Take a Look at Your Financial Forecast

Every day, or at least every few days, the vast majority of us check our local weather forecasts. We need to know how cold the weather will be, or whether any wintry precipitation is expected, before we can make plans for travel, outdoor recreation, grocery shopping, and even just our commutes to work. Whether you think about it much, or not, quite a bit of your life revolves around this forecast!

Similarly, your life also revolves around your financial forecast. And while most of us have a solid understanding of our finances right now and in the near future, the distant future might seem like a huge unknown.

Unlike the weather, we can actually forecast your finances for years in advance. Is the forecast always perfect? Of course not. Various life events and circumstances beyond your control can alter this forecast somewhat. But in most cases your outlook can be predicted with a degree of relative certainty.

This is an important topic, because (according to a recent Morgan Stanley poll) 71 percent of high-net-worth couples are concerned about whether they will have enough income to sustain their lifestyles in retirement.

A good long-range financial forecast looks at a range of possibilities, from worst-case to best-case scenarios. In the majority of cases, your actual outcome will fall somewhere in between these two extremes. The point is to identify those extremes, and then compare them with how you’re actually planning and investing.

For example, if you need a 5 percent return on your portfolio in order to generate adequate income for retirement, do you really want to invest as though you expect a 15 percent return? Sure, that degree of return would be fantastic, but it might not be realistic. That strategy also might not reflect your true risk tolerance.

We can help you analyze your portfolio, develop a long-range financial forecast, and determine whether you will be likely to generate the income you need in retirement. And unlike with weather forecasts, we can help you take steps to potentially improve conditions and your outlook, when needed.

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