Financial and Retirement Planning

How Do You Envision Your Retirement?

Exencial Wealth Advisors of CT, formally Shoreline Financial Advisors, believes that financial and retirement planning should be goal-based. Goal-based planning can help you explore the opportunities and possibilities you have in retirement. When it comes to planning for a fulfilling retirement, each of us has a unique perspective, and a unique set of expectations.

Advanced planning can help make possibilities become a reality.

7 Questions to Ask Yourself as You Think About Retirement

Retirement should be a time of excitement and hope. Planning for retirement involves deep conversations about your goals. Further, there are many questions that you may need to explore. Below, please scroll through the slider to help you think about the issues you may face in retirement. As always, we are here to help you on your journey.

How Many Years Do You Expect to Be Retired?

Life expectancies have increased substantially in the last 50 years.

According to the National Institute on Aging, the average life expectancy is now 83 for a woman and 80 for a man.

10% of us will live quite a bit longer.

What is Your Time Horizon?

Accordingly, you may need your savings to last longer than you think. For a couple who are each 60 years old, there is a 50% chance that one of you will live to 91.

If you retire at 65, your portfolio should have a horizon of 25 years.

How Will Inflation Affect Me?

Because we are living longer, we need to plan for a longer retirement. Inflation will:

Decrease the purchasing power of your portfolio.
Increase the prices of the goods and services that you buy.

To maintain the lifestyle you enjoy today, you should plan for a portfolio that will be larger in 30 years.

How Should You Invest?

Contrary to what many people assume, you should not plan on spending all of the annual returns that your investment portfolio generates.

To keep pace with inflation and afford the same lifestyle, you will need to continue to grow your portfolio to pay for future spending.

How Much Money Should You Plan to Take Out of Your Portfolio Each Year in Retirement?

First, we will look at three different withdrawal amounts over a 25-year timespan: 4%, 5%, and 6%.

To keep things simple, we will assume a $1 million well-diversified portfolio that is invested 60% in stocks or equities and 40% in bonds or fixed income, earning a long-term return of 7%.

How Long Will You Be Retired?

Assuming the same $1 million portfolio, let’s look at different retirement lengths. We will use a 5% or $50,000 annual withdrawal rate.

It is important to understand how long your assets may need to provide for you and how increasing life expectancies can impact your portfolio.

How Much Risk Should You Take?

Finally, assuming a $1 million portfolio and a $50,000 per year withdrawal rate, we vary the assumed rate of return by changing the asset allocation. This involves increasing or decreasing the allocation to higher risk/higher return asset classes. All other assumptions are held constant.

Increased return comes with an increase in the variability of those returns. Note, the decreased success rate for the 80/20 portfolio is a result of increased risk.

What Does Your Retirement Look Like?

Retirement is different for everyone. Our software lets you pick your goals. You’ll need healthcare. We can help estimate what it will cost. Maybe a big trip, updating your kitchen, helping your grandkids with college.

You can easily set your goals by a simple drag and drop of your computer mouse.

What Could Happen?

A lot, actually. Unfortunately, markets don’t go straight up. While they reward long-term investors, the path can be up and down. A Monte Carlo analysis estimates 1000 possible outcomes. Each line representing a unique scenario. In this example, an 87% success rate. Retire in a down stock market? We can run a ‘bad timing’ analysis.

What’s Your Number?

Financial and retirement planning should be interactive and help guide your decision making. If you want to see the effects of retiring early, it should be a mouse-click away. Our software will make your planning easy.

Thinking about a part-time job in retirement? Click.
Vacation home? Click.
Can we take the big trip we always talked about? Click.
Can we help with our grandkids’ education? Click.

How Can We Help You?

As an RIA, we are a fiduciary. We offer independent advice with no hidden charges, incentive structures, or third-party payments of any kind. Ready to take the next step? Let’s talk about how we can get you there.