An achievable goal of all advisors is to have a
quarterly/annual meeting with their client and provide the following statements:
(Planning Horizon Statement) Looking at current actuary
tables, a person of your age today can be expected to live to age Z years old. This implies your planning horizon is X
years. For your spouse, the tables indicate…
(Peer Outlook Statement) Looking at historical data provided
by a network of financial advisors, a person of your age usually spends $$,$$$
annually to sustain a comfortable lifestyle.
We note that recent retirees travel more and more senior retirees have greater
needs to cover healthcare costs. On
average, a person/couple of your age spends A% of their annual spending on
fixed living costs (home, food, etc.), B% on discretionary costs (gifts,
travel, etc.), C% on healthcare costs, etc.
(Required Minimum Distribution Statement) The Internal
Revenue Service requires that you withdraw $,$$$ this calendar year.
(Recommended Allowable Withdrawal Statement) After reviewing
your income assets (Defined Pension Plan cost of living (COLA) increases, CD/Bond
Ladder rate changes, Equities performance, Whole Life Insurance withdrawals,
Annuity disbursements, etc.) over the past twelve months and considering a 30% failure
rate of reaching your goals, you can safely withdraw N% ($$,$$$) this year from
your retirement portfolio. Your overall
income this year will be $$,$$$, which is in line with your peers.
(Tax Implication Statement) If you withdraw from your Roth/Traditional
IRA, your tax implication will be… For
every dollar over $$,$$$ (lower income tax threshold), you will be taxed at
X%. If you make donations to charity to
reduce the income to $$,$$$, then you will remain below this threshold.
(Recommended Asset Allocation Statement) To maintain a
greater probability of reaching your retirement goals, we recommend an asset
allocation for your portfolio of…
Having a safe withdrawal rate is nice to know, but how does
it affect the client should always be the question. It is a troubling concept to inform the
client how they are doing compared to the Joneses (Peers), but it is more
comforting to know that they are making the right choices.
Cheers,
Paul
