Jim: 38 year old Medical Device Sales Executive
Anne: 39 year old Doctor
Children: 3 (2, 4, & 6)
Annual Income: $375,000
Investable Assets (Joint Account & IRAs): $400,000
Annual Savings: $7,500 each to their 401k(s)
to meet their employer match
College Savings: $0
Wills & Powers of Attorney: None
Life Insurance: $100,000 (each-group term)
Disability Insurance: Through their employer
iThrive Life Planning Process™
Vision: Retire – Jim (65) Anne (66); Fund college for all 3 children; buy a vacation home; protect their family should something happen to them.
Awareness: Our analysis revealed they were below the confidence zone with a 51% probability of achieving their Vision.
Plan: In a live planning session we made adjustments to increase their confidence score to 83%.
Implement: Thrive Implemented their plan every step of the way.
Monitor: Thrive continues to annually confirm their Vision, test their plan, and hold them accountable so they stay on path.
Savings: Created a sustainable budget so they could maximize their 401k(s) (saving $35k/year), saved $15k/ year to their Joint Account, established three 529 Plans and started contributing $10k/year. Implemented a back door Roth IRA strategy in which they would be able to contribute $5.5k/year (each) insuring they would never have to pay taxes on the growth or distribution. Total savings = $71k/year.
Investments: Created an investment strategy consistent with their plan and implemented across all of their accounts. Aggregated their account reporting so they can maintain a cohesive household investment strategy and track performance in one place.
Insurance: Increased their coverage by purchasing $1.5M (each) of Term Insurance; the term period covers their youngest through college. Found the supplemental coverage offered through their employer cost $175 more
each year than what they could obtain outside of their companies. Obtained a supplemental disability policy for Anne.
Estate Planning: Mapped out a plan and made a referral to an attorney. They now have guardians listed in their Wills, ensuring the state would not decide who
would care for their children. Also included asset protection elements in their document so their children would inherit money at the right time and it would be protected from taxes, divorce, creditors, and themselves.
Taxes: Introduced a qualified accountant and saved over $8k/year in taxes by maxing out qualified plans and contributing towards college savings plans.
The above is a hypothetical case study and not based on actual individual client results.The results achieved in our simulations do not guarantee future investment results. It is possible that the markets will perform better or worse than shown in the case study; that the actual results of an investor who invests in the manner these case studies suggest will be better or worse than the projections; and that an investor may lose money by investing in the manner the case studies suggest. The case studies assume the reinvestment of dividends and do not include transaction costs for purchases and sales of equities and bonds or mutual funds and ETFs. We assume no deduction for advisory fees, and that assets are allocated in the manner the projections suggest until the hypothetical client reaches age 95. The final results also address such factors such as annual spending, annual savings, timing and cost of goals. Although the information contained herein has been obtained from sources believed to be reliable, its accuracy and completeness cannot be guaranteed. While the case study results reflect rigorous application of the investment strategy selected, hypothetical results have certain limitations and should not be considered indicative of future results or results for any individual investor. In particular, they do not reflect actual trading in an account, so there is no guarantee that an actual account would have achieved these results shown. The 51% (before) and 97% (after) illustrated probabilities of success were derived from licensed forecasting software. The forecasting results are based on a Monte Carlo simulation. In addition to the facts listed in the case study: Investment assumptions include a 10.11% hypothetical average rate of return with a 16.80% standard deviation. Annual goal inflation assumptions include 3.0% for Retirement-Basic Living, 3.0% for Vacation Home, and 6% for college funding. Marginal tax rate assumptions include 35% for federal and 3.07% for state. Long-term capital gains are taxed at 20%. A federal standard deduction of $24,000 was assumed. 85% of Social Security income was included as taxable income. Social Security income was estimated to be applied for at 67 years of age for both hypothetical clients. $36,389/year of social security income was assumed for each hypothetical client. Social Security income assumed inflation rate was 1.5% per year.