Your Personal Financial Roadmap

Click the Button to Preview a Sample Client “Roadmap.” Which corresponds to the case below.

Sample Comprehensive Financial Plan

**This plan is entirely hypothetical and does not constitute financial advice.

Comprehensive financial plans are integrated with eMoney financial planning software, enabling me to provide projections and data-driven recommendations. Clients can also link their outside accounts to the software for daily updates.

Background:

Both clients are 45 years old, with children aged 15 and 12.

Client 1 owns their company, Client 2 holds a management role at XYZ Corporation.

Together they earn a combined $450k/yr. and spend $180k/yr on living expenses. They want to spend an additional $20k/yr. traveling in retirement.

They want to retire in 8 years at age 53.

Early retirement and funding their children’s college education are their top priorities.

Analysis of Top Priorities:

Early Retirement Risks

  • Careful planning is required to access retirement assets before age 59 1/2 without incurring penalties.

  • Longer time spent in retirement puts more pressure on portfolios

  • Increased costs in the years leading up to retirement. The big one being health insurance.

  • You have less time to accumulate assets and allow them to grow, so it's important to save early and often if early retirement is your goal.

Education Planning

  • The cost of tuition on average increased at a rate of 4.11% from 2010-2022* - Higher than the average inflation rate of 2% for everything else.

  • A 529 plan is an efficient way to save for education expenses. Earnings come out tax free if used for qualified education expenses (tuition, books, room & board, meal plans, computers and education related technology, student loans up to lifetime limit of $10k).

  • If funding children’s education is a goal, starting early and having a plan is extremely important.

Plan Highlights and Opportunities:

Retirement Planning/Additional Savings Opportunities:

  • Backdoor Roth IRA: Due to income limitations, contribute to a non-deductible IRA and convert to Roth.

  • Health Savings Account (HSA): Maximize contributions for tax efficiency. This is the most efficient retirement savings account available. Contributions are tax deductible both from federal and payroll taxes (it’s the only payroll deductible account), and earnings can be distributed tax free if used for qualified medical expenses.

  • Profit Sharing Plan: Develop a strategy with employer contributions to further boost retirement savings.

  • After-Tax Insurance Plan: Implement a variable universal life insurance plan for death benefit protection, tax advantages and asset growth.

  • 401k Plan: Shift 50% of Client 2's 401k contributions to Roth to build a tax-free portfolio.

Investments:

  • Allocate investments more aggressively for growth potential over the next decade.

  • 2-3 years from retirement start planning for sequence of returns risk management.

Insurance:

  • Review life, disability, and long-term care insurance for adequacy and efficiency.

Income Tax:

  • Strategize traditional account contributions to minimize current taxes.

  • Focus on Roth conversions and capital gains management for future tax reduction.

  • Utilize tax loss harvesting when possible.

Estate Plan:

  • Ensure trust documents and beneficiary designations are updated.

  • Plan for potential estate tax implications with strategic gifting and charitable contributions.

Financial Planning Assumptions:

  • Detailed assumptions and assets managed within the financial planning software.

Education Planning:

  • Child 1 is on track to fully fund education.

  • Ensure Child 2's education plan is adequately funded through additional contributions.

Scenarios:

  • Utilize eMoney to simulate various financial scenarios, such as increased retirement spending, lower returns, or higher inflation, to stress-test and assess plan resilience.

Results:

Summary:

  • Based on my analysis, the clients' current course of action has a 16% potential for success. The probability of running out of money in retirement is extremely high.

  • Adjustments must be made to ensure client does not run out of money in retirement.

    • Options:

      • Retire later

      • Reduce expenses

      • Preferably combination of the two

  • If you are able to reduce expenses to $170k/yr. and retire at age 57 probability of success jumps to 71%.

    • This is still low probability, but returns end up better than expected, or if you make more money etc. the plan will look better.

  • Later retirement at age 60 while keeping expenses the same results in a probability of success of 76%.

  • As the client gets closer to retirement we’ll work together to monitor progress and determine a definitive retirement date and annual spend amount.

Sources:

*Hanson, Melanie. “Average Cost of College & Tuition” EducationData.org, May 28, 2024,
https://educationdata.org/average-cost-of-college

Interested in Working Together? Please Complete the Form Below

During our complimentary 30-minute initial consultation, we will cover:

  • An overview of your financial background and how I can add value to your financial journey.

  • A detailed explanation of my services and how they can be tailored to fit your unique needs.

  • A presentation of a sample financial plan that my clients typically receive.

  • An outline of what you can expect from our professional relationship.