Part of our work as asset managers is to generate sufficient cash flow for regular income.   A long-time client came in for a review last week, and we carefully reviewed her prior year income and expenses. She had managed her cash flows really well - right in line with her budget forecast for the year. Her Destiny Capital portfolio was specifically designed to distribute an exact amount of cash to her from her investments. We send this portfolio income to her bank account as an automatic quarterly deposit. Having an income target such as this allows us to construct the optimum investment portfolio in order to “Hit the Bullseye”. When we do this, her actual financial performance improves.  Having this bullseye allows us to position her total portfolio to function optimally and operate efficiently with only minor changes along the way. It keeps the majority of her capital invested to continue working for her. As a part of each review, we always ask what the next year looks like. In this case, she said "Well, I am thinking about doing something big next year with my kids and grandkids. I want to go see Mickey and Minnie with them in Orlando." She shot me the rough cost of the trip in addition to her standard annual budget. We adjusted her portfolio to make the new quarterly distributions and set aside the Disney trip money she would need for next summer. This is planning!  

A new client visited us recently. Some lifelong friends, who are long-term clients of our firm, had referred them. The new clients had recently gone to a seminar and participated in an online planning process. It's now very popular for firms to have people take “standardized tests” to determine their planning parameters. The results painted a particularly bleak future for them, including needing to save more money each month than anyone reasonably could in today’s world or suffer the alternative of having to continue to work until they were 76 years old assuming they could keep their jobs, skills, and health for that long. Sometimes I think the firms that do this really believe that fear is a good selling strategy, but it created a perfect time for them to come in for a conversation. We sat down and flipped through their sixteen-page report that had been created from the standardized tests.

The mass media and retirement 101 seminars continue to deliver a message to retirees that spending 4% of one’s investment assets per year is the “safe” withdrawal rate and that withdrawing more than 4% can be problematic, potentially leaving the retiree without any investment assets in the later years of life. This strategy has become known as the “4% Rule”.  

This is the last of a three-part series on retiring with nimbility. So far, we've discussed being Mentally Nimble and Financially Nimble. Today we are going to conquer the fear of healthcare.   Recent research has determined the most significant expense facing this retiring generation - healthcare. The average cost for healthcare is now $22,000 per year per family and those costs are actually higher for retirees. Building strategies to manage through this reality is now a financial planning task that we embrace.  

In the first part of this series on nimbility, we wrote about Mental Nimbility. Today we are going to address Financial Nimbility.   One of our tasks as an advisory team is to stage wealth. We have never sat down with clients and created sectors from their finances to determine which one to liquidate first, and second, and so on. Nonetheless, we do have an internal process to determine the most efficient method for each client to access their wealth throughout each stage of life.