High investment fees can be absolutely devastating to your financial security – learn why now.

Do You Know One Thing Possibly WORSE Than a Stock Market Loss?

It’s Time for an Analysis of Assets to Beneficiaries 

In past articles, we shared everything you need to know about the very first step in creating a comprehensive written retirement income plan: the Retirement Income Projection. Next, we discussed the second step in your planning, the Income Tax Analysis. If you didn’t get a chance to read those articles yet, you can start here.

In this final installment of this series, we give you details about the third step in your comprehensive written retirement income planning: an analysis of assets to beneficiaries. Having a comprehensive written retirement income plan you can rely on is incredibly important to your financial health in retirement, so let’s take a look at this final step.

A Quick Review of Our Favorite Hypothetical Couple

In our last installment, we created our hypothetical couple Bob and Carol’s income plan showing:

  • How much income they would receive throughout retirement.
  • That their income wouldn’t run out for as long as they lived.
  • They have decreased their risk by up to 90%.
  • They reduced their fees by $32,000 per year and $640,000 over the next 20 years.
  • They increased their annual income to $138,000 and kept their federal and state income taxes at 15%.

In our retiree example, after Bob and Carol were confident that they would receive the amount of income they wanted, their income wouldn’t run out for as long as they lived, and they wouldn’t get killed with income taxes, they wanted to know how much money they can potentially leave to their beneficiaries.

Next, Determining What Bob and Carol Can Leave to their Beneficiaries

We have found that most retirees want to do two things:

  1. Use their assets to produce income for as long as they live to enhance their lifestyle.
  2. Leave all remaining assets to their beneficiaries.

They have a son, Brian age 35, also an engineer like Bob, and a daughter, Susan, age 33, who is an attorney. Bob and Carol have two grandsons from Susan and two granddaughters from Brian.

We looked at two things:

  1. Year-by-year projected annual income from assets and cumulative income from assets.
  2. Year-by-year projected assets that can be left to beneficiaries based on conservative annual growth assumptions, net of their income distributions from their assets.

Bob and Carol’s “Annual Income From Assets” is what income they are projected to receive from their assets every year throughout their retirement. In 2018, they are projected to receive $60,000 of income from their assets, and in 2028 they are projected to receive $66,393 of income from their assets. In looking at their “Cumulative Income From Assets,” in 2028 they are projected to have received $695,451 of cumulative income from their assets from 2018 through 2028. In 2038, they are projected to receive $68,617 of income from their assets and their cumulative income through 2038 is projected to be $1,371,254.

This means through age 85, Bob and Carol were projected to receive $1,371,254 income from their $1,600,000 portfolio. Well, that’s great, but what’s left for their beneficiaries?

SEE ALSO: Should I Hide My Money Under the Mattress or Trust an Insurance Company?

Next, we looked at “Total Asset Value Analysis Beneficiaries.” This is an analysis of the asset values that can be potentially left to the beneficiaries, net of all income distributions, calculated on a year-by-year basis using what we feel are conservative asset return numbers. The analysis uses the following hypothetical assumptions:

  • A 4.0% rate of return every year. In 2038, after Bob and Carol have taken out $1,371,254 of cumulative income if their portfolio assets earn a 4.0% annual rate of return, there are still $1,531,476 of assets remaining in the portfolio. So how would you like to take out income totaling $1,371,254 from age 65 through 85, and just because you earned a 4.0% rate of return, you “accidentally” left $1,531,476 to your beneficiaries? Would that be OK? Did you have to give up anything to use your assets for income and still pass on a legacy?
  • Bank assets averaging a 1.0% annual interest rate. Bob and Carol have saved money each month and netted for any planned lump sum withdrawals. If the bank assets average a 1.0% annual interest rate, in 2038 Bob and Carol are projected to have $644,469 in the bank.
  • Real estate appreciated at an average annual rate of 1.5%. If Bob and Carol’s real estate assets average a 1.5% annual appreciation rate, in 2038 the real estate is projected to be worth $683,529.

Using the above, we can calculate the total projected value of all assets on a year-by-year basis, decreased for all income distributions and increased for stated growth rates.

