Needs Based Planning


Each family’s needs are different.


Understanding the planning pyramid is the basis to the approach we use for finding needs and setting goals. 

We initially do an inventory to determine needs and goals. We use several sets of software to assess and analyse if there are unseen risks of guaranteed retirement income, we call this  Income GAP analysis, and Guaranteed Retirement Income GAPs. 

We then move to find if longer term care cash flow is properly addressed and then move to finding inflation GAPS and ways to find solutions and bridge any GAPs and maintain all within your risk tolerance. ​

Building a Solid Foundation​ and Core

Here are a couple simple steps we recommend you follow to assure the basics are covered as you climb the risk curve. (pyramid) Here’s what you need to consider: Fill your qualified (tax deferred) bucket as fast as possible, but be sure the foundation of your estate is solid. Then look to maximize the non-qualified parts of your estate. By following the steps below you will begin your path to financial stability and peace of mind.


This is where you protect your family against the potential of a bread winners’ loss of income. So, first, be sure you have a good health care solution, in securing this, protect against a disability (both long term and short term).


Protect your largest investment, your house. To protect your house, you need to protect against the loss of a household income stream, an income that helps pay the mortgage. Term and or permanent life insurance can protect against the loss of income due to a death, but it also can protect against loss if you get sick or are disabled, so it can help mitigate the needs in step 1.

The primary reason you look at permanent insurance is it is a foundation, a part of your estate and will always be there, even if your family does not need it for the death benefit. It builds value on a tax-free basis, and that value can be used for things like college education and if never used a cornerstone of retirement income.


The question is how much do I need, and how much should I pay for it? as well as where does it fit? How do I allocate for it versus other foundation and or core estate needs? Here is what we suggest:

  • Make sure your mortgage is covered with a simple term policy at the very least.

  • Take advantage of the employer match in your company sponsored 401K plan if you have one. Typically with “traditional employer-sponsored plans” your contributions are deducted from your paycheck before taxes are taken out, and your savings grows tax-deferred. This means you pay taxes when you withdraw the money in retirement. 


Often these plans include an employer match. For example, your company may match 50% of what you contribute, up to 3% of your salary. So, if you save, say, 3% of your salary, you’d get an additional 3% from your employer for a total of 6%, and this makes sense for everyone to do, as the matched 3% is actually found money.

If you do not have one, or if you have cash flow after the company match is met, then look really hard at the investment into permanent life insurance. There are lots of reasons to do this, with the biggest being, the older you get the more insurance costs, and you will never be healthier then you are today so the cost for the benefit will never be lower.

  • After you assign the cash flow needed to fund your Permanent insurance, then look to contribute the maximum to your 401K, an amount above the company match mentioned above in the second bullet. Currently this is $18,000, and $24,000 if you file jointly.

  • Fully fund an IRA, if you qualify for the tax deductions allowed for a traditional IRA, if not then fund a Roth IRA. Either or, this is another $5,500 (add another $1,000 if you are over 50) long term savings plan (see IRA restrictions below for additional guidance).


Now that you have made the allocations to the 401K and IRA’s you need to look into how to invest that money. With a portion of these qualified funds, approximately 20%, take a look at indexed annuities. Why? Because there is typically a floor of zero, so if markets go down, at worst, you do not lose any value. Put the balance into a well-diversified equity portfolio of passive ETF's and let it ride. Look into re-balancing this portfolio annually. 


When you follow these steps, you have a solid FOUNDATION to your estate, backed up with a strong CORE to your estate, Now you can now turn your attention to the SATELLITE portion of your estate. (See Advanced Planning)


Needs and Goals Based Planning

1.   Set up a client portal inside the financial planning tool. Digitize the information collection process via collaboration with all financial accounts. This gives us the current state of the family balance sheet or net worth statement. Work to define with detail goals such as anticipated large purchases, cars, houses, weddings, etc. education, family growth, retirement dates, retirement expenses, social security, retirement savings are defined. THIS INFORMATION MUST BE INTEGRATED INTO THE SAME DATABASE IF THERE IS ANY CHANCE TO EFFECTIVELY UPDATE, ANALYSE, AND REPORT.

2.   Set up the client risk profiling and current assets in the client risk and portfolio stress test portal. Run stress test scenarios based on current and risk mapped portfolios. Once an understanding of the risk profile is established we generate the investment policy statement.

3.   We use the data generated in the risk and stress testing to set the future state portfolio parameters, and then run cash flow analysis using time series analysis and cost of living adjustments with full tax considerations. The time series is extended to age 95, so we can see if the current state and plan can support the future state time series needs.

4.   Reality check, typically one to three things need to be adjusted. 1. client needs to make more money, or 2. client needs to save more money 3. client life style changes to a more needs based verses wants based style

5.   Map out the plan to get the save/spend plan in line with goals

6.   Create a monitoring rhythm to maintain and follow the plan


GAP Analysis is designed to find shortages that protect you family in both the asset accumulation and the asset distribution phases of you family life. Most of these GAP's are filled by guaranteed offered by insurance products. Permanent life insurance, disability, and Annuities are strategic ways to fill these GAP's and provide secure income stream during retirement.

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