by Elizabeth Hagenlocher

Establishing the Importance of Big Picture ThinkingHow do you help your clients establish present-day strategies for future desires? So many people don’t think far enough into the future, that they’re only building strategies for the next five or ten years. First of all, that’s great! Any strategies they can implement now will help them achieve prosperity. The next step becomes demonstrating the importance of seeing the big picture. How do you help a client truly understand how much they need to save, and how to sustain their quality of life over a long retirement?

No one wants to think about retirement in their 30s (well, unless you buy into the F.I.R.E movement), but it is a MUST. You and your client will develop different strategies for different stages of life, but the big picture must always be accounted for: where will your client’s income come from when they can no longer work?

Enter, the Future Requirements Calculator.

Truth Concepts financial software has a unique calculator called Future Requirements. We will say, this is not an easy calculator for clients to digest. Future Requirements can pack a punch, so you must use your discretion when presenting it to a client. We also recommend using data that doesn’t belong to them—it showcases the impact without the sting.

This calculator has the ability to impress upon your client the critical requirement of saving more money. (Hint: it’s going to be way more money than you or your client might imagine.)

Future Requirements analyzes your client’s current financial picture, and projects that into the future, indicating exactly how much must be saved to maintain the same quality of life. You begin by inputting income and what percentages of that income are currently put towards living expenses, debt service, taxes, and savings.

The calculator shows what those savings will look like in future income, compared with the income necessary to sustain the same lifestyle. The projections feature provides the total amount of money needed for a retirement of a specific length, and what that would be in today’s dollars. A projected earnings rate is also provided, illustrating what the current savings must earn in order to achieve the necessary sum.

The projections can be quite sobering, because they show the real effects of inflation and taxes on savings. There are few accounts that can keep up with those variables.

Retirement and Prosperity Economics

Popular belief (fueled by typical financial planning practices) is that anyone can easily retire on a portion of their current income. This fails to account, however, for real life outcomes like inflation. Clients are also fed the idea that they will retire in a lower tax bracket, but what does that really mean?

For starters, tax law will change, and we cannot predict how. Assuming a lower tax bracket is unwise, because the possibility also exists that your client will retire in a higher tax bracket. Why? Because the brackets are based on income. If your client builds wealth and creates prosperity for themselves, as we hope they do, a higher tax bracket is likely. Taxes are a fact of life that aren’t going anywhere, but your client won’t necessarily be better off by taking a lower income to avoid higher taxes. Because taxes occur at the margins, their entire income won’t be taxed at one rate. Therefore, taking a lower income will just leave them with less money.

It’s important to understand the popular belief out there, so that you can have a frank discussion with your client about some of the misconceptions. This brings you one step closer to helping your client with big-picture thinking.

So What Now?

Your clients will likely ask this after they see a presentation as intense as Future Requirements. The good new is there are many strategies your clients can employ, which is why we show them this calculator at all. Participating whole life insurance is a great vehicle for accumulating cash value that can actually keep up with inflation. Educating your client on the benefits of whole life insurance is a great start to their prosperity journey.

You’ll want to start slowly—you have the next thirty years or more with your clients, so you can take your time. Ease them into the conversation. Future Requirements reveals the flaws in typical financial planning, so now it’s up to you to help them see the full picture.

It’s also important to point out that the money they save for retirement must last them the rest of their lives…which can be impossible to pinpoint. Help them consider ways to live the Prosperity Economics creed in more ways than one—what if they weren’t just working to retire? How revolutionary would it be if your client built their passion into their career? They’d probably feel less inclined to see 65 as a hard line for retirement, and more as a suggestion. Their enjoyment and fulfillment might also increase. The longer your client can work, ideally in an area they love, the less passive income they will need to save.

There are different ways to approach this topic with your client, but the baseline is—they have to be thinking about the big picture in the end. The big picture is what will help your client’s achieve a prosperous life both now and later.

If you’re looking for a community of like-minded advisors, look no further than the Prosperity Economics Movement. For more information about our movement, Truth Concepts. You can join the movement as a member and gain access to our exclusive resources. If you have a client who would like to learn more, have them visit our client community, Prosperity Peaks.