It turns out that engineering has allowed me to assist clients in managing their nest eggs. Mixing engineering concepts with wealth strategies pays off, so let’s look closer.
What is reverse engineering?
Reverse engineering usually involves taking an object apart and analyzing it in detail: something that engineers are skilled at.
I specifically refer to reverse engineering of retirement goals: working backwards from the desired end results to design a prudent plan for each family.
Reverse engineering retirement consists of two main components:
- Estimating the size of nest egg that represents the retirement goal.
- Ballparking the investment rate of return to achieve or maintain that goal.
Let’s consider this sample situation:
Assume the nest egg to be accumulated is $1,500,000. Say there are 10 years to go until retirement and today’s portfolio value is $700,000. That implies an annual return of over 7.9% to get there. Perhaps optimistic for today’s low-return environment. Continue Reading…