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Like many young couples starting out, Dillard Delts and his wife, Teresa, struggled to make ends meet. There seemed to be little opportunity to create a long-term financial plan as the Delts focused their energy and financial resources on basic family necessities. A food-service specialist in the U.S. Air Force, Dillard shored up the family’s finances with U.S. Savings Bonds. He eventually managed to save enough money to finance a portion of the down payment on a $59,000 home in Omaha, Nebraska, where he and his wife raised four children.
That was more than 30 years ago. Since then, Dillard, 58, and Teresa, 53, have come a long way. In the past five years, the baby boomer couple have doubled their net worth, amassing nearly $115,000 in total assets. Now with his eyes fixed on early retirement, Dillard must focus, in the next five years, on a debt-reduction and wealth-accumulation plan.
A civilian since 1988, Dillard has worked as a meat cutter in the commissary of Offutt U.S. Air Force Base in Bellevue, Nebraska. Teresa, a homemaker, says that the single paycheck is manageable because she follows a strict budget. However, a few years back, Dillard came to the realization that his pension and Social Security benefits would only go so far in sustaining his retirement. Many others have also confronted this harsh reality and ended up working longer than they had ever hoped. “I looked at my situation and it wasn’t very good,” says Dillard. “I didn’t want to work for the rest of my life.”
That’s when the Delts began to work on an aggressive retirement plan. In 1995, they refinanced their 30-year mortgage, reducing their interest to 8% from 11%. They used $2,000 of the equity to pay down their credit card debt, but $4,000 remains. They still owe $42,000 on the mortgage.
While most financial planners advice against using life insurance as an investment vehicle, the Delts built up a cash value of $30,000 in a variable life insurance policy with the Credit Union National Association (CUNA). The couple paid $340 a month, well over the required minimum. The money was invested in balanced, income, and capital appreciation mutual funds.
Dillard also opened an IRA, which has grown to $13,326, with holdings in the Putnam Global Growth Fund, Putnam Health Science Trust, and Putnam Voyageur Fund. Teresa also has an IRA, valued at about $7,000.
He contributes $120 per paycheck to a thrift savings plan. This employee retirement account has grown to $39,000 over the past five years. Under the thrift savings plan, his employer matches 5% of his contribution and prorates another 5%.
This multifaceted savings and investment plan is the foundation on which the Delts hope to build a fiscally sound retirement program. “My biggest thing is to be comfortable,” says Dillard, who loves to travel. “I like my lifestyle; I don’t want to have to change it at retirement.”
Dillard and Teresa Delts
Annual Gross Income (1999) $ 31,000
Military Disability $450/mo.
Mutual Funds $ 29,171
IRA (combined) $ 20,326
Gov’t. Employee Savings Plan $ 39,000