In 2038, the total of all assets Bob and Carol own, net of the $1,371, 254 cumulative income distributions, is estimated at $2,859,475. This means in 2038 if Bob and Carol pass away, they have taken income from their assets totaling $1,371,254, and if their portfolio assets average a 4.0% return, their bank averages a 1.0% return, and their real estate averages a 1.5% return, they will potentially leave $2,859,475 to their beneficiaries.

SEE ALSO: What is a ‘Safe’ Rate for Retirement Income Withdrawal?

Reviewing Bob and Carol’s Written Comprehensive Retirement Income Plan

The entire plan we’ve discussed throughout this article series was created with the focus of meeting all of Bob and Carol’s goals:

  1. Increased their annual gross income from $78,000 to $138,000.
  2. Increased their net after-tax monthly income from $5,800 to $9,811.
  3. Provided enough income every month to pay for all their expenses plus save $2,311 per month.
  4. Reduced their risk by up to 90%.
  5. Saved them over $32,000 in fees per year.
  6. Kept them in a 15% effective tax bracket on all their income for federal and state income taxes.
  7. Potentially leave a large amount of assets to their beneficiaries when they pass away.

But it is even more important to understand they have all of these things without having to expose their assets to large losses by trying to earn a high rate of return. They don’t have to earn 8%, 9%, 10%, 11%, or 12% to make their plan work. They could do just fine with 4.0% earnings on their portfolio assets, 1.0% earnings on their bank assets, and 1.5% appreciation on their real estate.

The key is that Bob and Carol no longer have to worry about their money so much with a plan because for the first time in their life, they are actually controlling their assets instead of letting their assets and their advisor control them.

Is it Time to Develop YOUR Comprehensive Written Retirement Income Plan?

Think about your answers to these questions for a moment:

  • How would you feel if you didn’t have to worry about your money any longer?
  • How would you feel if you were in control of your financial security?
  • How would you feel if you had a plan like Bob and Carol?

At Peak Financial Freedom Group, this is the type of service we strive to provide for our clients. We design customized retirement income plans to help our clients achieve their version of financial freedom. We can consider multiple conservative risk reduction strategies designed to help our clients add a degree of protection from market instability and provide them the opportunity for portfolio growth.

Ready to schedule a consultation with us? There’s no time like the present! We’re ready and waiting to give you more control over your financial future. Contact us today to get the conversation started.

Peak Financial Freedom Group
2520 Douglas Boulevard, Suite 110
Roseville, CA 95661


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2nd Opinion Package available to Qualified Retirees and Soon-To-Be-Retirees may include free consultations, a free retirement income plan, risk analysis, and fee analysis. In addition, a comprehensive written retirement income plan may be provided to those who complete the entire process. Qualified Retirees and Soon-To-Be-Retirees must have a minimum of $500,000 of investible assets such as IRA’s, 401K’s from past employers, stocks, bonds, mutual funds, bank accounts, money markets, CD’s, etc., but DOES NOT include real estate, businesses, limited partnerships, 401K/retirement plans that can’t be moved to another plan, and other illiquid type assets.

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2019(1), 2020(2), 2021(3), 2022(4), 2023 (5) and 2024 (6) Five Star Professional Wealth Manager Award - Dan Ahmad and Jim Files have been nominated for and have won the 2019, 2020, 2021, 2022, 2023 and 2024 Five Star Wealth Manager Awards. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers. Once awarded, wealth managers may purchase additional profile ad space or promotional products. Award does not evaluate quality of services provided to clients. The Five Star award is not indicative of the wealth manager’s future performance. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or this publication. Working with a Five Star Wealth Manager or any wealth manager is no guarantee as to future investment success, nor is there any guarantee that the selected wealth managers will be awarded this accomplishment by Five Star Professional in the future. Award winners represent an exclusive group of wealth managers who have demonstrated excellence in their field by satisfying 10 objective selection criteria. For additional information on the Five Star award, including a complete list of the 10 objective selection criteria and their research/selection methodology, go to https://fivestarprofessional.com.

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