2. Prepare a financial plan for yourself (and family, if applicable). This plan should include a summary of the short-term and long-term financial goals (make sure to include retirement as one of your long-term goals). Projected costs of those goals, a summary of the financial instruments (e.g., insurance, savings, investments, mortgages, loans, etc.) you will utilize to achieve those goals, milestones to measure progress, projected budgets, balance sheets, and income statements for consecutive 5-year periods (i.e., five years from now, ten years from now, fifteen years from now, etc.) up to your planned retirement age (i.e. the age you intend to retire, not necessarily age 65), and an assessment of the risks to the financial plan.
3. Project your budget to age 60 (retirement) in 10 yr increments starting at age 30, 3 budget forecasts minimum (inflation of 3 and 5%)
4. Make adjustment to your budget for future expected expense changes (children, homes, college expenses for children ect), explain expense changes.
5. Project insurance needs, costs and coverage amounts moving forward (life, home, auto, health). Explain rational for requiring insurance. This should be included in your budget.
6. Project how much you must invest monthly to achieve an amount to provide the necessary income through age 90. (use both 6 and 8% ROR) The savings/investment should be included in your budget.
7. The assumption is you’re retiring at 60 and will live to 90.
8. Show anticipated investments to be used to meet goals (give explanation of investments types, expected asset allocation and amounts to be invested)
9. Explain expected stock market growth, general direction of interest rates and the economy, to support your investment objectives.
10. Provide written comments to explain assumptions of interest rates, economic and personal change, investment types and returns and anticipated future costs, insurance coverage’s etc.
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