Your needs and requirements will change as you move through the different stages of life.
Let's start with the BIG picture.
Your life can be split into 4 primary phases.
Each stage of life has special and specific needs. Take a look below.
- Mom and Dad take responsibility for your life and needs.
- Get a good education and learn about life.
- Pocket money teaches you about the value of money.
- Learn about savings, needs and wants and charity.
Young Family
(Concentrate your Attention)
- First job.
- New car.
- Getting married.
- Starting a family.
- Financial Risk to your family:
- New Car debt.
- Home bond debt.
- Planning & Building your Pre-tax savings
- Planning & Building your Post-tax savings.
Mature Family
(Organizing your Wealth)
- At the peak of your career
- Family are growing up and off to varsity
- Children becoming more self sufficient.
- You have more time for yourself & your spouse.
- Your wealth should be growing fast.
- Your costs should be dropping
- Your debt should be reducing if not at zero
- Your need for risk cover should be reducing.
Retirement
(Securing your Wellness)
- You're handing over the baton at work.
- Kids leaving or left home.
- More time with your spouse.
- Time for your hobbies.
- Time for travel, Grandchildren etc.
- Your wealth should be in place.
- Your savings provide for your income needs.
- No liabilities.
- No direct need for risk cover.
From a "Wealth" perspective, your life can be divided into 2 primary phases:
Pre-Retirement
Pre-Retirement: - (Your Accumulation Phase)
In this part of your life, you earn an income which you then use to provide for your living expenses and lifestyle and hopefully you also allocate some of the income to your Savings.
Post-Retirement
Post-Retirement: - (Your Savings provide for your Lifestyle needs)
In this part of your life, you no longer have an income and your Savings then become responsible for providing you with an income for the rest of your lives.
Based on a FULL understanding of your and your families needs and requirements, we then develop a tailor made plan for you, which will look something like this.
(The below is a case study and is for illustration purposes only.)
CASE STUDY :
Here is a very short summary of the family's position and lifestyle to put you in the picture:
Mum and Dad have both just retired. Dad is 60 and Mum is 58. The kids are now self sufficient and out of the family house and it's time for Mum and Dad to enjoy their retirement.
- Monthly Incomes: The table adjacent shows that both spouses receive an income from their Living Annuities plus they draw from their Discretionary savings to make up their required income to cover their Monthly Living requirements.
- Monthly and Lifestyle Expenses: Once again, the table adjacent gives an approximation of the family's lifestyle expenses. Other expenses which have been built into this plan but not shown here are provision for Annual and Overseas holidays. (There are also various other inclusions to ensure a real and comprehensive picture is built of the family's situation and requirements but as you will understand these are not shown for sake of a simpler illustration.)
- What they own and what they owe: (See Current Family Assets and Liabilities table) The family have a home that is fully paid for. They pay cash when they replace their cars every 8 years. They will never take on debt at any point during their retirement.
NOTE :
- Although this example is rather simplified, it is based on very real data, underlying returns & inflation assumptions.
- The intention is to give you some idea of how you can plan your finances and ensure that you can fully understand your position and build a plan that will allow you to be informed and build a life that makes you happy.
- Ensuring that you always keep to your planned lifestyle and live within your prudent spending pattern. (It is always important to review your position on an annual basis)
Current Monthly Income:
Earner | Frequency | Amount | Comments |
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| | | |
Current Lifestyle Expenses
Expenses | Frequency | Amount | Comments |
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| | | |
| | | escalate at 2% above inflation |
| | | |
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Current Family Assets & Liabilities:
Asset/ Liability | Amount | Monthly provision | Comments |
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| | | |
| | | Monthly transfer to couples Bank account. |
| | | Monthly transfer to couples Bank account. |
| | | Monthly transfer to couples Bank account. |
| | | |
The graphs below show the projected Nominal and Real capital Investment values for the family we have described above.
You will notice that they will be able to maintain their lifestyle and will have sufficient savings/Capital to last them through to age 90.
Doing these types of calculations for yourself will help you ascertain what you need to do to ensure that you are in a position to retire financially comfortable.
The outcome and benefits of your Planning.
You will be able to answer a number of critical questions such as:
- How much should I be saving right now and into the future?
- How much do I need to save in order to retire Financially Independent and Secure for the rest of my/our life?
- Am I currently on track to reach my financial Goals?
- What are the best ways for me to save?
- Do I need Risk cover and if so what type and how much?
- What Estate Planning should I be putting into place, based on my planning and wealth profile into the future?
- And many many other questions that you may have....