain the familyís current
lifestyle, Fernandez said.
Fernandez said the most important adjustment the couple
can make will involve Christopher Reaganís making a
decision he doesnít want: staying in his job as a
teacher, if possible, until he is 67.
is oftentimes the person who goes into teaching or works
for the government, maybe in a lower-paying job than the
other spouse, who winds up stabilizing the coupleís
retirement. That could be the situation here," she
Christopher Reagan works another 14 years, giving him 23
years of total time as a teacher, he would have a
pension of $27,000 a year. That might not sound like
much, Fernandez said, but he would have to amass
retirement savings of $650,000 to $700,000 over the same
time span to achieve the same level of financial
pension is a huge deal," Fernandez said. "They
will definitely be in better shape if he stays
would be difficult, Christopher Reagan said.
always had to sacrifice to become a teacher," he
said. "We are horrifically underpaid and
Fernandez said heís looking at it the wrong way.
are underpaid," she said, "but when you
retire, you are the guys on top because of those
most crucial, itís time for the Reagans to put
this point it has to be all about them," Fernandez
said. "You know how they tell you in the preflight
talk to put on your oxygen mask first? They didnít do
that. They need to do that now."
his part, the Reagansí son has offered to come home
from college and take a year off or attend a community
Reagans said they know that might be necessary. Their
visit to a financial planner was needed.
there were some uncomfortable realities for us to face
and deal with," Robyn Reagan said, "it was