Non-Financial Independence: Low Capital & Low Income

Non-Financial Independance: Low Capital & Low Income
Income Enhancement & Capital Depletion

This type of client does not have the ability to increase either their current income or capital base.  Most often we find clients either approaching retirement, in retirement or having suffered from a debilitating event.  Typically, we find two scenarios; income enhancement and capital depletion.   

With the goal of income enhancement, we would design the capital base to supplement current income generated by either current labor, pension income, government payments or a combination of the various sources.  The goal is to preserve capital and maximize income.

A capital depletion scenario calls for us to maximize the capital base over time, while withdraws are being made to support the client.  There is a delicate balance that must be made between maintaining a cash reserve and exposure to equities.  The cash reserve must be large enough to meet the withdraw needs and serve as a buffer, while assets that are exposed to equities can grow over time.  As the equity base grows, it will constantly be drawn down to replenish the cash reserve. 

These are the two predominate scenarios we run across. However, there are many other circumstances that may call for a Non – Financial Independence strategy.  Please contact us to discuss further particular situation.