In an uncertain world of trade wars, fake news and sub 2% term deposits, will you be able to live out the life you hoped for?
The most fundamental fear retirees have is running out of money. For those who have more than enough, it’s the fear of mismanagement and a fumbled legacy.
But how much can you really afford to spend when there are uncertain lifespans, uncertain investment markets, and any number of banana skins on the road ahead?
This article summarises how we approach this question at Sovereign. We break it down, apply process to every uncertainty and bring it all together in a flexible Grand Plan. A Grand Plan that’s unique to you, designed to help you live life to the full and never run out of money.
With a focus on the numbers side, here’s how we do it:
We understand your lifestyle and aspirations
We help you “cost up” a life well lived into annual cashflow forecasts that capture your lifestyle and aspirations.
We understand your wealth’s potential
We examine what you have and help you position it for the future. Every aspect of your wealth has to play its part in getting you the best possible long term outcome. We help you allocate your wealth between lifestyle and investment assets, defensive and growth allocations, short term funding pools and long term growth buckets. If your mix looks wrong we’ll tell you why. With the help of our research sources we make forecasts for each of your investments’ long term returns, remembering that in a typical retirement more than 50% of spending has to come from investment returns made AFTER retirement, not before.
We reconcile the two and help you understand the trade-offs
Our interactive Sovereignty software allows you to explore the interaction of your current wealth with your lifestyle aspirations. Its enlightening to use and gives you a sense of empowerment. This software helps you bring each strand together and ‘solve’ the puzzle of your wealth.
We embrace the uncertainties and set a prudent course
Some say you should hope for the best and plan for the worst. We say we should capture and consider all reasonable outcomes and take a considered approach. For example:
Health – we believe it’s best to plan for an optimistic life expectancy and set aside funding pools for the unexpected. We can illustrate to you the role of personal insurances and agree on the risks that are worth insuring for.
Investment booms and busts – we forecast for the full range of expected possible outcomes and help you set investment policies and spending policies that respond to market conditions. Did we mention spending policy? Yes we can agree a spending policy with you that’s designed for gradual recalibration every few years, depending on how the investment markets play out. We typically recommend a level of prudence whereby the chances of being able to increase spending in the future are higher than the chance of having to trim it back. Our modelling tools show you exactly how confident we are that a level of spending can be sustained.
We make it easy to re-calibrate
Life happens. New possibilities come along and plans change. We’re happy to tear up last year’s plan, re-tweak the software and set you up with a new one. After all, it’s your life and you want to live it to the full.
Disclosure Statement: This communication has been approved and issued by Sovereign Wealth Partners Pty Ltd ABN 18 607 071 367 Corporate Authorised Representative (No. 001233909) of Sovereign Capital Pty Ltd ABN 44 164 127 833, AFSL 456235.
General Advice Warning: Any advice included in this article and associated links is general in nature and does not take into account your objectives, financial situation or needs. If a product we recommend has a Product Disclosure Statement (PDS), you should read it before making a decision. Past performance is not a reliable indicator of future performance. We do not endorse any information from research providers that we provide to you, unless we specifically say so.