Financial Planning Fridays #38: A 100-Year Plan

Today I want you to consider a different way to think about your investments. What if you and your family had a 100-year time horizon?

Most Presilium clients have financial plans that show their wealth continuing to grow year after year. Due to their projected withdrawal and growth rates, their investment accounts are projected to grow to a much larger amount when they are in their nineties than they had in their sixties. This means that they are likely to leave a sizable amount to their family, friends, and their favorite charities.

However, what if we looked at our investments over a 100-year time horizon instead? The investments we hold today are ours while we are alive, and give us the financial freedom to accomplish our goals, however, after we pass away, our beneficiaries now can not only benefit from our financial legacy but also continue it.

Additionally, this would allow us to better tune out the ups and downs of the market volatility we see so often. Knowing that this is not a one-year game, or even a three or five-year game, but a 100-year game would allow us to maintain the proper long-term perspective needed to achieve everything we set out to achieve.

Let’s go over how that may look during the next 100 years.

A sample couple starts retirement at age 60 with $3 Million saved and a goal to spend $120,000 per year. It’s important to state that this $120,000 in spending is an after-tax amount and we have it growing at a rate of 2.5% annually to account for inflation.

This means that they will spend about $5.2 Million during their 30-year retirement starting at $120,000 at age 60 and finally spending $245,000 in their 90th year. This would then leave their children $6.5 Million if their portfolio grows at seven percent per year.

Their children then start spending $250,000 per year, increasing each year up to $515,000 on their 90th birthdays. This is a total of $11 Million over the next 30 years and would leave our client’s grandchildren with $16.7 Million.

Finally, our client’s grandchildren are then able to spend $527,000 per year starting in the 60th year up to almost $1.4 million by their 100th birthdays; a total of $35 Million in spending and with a final family portfolio value of almost $100 Million.

One hundred years of portfolio income, amazing life experiences for multiple generations, and a final portfolio of almost $100 Million all from a starting point of $3 Million.

With careful planning you can not only reach our own financial goals but also leave a legacy that will help many future generations.

Be on the lookout for our next Financial Planning Fridays episode. Subscribe to our Youtube Channel so you never miss an episode. Or contact us directly; schedule your 15-minute call with us today.