Mary was a 58-year-old happily marriedwoman with no children. Her husband,age 65, was a primary care physician,healthy in all other respects except for an arthritichip. During hip replacement surgery, he had anembolism and passed away.
After more than 30 years of marriage and with noprior financial expertise or training, Mary was facedwith the prospect of not only being widowed, butalso organizing her financial future. She had been leftvarious financial accounts totaling $1.6 million anddid not know what to do with them. For almost a year,Mary had no idea whether she could continue withretirement plans or if she could live on what she had.
Importance of Goals
The case of Mary provides a real-world instanceof just how important it is to implement a goals-basedinvestment strategy. In essence, goals-basedinvesting is tailoring an investment strategy around aparticular investor's data and needs. The idea is toensure a client's risk level is consistent with the goalsthey wish to attain, thereby delivering peace of mindto the client and financial security as well. There's noreason to accept more risk than is necessary.
In order to decide on an investment strategy,individuals need to project their abilities to financiallyprovide for themselves and reach their longtermfinancial objectives with a great deal of certainty.If it is determined that they most likely willnot be able to meet these goals, a financial advisorcan work together with an individual to raise thatlevel of certainty and increase the likelihood of apositive financial outcome.
By looking at Mary in terms of her current age, herearned income, the date at which Social Security survivorshipbenefits were to begin, and the need for$100,000 annual pretax income she had through herhusband, it was ascertained that she would be able toprovide for herself an income of $100,000 per year,adjusted 3% yearly for inflation, with a basic growthand income allocation (ie, 60% allocated equity and40% bonds). This takes into account the assets shebrings to the table, but it does not include the marketvalue of her primary residence, which at some pointin the future can be converted into cash if necessary.
In order to realize your long-term financial goals,a conservative investment strategy such as goals-basedinvesting is the best route for the physician-investorlooking toward retirement. Undertaking aslittle risk as possible and keeping your investingsimple will bring more predictability to your future.A Certified Financial Planner™practitioner canhelp tailor a goals-based investment strategy thatkeeps in mind your retirement goals, withoutexposing you to any undue risk.
is a financial planner and president of
Krasney Financial, LLC, in Brookside, NJ. He is an expert in personal
finance issues for high-net-worth individuals and often
assists clients in estate planning issues, tax management,
bonds, mutual funds, and charitable giving. He has appeared on
CNN, CNNfn, and can be seen regularly on CNBC's Power Lunch "Making Your
Money Work" segment. Mr. Krasney welcomes questions or comments at 888-572-7639 or firstname.lastname@example.org.