“WealthCare”
Benchmarks to Retirement
The Big Puzzle
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Do I have enough?
Am I on a solid financial track?
What will I need in the future?
What will it take for me to get there?
Life Cycle Stages
Earned
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$_____
$_____
$_____
$_____
$_____
Insurance
Products
Business
Home
Real Estate
Retirement
Plan
Personal
Portfolio
IRA
Funding
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Stored
Future
= Financial = Income
Power
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Economic Battery
Define Your Objectives
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Maintain your standard of living
Educational needs
Parental or special needs
Travel or 2nd home
Legacy planning
Don’t assume The
Life Cycle Stages
of Retirement will
just take care of
themselves
The Accumulation Cycle
• Capital Accumulation
• Manage the ‘more month than money
syndrome’
• Protection-debt & future education
through Life Ins
• Savings habit (10% minimum)
• Housing- save the dream home for later
(housing 16-17% of monthly gross
income)
Consumption Cycle
• Protection against personal risks-”if you
have it made don’t risk it”-disability ins, long
term care ins, life ins.
• Capital accumulation( savings-15%)
• Housing-evaluating needs for the ‘empty
nest’ and possible 2nd home
• Provision for retirement income-max funding
• Reduction of tax burden
• Planning for heirs-estate planning in place
Transition Cycle
(with grown children)
• Protection against personal risks-eval life ins
for estate planning-long term care-is
disability needed
• Investment & property management-home
paid for-downsize
• Savings-15-20 minumum
• Provision for retirement income-well into the
cycle to provide 4-5% annually-3 to 1
earnings to savings ratio
• Reduction of tax burden
• Legacy planning for heirs
Dream Cycle
• Protection-health protection
• Savings/spending- ‘0 based budgeting’
–live within your means
• Legacy planning complete
• Live on/leave on
Legacy Cycle
• Enjoy what’s meaningful in your life
• Planned giving
• Asset distribution
The biggest enemy = Inflation
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$10,000 of income needs today
Add 3.75% inflation
5 years = $12,021
10 years = $14,450
15 years = $17,371
20 years = $20,882
25 years = $25,102
Enemy #2 = not planning
• Failing to create a budget
• Not saving
• Spending (make more than you spend
and spend less than you make)
• Allocating assets without a tax plan
• Ignoring or denying the problem
What will you need when
you retire?
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25 yr old earning $25,000/yr
At age 65 needs $78,802/yr
35yr old earning $35,000/yr
At age 65 needs $79,209/yr
At 3.75% inflation
This is calculated not taking into
consideration any salary increases
What will you need when
you retire???
• 40 year old earning $160,000/yr at
age 65 needs $302,220
• 4-5% of total portfolio draw-down is
average
• Retirement income is generally
calculated at 70% of annual pre
retirement income
Retirement Pool
• Assume retired for 25 years, inflation 3.75%, investment return
averages 7%. Values are for each $10,000 of annual salary need.
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1 year from retirement = $181,095
5 years = $211,916
10 years = $257,712
15 years = $313,608
20 years = $369,329
Enemy # 3 = market volatility
Which would be your choice?
a. +5%, +5%, +5%, +5%, +5%
b. +10%, -10%, +10%, -10%, +10%
c. +20%, -15%, +20%, -15%, +20%
Assume $10,000 beginning portfolio
a. = $12,763
b. = $10,781
c. =$12,484
Biggest mistake in planning
#4
“Putting all your eggs
in one basket”
Respons-able Positioning
• Your investments are positioned to respond
to varying market conditions-(market
neutrality)
• Your planning has positioned you for the
different phases of your life
• Your financial planning has positioned your
family to be prepared for unforeseen events
• Your assets are positioned for protection,
liquidity and tax avoidance
• Your estate is positioned in case of untimely
death