Revamping a retirement plan: a retired military veteran and his entrepreneur wife are fashioning a better living.

For 23 years Calvin and Jacqueline McGahee's marriage has been a wonderful ride. They married at 19 and 20 and have since journeyed all over the world, even living for eight years in Germany during Calvin's service in the U.S. Army. During all that time, two things about them have remained unchanged: They are steadfast Christians, and they pay for most of their purchases with cash. Unfortunately, holding to that last principle hasn't always translated into solid money management for them.

The McGahees reached out to Smith Barney financial consultant Constance Woods after Jacqueline had the opportunity to hear Woods discuss investing and spiritual wealth at an event, four years ago. "We had dealt with another financial company before because they gave us a free consultation," says Calvin. "But they wanted us to turn over all our financial information, and we were not comfortable with that. They wanted to invest for us without our input." But Woods involved them in the decision-making process, and her thorough approach put them at ease. "She made the process simple and she understood the biblical principles of creating wealth," says Jacqueline.

Woods started by discussing the best ways for them to achieve their goals; she tackled the most pressing short-term issues first; "I explained the importance of budgeting, reducing and eliminating debt, establishing a good cash flow, and saving for retirement and their daughter's education."

Now in their 40s, the McGahees' primary concerns are preserving Calvin's pension, which comes to about $40,000 per year; saving for their 5-year-old daughter Lauryn's education: and setting up a retirement, plan for Jacqueline, who earns about $50,000 annually as the owner of Jackie's Beauty Works in Martinez, Georgia. They were saving regularly through a credit union and a bank, but Jacqueline admits "they did not give the best returns." They also own a home that they bought in 1999 for $125,000, which has appreciated in value to $148,000.

THE McGAHEES ARE SETTING UP THEIR FINANCES FOR THEIR DAUGHTER'S COLLEGE EDUCATION AND THEIR OWN RETIREMENT.

Assessing the couple's situation, Woods says, "They were saving for short-term emergencies, but we had to first set up a SEP IRA for Jacqueline." A Simplified Employee Pension IRA allows an employer--or in Jacqueline's case, a self-employed person--to contribute up to 25% of their compensation or $40,000--whichever is less--into an investment account for retirement. Contributions placed in the account earn interest tax-free. Woods now has Jacqueline investing $200 a month in her SEP IRA, which has 50% of its assets allocated in stocks, 35% in bonds, and 15% in cash.

Woods set the McGahees up with a 529 plan into which they invest $50 a month toward Lauryn's future educational costs. She also established a money market account for the family's short-term spending needs with an initial investment of $2,500. The money market earns higher interest rates than their savings bank and credit union accounts. And as a final measure, Woods reviewed Calvin's will, healthcare proxy, and durable power of attorney, making sure his wishes will be carried out upon his death or in the event of a health emergency where he cannot make decisions for himself.

The McGahees are happy with their revamped financial situation. "Constance gave us more organization, and we feel that we have made a very good start," says Calvin. Now the McGahees can continue the journey they started as young adults with greater financial confidence. "I've learned that you have to start somewhere," says Jacqueline. "Most people think that you have to have a lot of money, but I have found that it is important to use someone that you can trust [and] who is accessible. My parents were busy just trying to provide for us when I was growing up, so they couldn't invest. So I want, to do what I can to learn all I can about investing for my family."