Where Many Advisors
Get It Wrong
LIFETIME INCOME CASE STUDY
Bill & Marsha White
Registered Investment Advisor
Presented by Financial Sense Advisors, Inc.
Important Notice:
This is a hypothetical illustration based on real life
examples. Names and circumstances have been
changed. The opinions voiced in this material are
for general information only and are not intended
to provide specific advice or recommendations for
any individual. To determine which investments or
strategies may be appropriate for you, consult
with a financial advisor prior to investing.
Financial Sense Advisors, Inc.
Registered Investment Advisor
WHO ARE BILL & MARSHA?
Ages: 57 & 58
Jobs: Regional Manager & Human Resources
- Bill is getting tired of traveling for work
and wants to retire in the next 5 years.
- Marsha is anxious to retire but us
concerned whether they have saved
enough to do so.
- Seeking a 2nd opinion to determine their
ability to retire and live a comfortable
lifestyle.
WHAT IS IMPORTANT TO BILL?
Having predictable
retirement income Lowering taxes
Bill
Having a financial
plan
WHAT IS IMPORTANT TO MARSHA?
Not outliving their
Not losing investment assets
principle
Marsha
Enjoying a comfortable
retirement
BILL & MARSHA’S CURRENT RISK TOLERANCE?
Most Conservative 1 - 20 - 30 - 40 - 50 - 60 - 70 - 80 - 90 - 100 Most Aggressive
Current Risk Score Portfolio Risk Score
46 68
BILL & MARSHA’S CURRENT BUDGET
Income $127,000
Expenses ($72,000) Discretionary
33%
Surplus $55,000 Living Expenses
67%
BILL & MARSHA’S RETIREMENT BUDGET
Income $37,000
Expenses ($73,000) Discretionary
34%
Shortfall ($39,000) Living Expenses
66%
BILL & MARSHA’S BALANCE SHEET
Real
Estate + Portfolio - Liabilities = Net Worth
$330,000 $739,000 ($75,000) $994,000
BILL & MARSHA’S ASSET ALLOCATION
Asset Allocation
31% Stocks
38%
Bonds
Cash
Hard Assets
19% 13%
BILL & MARSHA’S FINANCIAL PLAN CHALLENGES
1. Improper diversification.
2. Insufficient assets to support their
desired lifestyle.
3. Handling sequence of returns risk.
4. Managing income sources in
retirement.
BILL & MARSHA’S RETIREMENT INCOME STRATEGY
Social
Security
$37,000
+ Portfolio
$15,840
= $
Total
Income
$52,840
Investment Portfolio Expenses ($73,000)
Bill’s Retire. $385K Stocks & Bonds @ 3.2%1 $12,320
Shortfall ($20,160)
Marsha’s Retire. $110K Stocks & Bonds @ 3.2%2 $3,520
Joint/ROS Acct $44K
Precious Met. $200K
1,2 & 3: Yields are for current portfolio yields as of 4/30/18. Please see disclosures at the end of this presentation for security risks.
GOAL BASED RECOMMENDATIONS
FOR BILL & MARSHA
Proper diversification Having enough assets to
• Reduce holdings in precious metals
retire
to about 6% • Gave them option to delay retirement
or reduce monthly expenses
• Use a portion of the cash to purchase
rental property • Our biggest concern was their
unsustainable withdrawal rate above 5%
Setting realistic
expectations
• Received advice based on historical
evidence
• Previous plan did not account for current
market conditions or sequence risk
Disclosures:
1. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values
will decline as interest rates rise and bonds are subject to availability and change in price.
2. The payment of dividend is not guaranteed. Companies may reduce or eliminate the
payment of dividends at any given time.
3. The information in this material is not intended as tax or legal advice. Please consult legal
or tax professionals for specific information regarding your individual situation.
Financial Sense Advisors, Inc.
Registered Investment Advisor
Financial Sense® Advisors, Inc.
Registered Investment Advisor
If you have any specific questions or comments, please give us a call at
(858) 487-3939
We’re happy to speak with you.
Post Office Box 503147 - San Diego, CA 92150-3147
10809 Thornmint Road 2nd Floor - San Diego, CA 92127-2403
(888) 486-3939 Toll Free (858) 487-3939 Tel (858) 487-3969 Fax
Advisory services offered by Financial Sense® Advisors, Inc.
An SEC Registered Investment Advisor.
