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John
and Mary
DieBroke wanted to spend all
their assets (excluding
their home), during their joint life expectancy. Their plan was if they survived
beyond life expectancy they would reverse mortgage the home, downsize, or rent. This
may not be an ideal retirement strategy from a professional financial planner's
point of view (even when
conservative rates-of-return are used), however,
this was the bottom-line the client wanted
to see. Our Financial Planning software made the analysis easy to illustrate.
We simply entered all the
data and adjusted the living expenses, accelerating
their IRA distributions as required
to achieve the
result.
The following graph
showed the
client that
their target
lifestyle should
be, to spend $76,000 per year in
current dollars.
Taxes are
recalculated each year according to taxable cash flows. Of course, lifestyle
expenditures
can be changed
at any age and reflected in the plan.
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This analysis was invaluable to the
client. Through follow up reviews we have continued
to make changes to reflect their lifestyle, allowing them
to plan their future with confidence.
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