Two weeks ago, we began a 6-part series that introduces Alex, our underdog protagonist, who is on a journey of financial discovery. He is beginning to explore our 4 pillars of financial philosophies alongside our fictional advisor. The story will take us through a series of lessons and unexpected scenarios which is intended to teach our readers. 

This week, we begin the 2nd episode of our series: Lifestyle Planning to Build the Foundation. We welcome you to follow his story, reach out to our team with any questions that may arise, and hope that you find this entertaining and educational. Let's dive in!

Beginning the Adventure: Knowing When to Seek Guidance

In their tranquil sunlit kitchen, Alex and his wife Kate find themselves at a crossroads. Their coffee mugs cradled in hand as they gaze fondly at old travel photos adorning the table. The laughter of bygone adventures lingers in the air, mingling with a subtle undercurrent of uncertainty. As they sift through memories of past escapades, a sobering question emerges—can they sustain the vibrant lifestyle they've grown accustomed to in retirement?

Alex, having recently sold his thriving business for $2 million at 59, finds himself on the precipice of newfound financial freedom. Yet, the allure of retirement is tempered by the daunting task of charting a course for their future. Kate works full time and is unsure when she will be able to retire as well. Their daughter was recently engaged, and although this should be a happy time, they weren’t entirely sure how that budget would impact their future savings. The need for a solid financial plan becomes increasingly evident as they contemplate the intricacies of their desired lifestyle. 

It's in this moment of reflection that Alex and Kate make a pivotal decision—to seek guidance from a financial planner. With a blend of apprehension and determination, they set out to explore the landscape of lifestyle planning, armed with questions and a shared vision for their future.

Defining Household Expenses: Understanding Your Financial Landscape

As they sit across from their financial planner, the scene unfolds with an air of anticipation. Their questions echo through the room, probing the depths of their financial horizon and uncovering the myriad possibilities that lie ahead. Together, they delve into the nuances of lifestyle planning, exploring the various components that comprise a solid financial foundation.

"What are your current living expenses?" the financial planner begins. A simple question, but tricky to answer. 

When Alex and Kate explore their usual monthly budget sheets, they are always focused on the essentials: mortgage payments, utilities, insurance, home repairs, hobbies, dining. Everything that makes their life what it is and builds the very foundation of who they are.

"Your annual estimated expenses are around $200,000," the financial planner remarks, drawing on their earlier discussions. "This will give you about 10 years of retirement with the sale of your business- but let’s explore other factors of your lifestyle before we dive into your retirement plan."

Planning for the Unexpected: Navigating Life's Curveballs

As they delve deeper into the intricacies of lifestyle planning, Alex and Kate confront the reality of life's uncertainties. Together with their planner, they explore strategies for navigating unexpected expenses and unforeseen challenges. From setting aside funds for emergencies to planning for long-term care, they build a safety net that offers peace of mind and financial security.

Their daughter being newly engaged, could mean that they would need to start saving for potential grandchildren. They love to make charitable contributions when something new pops up that they feel passionately about. They also have always dreamed about traveling to Europe once they both retire to enjoy the fruits of their labor- but they assumed with the $2 million sale of Alex’s business this wouldn’t be an issue. What about a new car for their son in a few years?

Their conversation meanders through all of the possibilities, each bucket representing a facet of Alex and Kate’s unique aspirations and priorities. As they discuss their hopes and dreams, a clearer picture begins to emerge—a blueprint for their financial future, meticulously tailored to their unique vision of retirement. 

Instead of breaking down their retirement savings into neat little monthly payments, this was now becoming a very complicated structure with support beams. As unexpected as some of these considerations were, having the advisor there with them was essential. Bucket by bucket, they were building something bigger.

Trust Your Coach: Survive and Thrive

Lifestyle planning goes beyond crunching numbers; it's about capturing the essence of your dreams and aspirations. It's about delineating the nuances of your future—plotting out the next chapter of your journey with precision and foresight.

“We’re creating a framework that empowers you to live the life you've always imagined," the financial planner remarks. Having a coach in any profession is the way that you take your performance to the next level, and this is evident with financial planning as well. 

Armed with newfound clarity and purpose, Alex and Kate discuss their situation as they look forward to their retirement life. It would be critical to have a clear line of sight of when Kate would be able to retire and they could comfortably move into their next chapter. The ultimate goal is to see how long Kate needs to work and how much they need to save in order to make the tradeoffs needed to live a happy retirement. Their advisor would send them a specific plan to optimize how much they needed to save. 

Returning home that night, Alex and Kate carry with them a sense of empowerment. Their discussion with the financial advisor has shed light on their financial landscape, offering clarity amidst uncertainty. However, as they settled back into the comfort of their kitchen, they opened one more piece of mail sitting on the counter: tax forms from the IRS. They were humbly reminded that their financial journey wasn’t over yet.

Stay Tuned for the Next Article: Tax Planning: Navigate and Optimize.