The drama of 9/11 and the depressed securities markets of 2000-2001 have in some way affected us all. According to recent press reports, many Americans have begun to reprioritize their lives and review their financial planning assumptions at this time. We assume that this will be no less true with members of the BWFA family. As your advisors, we have been reviewing plans which we have completed in the last few years with an eye to the sustainability of cash flow when calculated from present depressed market prices. In financial plans completed before July this year, our planning assumptions used a 6% static annual rate of return during retirement and a rate of return as high as 8% before retirement. In the past year, we have actually changed our approach to future rates of return.
On annual review, we will be recasting your projections using new assumptions and then calculating the future probability of success of your plan. As you know, we suggest that all planning be reviewed annually. Some of you have disciplined yourselves to do so; others have not. This year, be certain to get a thorough review. Nearly all your planning parameters should be reviewed and many plans will need recasting to take into account the changes of the last 24 months in the world.
Take this opportunity to review with us any significant changes in your life. Besides world events and market downturns, health issues, relocation decisions, retirement cash needs, and other personal issues will also affect the outcome of your financial planning. If it has been more than a year since your original plan was completed or since your last review, please schedule some time to see us during the first quarter. Some data collection may be necessary, especially if we do not do your taxes or manage your investments. However, new iterative projections can determine the probability of success of your current plan much more closely than we were able to with our previous system. The peace of mind that comes from knowing with some certainty if anything needs to be adjusted in order to maintain your current lifestyle is immeasurable.
|You may ask, �Can I save any money?�|
|In a recent financial planning review, new IRS estate tax tables substantially altered our recommended estate planning strategy for one client. As a result, we were able to eliminate $13,000 in annual insurance premiums and free up over $200,000 in insurance cash value for other uses, because our review showed that the death benefit in his policy would not be needed to pay estate taxes.|