Retirement Planning

Six Life-Stage Financial Planning

Stage I - Getting Started—Building a Foundation

Stage II - Establishing Roots
Stage III - Full House—Sandwich Generation
Stage IV - Empty Nest—Preparing for Retirement
Stage V - Retirement—Enjoying It
Stage VI - Multiple Generation
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I. Getting Started—Building a Foundatio

– Create a budget
– Pay Down Debt
(student loan)
– Establish Emergency
Fund
– Save for Large
Purchases
– Invest Early (Dollar
Cost Averaging)

Investing and Planning

Early
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II. Establishing Roots

– Continue Investing for
Retirement
– Start Investing for
your Child’s College
Education
– Review your Life
Insurance Coverage

Planning the Expectings

and Un-Expectings
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III. Full House—Sandwich Generation

– Invest your Child’s
College Education
– Know your Parent’s
Needs
– Plan for Health Care
– Make your Retirement
a Priority
– Match Your Goals and
Your Time Horizon

Balance your Life and

Expectations
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IV. Empty Nest—Preparing for Retirement

– Eliminate Remaining
Debts
– Estimate Your
Retirement Income
Needs
– Evaluate Your Portfolio
and Net-Worth
– Increase liquidable
(easy access) assets by
reducingfixed assets
– Update Your Estate
Plan

Dealing with your

Realities
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V. Retirement—Enjoying It
• Debt Free
• Stable Monthly
Incomes Plan
• Conservative
Investment
Portfolio (maintain
growth potential)
• Review Estate Plan

Enjoy your Golden

Age
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VI. Multiple Generation

• Sufficient cash inflow
and reserves
• Estate Planning
• Further simplify your
portfolio and life
(maintain growth
potential)
• Long-term Care
Simple is a
wonderful word
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Life Cycle Phrases,
Financial Characteristics
and, Financial Statement
Age 20 40 60 80 100

Excess
Shortage Cash Flow
High Debt Low

Low Net Worth High

III. Distribution/ Gifting (*Cash Flow Statement)

II. Conservation/ Protection (*Balance Sheet)

I. Asset Accumulation (*Income Statement)

Age 20 40 60 80 100
 John and Mary Cash Flow
1/1/2014 - 1/31/2014

Income
John Salary $ 100,000
Mary Salary $ 60,000
Rental A $ 12,000
Rental A $ 8,000
Interests and Dividends $ 1,000
Others $ 50,000
$ 231,000
Fixed Expense
Retirement Plan $ 5,000
Health Insurance $ 8,000
Home Mortgage $ 48,000
Rental A Mortage $ 20,000
Rental B Mortage $ 22,000
Car Loan $ 6,000
Insurance $ 4,000
Utility $ 2,000
Telephone $ 1,200
TV and Internet $ 1,200
$ 104,400
Non-Fixed Expenses
Food $ 12,000
Credit Cards $ 30,000
Cloths $ 12,000
Entertainment $ 12,000
Medical $ 2,000
Others $ 10,000
$ 78,000
Tax
Income Tax $ 23,000
Car and Property Tax $ 6,400
$ 42,400

Disposable Cash Flow $ 6,200

Accurately calculate the total retirement
incomes from DC and DB plans
 Asset Distribution
Household Balance Sheet Equity/Debt Ratio
Asset Allocation
John and Mary (age 52 and 49) Asset Growth Diagram
Balance Sheet (as of 12/31/2014)
Liabilities and Net Worth Cash
Asset Liabilities Growth
Cash/ cash equivalents Current Fixed
Joint Cash $ 10,000 Wife Credit Card $ 20,000 Asset
Liqui
Total Cash $ 10,000 Husband BMW Car Loan $ 30,000 d
Investment Assets Total Current Lia. $ 50,000 Asset
Liquid Assets
Husband Mutual Fund $ 10,000
Husband Stock $ 8,000 Long-Term
Wife Insurance $ 30,000 Joint Primary Residence Mortgage $ 500,000
Wife Bond $ 1,000 Husband Vacation House Mortgage $ 7,500
Total Liquid Assets $ 49,000 Husband Mortgage Rental A $ 650,000
Fixed Assets Husband Mortgage Rental B $ 350,000
Husband Rental A $ 700,000 Total Long-term Liab. $ 1,507,500 Risk
Husband Rental B $ 400,000 Total Liabilities $ 1,557,500 Debt Equity Measurement
Wife Land $ 100,000
Total Fixed Assets $ 1,200,000
Personal Used Asset
Joint Primary Residence $ 700,000
Husband Vacation Home $ 8,000 Net Worth (Equity) $ 479,500
Husband BMW car $ 50,000
Wife Toyota $ 20,000 Other
Mutu
Total Personal Assets $ 778,000
al
Total Asset $ 2,037,000 Total liabilities and Net Worth $ 2,037,000 Cash Fund
Portfolio
Important characteristic of “Financial Freedom” for retirement people Stock
Bond
is the continuously increasing of their “New Worth”