CFP Practice Test 3

Owen Sato (38) is a software engineer earning a $140,000 base salary. Priya Sato (37) is a physical therapist employed by a hospital system, earning $90,000. They have been married 11 years, file jointly, and live in a common-law state with their children, Rowan (8) and Tessa (5). Both are in good health.

Goals, in the order they gave them: (1) build a proper emergency reserve; (2) pay for four years at a public in-state university for each child; (3) protect the family if either of them dies or becomes disabled; (4) both retire at 62; (5) remodel the kitchen for about $40,000 within two years.

Observations from the first meetings: Owen describes himself as "a saver" and wants every spare dollar in his 401(k); he says Priya "spends whatever she earns." Priya says Owen's frugality means they "never enjoy anything," and the remodel is her top personal priority. Both describe their risk tolerance as moderately aggressive with a long time horizon.

Owen's take-home pay is about $7,600 a month.

Wills (signed 2017): each leaves everything to the surviving spouse; if the spouse does not survive, everything passes outright to the children in equal shares. Owen's brother, Silas Sato, is named guardian of the children. No trusts. Durable powers of attorney and health care directives were signed with the wills. Owen's 401(k) and Roth IRA name Priya as primary beneficiary; Priya's 403(b) and Roth IRA name Owen.