In our practice, we have a unique approach called LIP, or lifetime income process, which we demonstrate on paper for every client. We believe that the money coming into a household goes to two primary places: it is either spent or saved. When we talk about savings, we're referring to long-term retirement savings, not savings for immediate wants like a sunroom or a jet ski.
We explain to our clients that their current standard of living, or consumption number, has to adjust for inflation over time. This means their consumption graph line must rise to account for inflation, ensuring that a dollar today feels the same as a dollar tomorrow, even if it means it will cost more.
Many aspire to retire but do not realize that upon retirement, income usually drops, leading to a financial gap. This gap can worsen due to pensions and social security not keeping pace with inflation.
The red line represents your financial data, while the green line represents your consumption number adjusted for inflation. The goal is to have your financial data (red line) keep pace with your consumption needs (green line) throughout your life. In 95% of cases, the data shows a significant drop-off if not properly managed.
Using minimal data inputs, easily model and test different financial scenarios. This allows you to experiment with variables such as retirement age, income sources, savings rate, and rate of return on investments.
Our simple two-line model allows for effective financial planning and accountability, ensuring you can live comfortably throughout retirement without financial surprises. Don't wait until retirement to adjust – plan now to achieve financial security and happiness.