Financial Planning Benchmarks

Liquidity

Emergency Fund – 3-6 months of non discretionary expenses in a savings account

Emergency Funds are important to have in place to give you a cushion when trouble knocks at the door.

Savings

15% of your gross pay saved in retirement accounts (includes employer match)

Starting at age 25 to 67. You will need to generate about 45% of your retirement income (before taxes) from savings. If you start at 30 you should be saving 18%. If you start at 35, You should be saving 23%.

Debt

Levels Benchmark ← 36% (Principal + Interest + Taxes + Insurance + Other Debt Payments/Gross Pay)

Lenders use this parameter as an underwriting benchmark when deciding to extend credit. There is a similar benchmark of no more than 28% of your income being spent on housing.

Retirement Account Balance by Age

• 25 – 0.2x your income
• 30 – 1x your income
• 35 – 2x your income
• 40 – 3x your income
• 45 – 4x your income
• 50 – 6x your income
• 55 – 7x your income
• 60 – 8x your income
• 62 – 67 – 10x your income

Wage Replacement Ratio

80% of your pre-retirement salary (include social security and other income)

Withdrawal Rate

Withdraw 4% of your account balance in your first year and adjust that amount upward
for inflation annually.

• □Life Insurance – Policy amount 12-16x annual salary
• □Log-term disability Insurance – 60% of gross pay
• □Umbrella Insurance – At least $1MM
• □Property Insurance – 80% of FMV

• □Last will & testament
• □Advance medical directive
• □Durable POA for health care