Personal Finance Case Hope Forma

Hope Forma, 45, is a single parent of two teenagers. She is currently attending school part-time to
earn a master's degree. She expects to finish in four years, which is exactly when her alimony will
end. She earns $72,000 a year and receives $192,000 per year for next two years and $128,880 for
the two years after that. She expects her income to at least triple when her schooling is completed.

Forma's short-term goals are to complete her degree and sell her $2.85 million home and move into a
smaller dwelling that is more affordable. She also wants to send her children to university and save for
her future. "I know I need to downsize my lifestyle to be able to save for retirement," she notes.

The house has a $1.97million mortgage, which would leave $880,000 (minus selling costs) of profit
when it is sold. Forma would then like to buy a condo for less than $1.5 million so that she is no
longer responsible for excessive maintenance and yard work.

Forma has $480,000 of cash assets, $433,524 of invested assets (including a $402,000 URF at Unit
Trust), her home, and a vehicle and personal property worth $198,000, for total assets of $3,528,000.
Her only debt is the mortgage, leaving her with a net worth of $1,558,000. Her other cash assets are
in a statement saving account earning 0.25% interest.

Forma noted that she has a will but it needs to be updated because of the divorce. She has $600,000
of whole life insurance and an employer-paid health plan that covers her and the children. She has no
disability or critical illness insurance.

Forma estimates that she spends $30,000 monthly ($360,000 a year), which is $8,000 more than the
$22,000 she receives monthly ($264,000 a year). She's been using money received in her divorce
settlement to make up the difference. As she's seen her savings dwindle, she has become more
concerned about her finances and knows she needs to "do something" to get things in balance.

Forma would like to retire sometime between ages 59 to 64. She anticipates receiving National
Insurance, plus an employer pension, plus her current URF and whatever else she saves in the future.
Upon retirement, she'd like to travel and be financially independent of her children in her old age.