Many of the super wealthy stress test their financial plan and you should consider doing so too.

Your plan for retirement looks good until it doesn’t. Just like We stress test many things in our life:

  • Heart
  • Cars
  • Our banking System

To test your future:

Start with your goals. Identify Retirement income, health care costs, travel/hobbies, charitable/family distributions,…

Then document all your assets to fund these goals. IRA, 401k, real estate, business valuation,

Now evaluate your probability of success.

Consider the uncertainties. Does your plan provide contingencies for:

  • Basic income needs met through your mid 90’s
  • Market Volatility
  • Prolonged Inflation
  • Medical Insurance/Medicare
  • Tax Costs
  • Prolonged Illness
  • End of life goals: family, charitable,…
  • Market Under Performance.

At the same time, is your plan too conservative. Are you leaving too much money into your 90’s such that you are unnecessarily limiting your fun bucket now?

Although the super wealthy have additional resources, these same fundamental strategies are available to you as well. They should be part of your diligence as well when vetting financial plans. Frequently stress tests can uncover flaws in plans and opportunities for better solutions. For these reasons stress tests will likely benefit a great number of people, especially pre-retirees and business owners.

Some of the things to consider.

Kelly Wood, AAMS
Financial Advisor

All investing involves risk and you may incur a profit or a loss. There is no assurance that any investment strategy will be successful. Any opinions are those of Kelly Wood and not necessarily those of Raymond James.