These 3 numbers are at odds with one another and form a trilemma. If your goal is to increase one point of the triangle, you must do so at the expense of the other two.
For example, let’s say you want to spend more in retirement. In doing so, you’ll leave less to heirs and lower your probability of success. You want less risk of falling short? Reduce your spending and legacy goals. You want a larger legacy? Increasing that goal reduces probability of success and/or reduced spending.
So if a retirement financial plan is only a series of tradeoffs, what does it mean to actually make a plan better?
You see, the trilemma exists because it assumes everything is held constant. Your spending never changes, your investments are static, and your plan simply ends at death. But that’s not what happens in the real world.
Spending is dynamic, adjusting to different economic conditions and stages of life. Investment portfolios can have different objectives and be optimized to achieve different goals. Finally, the end of your life doesn’t have to mark the end of your plan. The assets you’re likely to leave at death have different time horizons and objectives, and those should be recognized in financial plans.
We recognize the dynamic nature of our client’s lives and have developed strategies that will meaningfully improve your retirement. With a more dynamic investment approach, smart strategies on retirement spending, realistic planning assumptions, and a more intuitive way of measuring planning risk, we can finally break out of the financial planning trilemma.
This post is the introduction to a series that will explore the concepts and strategies that can lead to the outcomes above. The series will cover the following:
At WJ, our vision is that every client lives a fulfilling life by making the most of their financial resources. We’re always trying to find ways to make that a reality, and we’ve found that the traditional financial planning model can get in the way of that.
We want to challenge clients to think bigger. What would you do if you could spend 20% more per year? What impact could your wealth have if you were to leave a larger legacy?
This strategy has been the culmination of a lot of research and years of analyzing our clients’ goals and objectives. We are excited to finally share this with you, and even more excited to see the impact it will have on our clients’ lives.
WJ Interests proudly provides financial planning services in Sugar Land and Fort Bend County. Learn more about working with one of our CERTIFIED FINANCIAL PLANNERTM professionals to achieve your goals.
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