Personal Financial Plan
Introduction
The purpose of this presentation is to provide a general overview of some of the aspects of my personal financial position.
I am 38 years old. I have a wife who is 33 years old and I also have two children aged 5 and 8. I have hopes of sending both my children to college. I have a home which I am still paying for using a mortgage plan.
- I have assets of approximately $ 550 000
- I have liabilities of approximately $ 40000
Current and Future Income needs
- Both my wife and I hope to retire at the age of 65
- The monthly after tax income that I need currently is about $3000
- This income is needed until the final life expectancy which is at the age of 90
Debt acquisition and retirement
My calculations reveal that my family will have around $250000 at the life expectancy. This value has been reached with disregard to long term care or premature disability that my wife and I may experience and also with disregard to unforeseen economic downturns. Contingency allowances have however been taken into consideration when coming up with this figure. However, this amount is short of the $300000 required ate the life expectancy. I therefore need to make a debt acquisition of $ 100000.
Acquisitions and disposal of personal assets
My wife’s and I marriage terms dictate that everything is shared equally including personal assets. We are not an extravagant family and our lifestyle is quite simple. In accordance to this simple lifestyle, we plan to acquire minimal personal assets totaling to about $80 000. The disposal of these assets is subject to both my wife’s and my own approval. However, there are some personal assets that we consider surplus and will therefore be disposed. The total amount we expect to raise from the disposal of these assets is about $135500. This amount will be a great addition to our savings for our future plans.
Emergency cash funds
A part of our savings is dedicated to emergencies that may occur at any given time to the members of our family. Currently, our total savings are about $48000. Form this amount, the amount allocated to emergencies is about 10, 000. However, in terms of survival needs, we have also signed up for a life insurance scheme with annual payments of about $2000 dollars. The scheme covers every members of the family. This has been done taking into consideration that my relative job devotion and income level would significantly drop if I lost a family member. This is how this amount of contributing $ 2000 annually has been reached.
Investment plan
Retirement plan
As stated earlier, my wife and I both plan to retire at the age of 65. Currently, we are both covered by a pension scheme that will become active once we retire. However, since the pension alone will not be able to support our annual living expenses, this is where our savings will come in handy. The total amount that will be present at life expectancy will be about $300000 in exclusion of the proceeds from insurance. Generally, the general retirement profile will looks as shown below.
Retire spending needs $20000
Survivor spending needs $15000
Retirement age 65
Inflation (current) 3%
Inflation (retirement) 3%
Tax rate (current) 18%
Tax rate (retirement) 15%
Estate plans
My current gross estate is about $400000. Federal estate taxes will potentially range from $4500 to $6000. The probate, administrative and final expenses could potentially total for $11000 to $11000. However, additional planning could actually save up around $9000 in the estate taxes and also other costs. Some of the strategies and documents that I plan to implement to ensure that my assets and property is properly distributed in accordance with personal goals and objectives include
- A will for my wife and I.
- Revised ownership of assets terms to achieve more property balance
- A Revocable Living Trust for both spouses
- Funding of the Revocable Living Trusts
- Irrevocable Life Insurance trusts
References
How to Create a Comprehensive Personal Financial Plan - Budgeting Money. (n.d.).
Retrieved June 14, 2013, from http://budgeting.thenest.com/create-comprehensive-personal
financial-plan-28501.html
Hallman, G. V., & Rosenbloom, J. S. (2003). Personal financial planning. New York: McGraw-Hill.
International Association for Financial Planning. (2000). Financial planning. Atlanta, GA: International Association for Financial Planning.
Personal Financial Planning Sample. (n.d.). Retrieved June 14, 2013, from http://www.small-business-ideas.org/personal-financial-planning-sample.shtml
The Financial Planning Process. (2013, February 23). Retrieved June 14, 2013, from http://highered.mcgrawhill.com/sites/0073106712/student_view0/ebook/chapter1/chbody1/the_financial_planning_process.html
