Coastal Financial Planning, Inc.
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Narragansett: 401.788.8151


I hope everyone is enjoying this beautiful summer! Please reach out to me if you would like to discuss any of the following topics in more detail, and as always, feel free to share your thoughts on our Facebook page.




In This Issue
Reader's Question
Market Performance Report
Brexit - Going Forward
Retirement Savings Trends
Reader's Question
Retirement is on everyone's mind, and we hope the following Reader's Question offers some insight as to America's retirement trends.  

According to a recent economic study, what percentage of US households will have less than $10,000 in liquid assets near or at retirement?
a. 2%
b. 26%
c. 30%
d. 54%

Among households nearing the age of retirement (55-64) it is expected that only 25% will have adequate savings for their retirement.  The savings figure looks only at "liquid assets" and excludes home equity, as homeowners generally do not liquidate their residences upon retirement and they will also have continued needs for housing.

With the exclusion of home equity, an average of 30% of US households for this age group have less than $10,000 in immediate assets.  An alarming number, in my opinion.  Therefore, if your answer was C, you were correct.  

Market Performance Report

Mid-Year Returns

I am happy to report, that the mid-year returns were favorable for both actively managed investments positions.

Year to date, the moderately aggressive portfolios came in at 4.33% and the moderately conservative accounts came in at 3.41% after fees.  
The moderately aggressive portfolio beat all indices as of this posting.  I believe the exposure to the Gold ETF as well as the addition of Apple in many portfolios attributed to the higher rates of return.
The conservative-based portfolios held smaller positions in precious metals and a larger exposure to bonds, but still managed to exceed two of the four major indices.
Please be advised that no two portfolios are alike and the above figures are representative of composite investments by risk class.

July 1, 2016

Index           YTD
Dow             4.25%
NASDAQ      -2.89%
S&P 500       2.89%
NYSE           3.67%

What's ahead?

Volatility - sideways market moves - economic discomfort.
None of these bodes well for the U. S. consumer: however; they are still spending, inclusive of high ticket items such as autos, and in many major metropolitan markets, the purchase price of homes has consistently increased over the period.

I will continue to hold a significant portion of assets in cash until I have a strong feeling as to the direction investment classes will be trending through the remainder of the year.

This philosophy has served us well during the first half of the year and my goal is continued success through ongoing market cycles.

Brexit - Going Forward

I have received many emails over the last two weeks regarding the impact of England departing from the EU. I have some general comments I would like to share and, as always, please contact me with your thoughts and concerns.

Let's look back at the week following the exit vote.  Monday, downward pricing and dips across the board.  Many decided to do some selling.  Remainder of the week - bounce and gains.  Moral of story? Never react to news immediately. When you let your emotions rule vs. quantitative analysis, there is a high probability that you will not obtain your maximum desired outcome.

The most recent incarnation of the European Union was brought forth in 2004 with 25 member states. Over the years, new member countries joined.  In 2009, there were major concerns regarding the default of countries like Poland, Ireland, Greece and Spain.  Despite the many concerns the EU's continuity remained intact through the past years.

Now your history lesson - England has been inhabited for more than 8,000 years.  They were once part of the Roman Empire and later invaded and occupied by the Vandals.  Let's move forward to 1485, the start of the Tudor Dynasty and a relatively stable empire, given the times.  Fast forward again, we are now seeing the "Industrial Revolution" and the "decolonizing" of England.

My personal belief is that England will continue to be a viable country without the help of the EU and the EU will need to make adjustments but will continue on as a stabilizing force in Europe.

To summarize, although an important global occurrence, the media turned the event into a circus event.  Remember the media needs something to discuss, and they need headlines.
My warning to my readers is, do not overreact or react too hastily.  Analyze what you read and hear and come to conclusions based on your own belief system.
Retirement Savings Trends

As previously discussed in our readers question series, many are going to fall painfully short of savings in retirement.  The result of the short fall will result in too little funds saved to produce a significant stream of income during the retirement years.

Lifestyle Choices
In general, most advisors recommend you maintain an income stream equivalent to 70 - 75% of your pre-retirement income.  Your retirement lifestyle directly impacts your need for cash flow during this period and one should ponder if they will be content during their retirement growing a garden in their back yards. Or, if their ideal retirement would consist of vacations visiting family and exploring new places around the world.  Obviously these are two completely different lifestyles, but both in need of a quantitative analysis in terms of the cash needed to fund a comfortable retirement plan.

A recent survey indicates that Americans with liquid assets of over $300,000 are best poised to have their savings generate a stream of income suitable for their retirement needs.

My own personal opinion is that $300,000 may not be sufficient to meet all retirement needs.  Again lifestyle is an important factor and let us not forget the average person is living longer and healthier.  This equates to a longer retirement period and a greater span for various activities in retirement.  

Projected Cash Flow
Will you have housing debt in retirement?  This represents a major factor in the retirement cash flow scenario.  I encourage all my clients to eliminate housing debt in retirement and also to identify the projected cash flow that their savings can generate.  For example, if you have $500,000 in savings, I recommend that you spend no more than 4% annually.  This equates to only $20,000 a year.  This figure should represent only a part of your total retirement income.  The residual dollars should come from other sources like social security and pension income.  Combine these three pools of funds and see if this dollar amount is realistically in line with your projected spending.

If you will receive $24,000 annually in social security and $20,000 from pension benefits, the $20,000 to be drawn annually from savings will equate to an annual cash flow of $64,000.  

If prior to retirement your earnings put you at an annual salary of $105,000, then 70% of that number is $73,500 which will result in a short coming for your anticipated retirement lifestyle.

As always, please contact me at my office if you have any questions regarding goal setting for retirement.

Thank you all


I would like to take this time to thank my clients and affiliated professionals, for the opportunity to serve you personally or through your business.


The firms' goal, like other professional service firms, is to strive for client satisfaction through performance, communication and professionalism.  Our clients'

satisfaction results in our primary source of new business, through referrals.  Your referrals, both personally and through your business, are appreciated and serve as the cornerstone of our organization. 


Thank you all,

Angela Thomson, CFP (r)
Coastal Financial Planning, Inc.
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