BUILDING YOUR
FISCAL FORTRESS
™
You've worked a lifetime preparing for this time.
It's taken years of hard work to create your wealth. Now that you are at, in or near retirement, the rules have changed. It becomes less about accumulation and more about preservation and distribution of your wealth in a tax efficient manner.
Let us help you navigate the new rules of retirement with our proprietary planning & investment strategy called the Fiscal Fortress™, an integral part of our Retire REGAL® process.
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The inspiration for the Fiscal Fortress™ strategy comes from the process used by Ivy League Endowment Funds, who, in our opinion, have been leaders in diversified multi-asset class investing for decades. We’ve incorporated these concepts and broken them down into our simple, easy to understand financial planning and investment strategy.
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So what is a Fiscal Fortress?
Looking back centuries ago, the wealthy would build a castle or fortress to help protect their family, estate & assets from man-made threats & natural disasters. These structures were marvels of engineering that required careful planning and a team of skilled professionals to construct and maintain.
THE FOUNDATION
When building their fortress, what do you think they started out with? The tower top? Or the foundation? Obviously, the foundation because you can have the most elaborate, decorative tower top in all the land, but you’ll need a solid foundation to hold it all up.
The Foundation is probably one of the most critical parts of the Fiscal Fortress™. The Foundation is what we call ”Protected” Money. “Protected” money, in our opinion, is simply defined as money that is difficult to lose unless you choose. The principal in this area is protected unless you cash it in early.
So, what kind of accounts can make up your Foundation? There really are only three accounts that meet that definition. And they are CDs, Fixed Annuities, and Government Treasuries and bonds.
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All three of these types offer principal protection. CDs as you know are backed by the FDIC, if the bank was to fail, FDIC protection comes in and makes you whole. The thing about CDs though, when you place an amount of money in a CD, they place a very small fraction of the money in reserves, because you have the FDIC protection of up to $250,000.
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With fixed annuities, there’s no FDIC backing it. Pensions or “defined benefit plans”, for example, are a common form of fixed annuities. These are issued by an insurance company for employer pensions. Since you have the insurance company backing it, they must keep higher levels in reserves. So, let’s say for every dollar put into a fixed annuity, Insurance companies must keep at least a dollar, at a minimum, in order to be solvent, and liquid enough to make good on their promises for pensions and other policy holders.
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Last but not least, government bonds & treasuries that are backed by the U.S. government. These have the full faith & credit power of the U.S. government backing them up.
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And those are the three principle protected accounts that are available in the Foundation of your Fiscal Fortress™.
THE TOWER TOP
Now the opposite of the Foundation is the Tower Top of your Fiscal Fortress. The Tower Top is what we call your ”Risk” money, which we define as money that you position for potential growth, opportunity, liquidity, and access, but it’s also exposed to outside forces beyond your control (and ours) like market risk.
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When it comes to constructing the Tower Top, there are a handful of options: There are stocks, ETFs, mutual funds, variable annuities, commodities, options, futures.
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Our philosophy though, is to be transparent and use lower fee areas when it comes to investing in the tower top. Because of that we focus on stocks and ETFs or exchange traded funds. Exchange traded funds can potentially have the best of both worlds with the transparency and lower fee nature of stocks and the diversification of mutual funds.
THE WALLS
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So, in between the Tower Top and the Foundation, we have the Walls of your Fiscal Fortress™.
The Walls are unique because the principal isn’t protected like the Foundation, but we also don’t normally have the same level of market risk and volatility as the Tower Top. For Wall investments think insulation, like the walls of your house insulating you from outside elements. We typically look for strategies that offer some potential insulation from the market, some potential inflation protection and, if possible, investments that can help provide durable income.
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The overall goal is this: With money in the Walls of your Fiscal Fortress™, Its all about helping to make sure your lifestyle isn’t dependent on what the markets do in your Tower Top. And that’s why not only do we diversify in the Tower Top and Foundation, but especially in the Walls.
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The string attached to most investments is how accessible it is.
For instance, how often do you think they dug up the foundation of a fortress centuries ago? Not very often, if ever. The Foundation of your Fiscal Fortress™ is the most protected and least accessible.
The Tower Top is the most accessible & liquid, but also the least protected.
THE RULE OF 100
​​As we look at each section of your Fiscal Fortress™, the driving forces in understanding how much you should have in each section, whether it be your Foundation, your Walls, or your Tower Top, are your income needs, risk tolerance and legacy plan. Many people ask, "Where should I start? How much should I have in my Tower Top?"
We subscribe to a rule of thumb that has withstood the test of time for over a century. It’s called the prudent investor rule or the “Rule of 100” It shows us where to begin and asks how much a prudent person your age should have in their Tower Top.
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It can actually be pretty simple & works like this: Take 100 minus your age, and the result is the max a prudent person should have at risk in their Tower Top. So, if you’re 62, the max you should have at risk in the Tower Top is 38% of your total retirement savings.
Now, everyone is different, but we’ve found that the prudent investor rule can be a good place to start the conversation.​
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The fine-tuning takes place when we factor in everything else: your pension, social security income, your risk appetite, your focus on tax efficiency, and your legacy plan.
The Retire REGAL® process helps to optimize and strengthen each of these areas across your overall retirement strategy.
The main point to remember is that the Fiscal Fortress™ should be tailored to YOU. There’s no such thing as a cookie cutter investment plan that’s right for all types of people, backgrounds or goals.
THE FINE-TUNING
ARE YOU READY?
The Fiscal Fortress™ strategy, however, is not for everyone. You have to have enough saved & easily accessible to take advantage of our planning and investment strategy because you can only spread so much so far.
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If this is you, and you are actively looking for ways to help strengthen your retirement strategy, click on the link below to schedule a free, no obligation video visit.
During that first video call, we’ll conduct our Retire REGAL® Review, where we look at what you are doing in terms of your retirement income, investments, tax strategies and legacy plan and uncover any significant cracks that you may not be aware of and at that point it will be up to you to decide if you want to fix them or not.
Click now to schedule your video visit and take the first step in building a confident and sustainable retirement.