It’s important to make an estate plan that protects your family if you die. Losing a loved one is hard enough without losing your standard of living too.
Financial Strategy
Risk and the Life-Cycle Theory
Investing is one way to fund future spending. Rick Miller uses the current living standard and spending patterns of clients to predict the risk of potential returns when planning.
Human Capital and the Life-Cycle Theory
The Life-Cycle Theory recognizes that there are different stages in life that fade into one another. Rick Miller talks about the three main phases of the lifecycle: human capital development, working and raising a family, and retirement.
Goals Within Life-Cycle Planning
Risk Management
We work closely with you to understand your lifetime budget, or how much money you expect to live on each year. From that perspective, risk management is the set of insurance products that will allow you and your family to maintain that budget over the course of your lifetime.
Utility Maximization
Rick Miller, founder and CEO of Sensible Financial Planning, helps clients think in terms of utility maximization. The utility maximization rule states that consumers allocate their income so that the last dollar spent on each product purchased yields the same amount of extra marginal utility. The key takeaway according to Rick are the experiences people enjoy and the benefits of stable consumption.
Lifespan Uncertainty
When planning, you never want to plan too short. Many tend to underestimate, but life expectancy is unpredictable. Founder and CEO Rick Miller discusses the uncertainty in lifespan during financial planning.