Financial planners like to see smooth waters for clients in their 50s: saving lots in the best earning years of one's career, avoiding new debt, paying off the mortgage by retirement or soon thereafter.
Instead, Christopher and Robyn Reagan of South Pasadena have weathered a storm of big events.
"We had just gotten to a point where we could afford to live in this house," said Christopher Reagan about the couple's 73-year-old, three-bedroom, two-bathroom home in South Pasadena, purchased in 1998.
"Then my daughter got pregnant, my son got into college and my wife lost her job," he said.
FOR THE RECORD:
Money Makeover: An article in the Dec. 1 Business section in which a couple's finances were analyzed by a fee-only financial planner said the husband and wife lived in South Pasadena. Their home is in Los Angeles.
To financial planner Delia Fernandez, founder of Fernandez Financial Advisory in Los Alamitos, the Reagans are an example of the increasingly common problem of older parents juggling college costs and retirement planning.
"I never want my parent clients to sacrifice their own retirement for their kids' education," Fernandez said, "and if they are not careful, they are going to do that."
The 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.
"They 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.
Just a few years ago, the Reagans were headed in a different direction.
The 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 other's eyes.
He attended UC San Diego and
Robyn Reagan was the primary wage earner, bringing in about $72,500 working for a nonprofit.
For the first nine years as a parent, Christopher Reagan was a stay-at-home dad.
He then became a teacher, he said, because "it was the best way to have a schedule that meshed perfectly with my children's." Now he teaches at the same middle school in Pasadena he attended in his youth.
The financial complications hit suddenly and multiplied rapidly.
The Reagans' twentysomething daughter 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.
The Reagans' 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 than $58,000.
The 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 son's college costs.
Then Robyn Reagan lost her job in June after the federal funding for her position ran out.
"Within a year and a half," Christopher Reagan said, "what had been smooth sailing had been tossed asunder."
Robyn Reagan, meanwhile, is finding out how tough it is to find new work past age 50.
"I have applied for 57 different positions," she said recently. "I'm also looking for part-time work because nothing else is coming up."
The couple are living on Christopher Reagan's salary of $52,500 a year and finding that it isn't nearly enough.
"We realize we need to plan for our retirement," Robyn Reagan said, "but my 403(b) accounts are our only savings."
Aside 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.
Their 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).
There is more than $31,000 outstanding in loans for their son's education.
In 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.
Christopher 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.
"I took this career because of my children, and that just isn't necessary anymore," he said. "I'd like to start a second career that will earn more money, because what I earn now isn't enough."
Reagan would love to make a living as a writer, putting that wit and his experiences as a teacher to good use.
Reagan is an old Irish name, and in some of their imaginings the couple have dreamed of retiring in Ireland and exploring Europe.
Fernandez said the couple need to make immediate changes.
First, they need to sharply reduce spending to adjust to the current reality of a household earning $52,500.
"I'm 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 single month."
Ever 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.
The 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.
The 13.48% interest rate on the couple's credit card, Fernandez said, "is costing them big every month."
Fernandez wants them to negotiate a lower payment and interest rate. The National Foundation for Credit Counseling is a logical step, she said.
"The 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."
Christopher Reagan's father has generously offered to help with the grandson's college debt. Fernandez said the couple should accept.
"Ask Dad to pay for spring college costs," Fernandez said. "That's coming up in December."
Another option: Use the father's help to get out of that expensive Prius lease.
Christopher Reagan "needs to go back to the dealership and see what it would take to get out of this lease," Fernandez said.
Renegotiation of other bills also makes sense, Fernandez added, saying that "any reduction in ongoing bills is a great idea."
Fernandez also wants Robyn Reagan to consolidate her retirement accounts into a plan with much lower fees than she now faces.
"She's currently paying 0.96% on her mutual funds inside those accounts; she can get that down to 0.2% or less," Fernandez said.
Robyn Reagan also will need to land a job paying at least $73,000 a year to maintain the family's current lifestyle, Fernandez said.
But Fernandez said the most important adjustment the couple can make will involve Christopher Reagan's making a decision he doesn't want: staying in his job as a teacher, if possible, until he is 67.
"It 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 couple's retirement. That could be the situation here," she said.
If 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 security.
"His pension is a huge deal," Fernandez said. "They will definitely be in better shape if he stays there."
That would be difficult, Christopher Reagan said.
"I've always had to sacrifice to become a teacher," he said. "We are horrifically underpaid and overworked."
But Fernandez said he's looking at it the wrong way.
"Teachers are underpaid," she said, "but when you retire, you are the guys on top because of those pensions."
Perhaps most crucial, it's time for the Reagans to put themselves first.
"At 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 didn't do that. They need to do that now."
For his part, the Reagans' son has offered to come home from college and take a year off or attend a community college.
The Reagans said they know that might be necessary. Their visit to a financial planner was needed.
"Although there were some uncomfortable realities for us to face and deal with," Robyn Reagan said, "it was very helpful."