Managing the family finances: 'Spying was easier'

@Money January 30, 2012: 12:46 PM ET
savings plan best new money moves

Tom and Laura DiSilverio, 53 and 49, Colorado Springs, Colo. Government intelligence analyst, mystery novelist

(MONEY Magazine) -- We spoke to five families who face challenges that could keep them from meeting their financial goals. With a few tweaks to their game plan, they can get back on course. Here, the DiSilverios' story -- and the recommended financial fixes.

Laura DiSilverio knows how to get to the bottom of things. She spent 20 years as an Air Force intelligence officer before retiring in 2004 to write mystery novels.

Today Laura is flummoxed by the job of managing 11 investment accounts. She and her husband, Tom, are unsure whether they're on track for him to retire in 15 years and help pay for college for their daughters, Lily, 14, and Ellen, 12. As Laura puts it, "Spying was easier."

Fortunately Laura is assured of having $36,000 a year in an Air Force pension. (Tom will qualify for $18,000 at age 60 for being a reservist.) However, they estimate needing about twice that once they retire.

Best New Money Moves

Their retirement accounts are 75% in stocks, with the rest evenly divided between bonds and cash. The DiSilverios' 529 college savings plans, 100% in equities, have been on a roller-coaster ride for the past few years, ending up about even. "We might as well have hidden the money in a mattress," Laura says.

Their finances

  • Income: $163,000
  • Assets: $428,500 in retirement savings, $38,000 college savings, $34,000 cash, $130,000 in home equity
  • Goals: Retire at 68 (Tom); fund college for kids

The problem

The DiSilverios have too many accounts, says Clarissa Hobson, a financial planner in Colorado Springs, and their portfolio is not diversified enough.

Also, since their oldest daughter is just four years away from college, the all-stock 529 plan is far too risky.

The advice

Consolidate. Tom and Laura should roll the seven old 401(k)s and IRAs into two IRAs and move all accounts to a single brokerage. "That would be less overwhelming," says Laura.

Get a better 529. The DiSilverios should switch from their high-fee 529 to the Colorado Direct Portfolio college savings plan, which offers low-cost Vanguard funds. They should select the age-based investment options, which automatically become more conservative as the girls approach college.

Re-allocate. The DiSilverios should keep more in stocks than the average fiftysomethings, says Colorado Springs financial planner Susan Strasbaugh, since they can rely on pensions.

Send your financial makeover questions to The Help Desk

Still, 63% in large U.S. stocks is too risky. Strasbaugh suggests cutting the large U.S. stock holdings to 31% of their portfolio and adding some international and REIT funds.

Refinance. Tom and Laura will add only $50 to their monthly payment if they refinance to a 15-year loan, allowing them to retire debt-free.

MONEY magazine is researching an article on ways to reduce the financial pain of college. We're looking for families that can talk about new and creative ways that they're raising cash for college and cutting costs while they're there. Sound like you? Tell us your story and you might even get your picture in the magazine! E-mail Beth_Braverman@moneymail.com  To top of page

Help! We need a makeover
Young dad, $15,000 in credit card debt
Readers' Choice

Carlos Rodriguez is trying to rid himself of $15,000 in credit card debt, while paying his mortgage and saving for his son's college education.

$400,000 portfolio, too many holdings
Readers' Choice

Susan Carson and Laura DeLallo make $225,000 and have half a million in retirement savings, but their sprawling portfolios is proving hard to manage.

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
  • -->

    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.