BOTTOM-UP APPROACH EXAMPLE (1 OF 2)
01.Core Concepts
Assume you had two clients, Anna and Bart, who had identical income and expenses each year. Anna and Bart each make $120,000 in pre-retirement income. Anna has arranged her financial affairs in such a way that she will have no mortgage payment or car payment while in retirement. Bart, on the other hand, expects to continue to have both a mortgage payment and a car payment throughout the majority of his retirement years. Both of them expect some expenses to decrease durin g retirement. The following chart illustrates that, while Anna will need a 64.75 percent WRR, Bart will need an 84.75 percent WRR. The difference is due to Bart’s $18,000 annual mortgage payments and $6,000 annual car payments.