To help this couple, it would be incredibly important to develop an intelligent strategy that would give a clear picture of their financial status. We would typically sit down with the couple and hold in-person meetings to help identify their true cost of living and make educated assumptions about the potential changes in their budget over the remainder of their retirement due to relocation, medical costs and inflation.
Once that was done, we would review all their sources of income. By calculating the client’s net cost of living and subtracting their established systematic income (Social Security, pensions, etc.) we would be left with how much income they would need to generate from their existing investments.
The next step would be to define a distribution rate and plan. The distribution rate would be calculated to figure out how much of their nest egg is required to fulfill the income needed to live the lifestyle they want. The plan would then take shape based around the investments that could generate the income needed. Once we determined there were sufficient funds beyond the income needs, we would recommend establishing both a cash reserve — which serves as a security blanket for easy access by the client — as well as an intermediate “what if” account to invest at a agreed upon risk tolerance level.
After the three investment allocations would be filled (income, cash and “What if”), it would be time to focus on designing a wealth transfer plan. We would review insurances and will/trust documents to confirm the correct registration of property and business entities. We would then develop a plan that not only ensured their future, but their family’s future as well.