The Science of Creating Your Financial Plan

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EP Wealth Advisors

Find your "why"The why of wealth

Retirement planning is more than crunching numbers. It starts with dreaming, figuring out what aspirations are important to you and using those to define specific, observable goals. Because the reality is that if we’re not emotionally invested in our plans, we’re much less likely to stick to them.

The upside of emotion

Action, for most of us, comes more from emotion than logic. But we can use our logic to help create beneficial emotions, resulting in positive actions.

A scientifically tested process to help achieve long-term goals was discovered by Dr. Gabriele Oettingen of New York University and the University of Hamburg. Called MCII, it has helped inform EP Wealth’s Peace of Mind (POM) Planning Model.

Start by sketching out what you really want out of life. Do you desire time to retire and travel? Do you want to fund your child’s education? Do you want to spend more time with family?

Next, consider why you want each goal. How would achieving that goal and doing those things make you feel? Liberated? At peace? More loved? More purposeful?

Your goals will be your destination, and those emotions will be your fuel.

Visualize small steps and challenges

This is where negative thinking comes in handy. If you have one of those minds that can pick apart any
situation, then this is the time to use it. What are all the realistic things that you need to accomplish and
overcome before you can reach your goal?

For example, in planning for retirement, there are six major questions that individuals need to account for:

1. Do you know how much your retirement will cost? Start with these four guidelines.

  • How much do you currently spend? This is crucial if you want the same lifestyle that you have now, which also means including an emergency fund.
  • How long will you be retired? The average 65-year-old lives until 85, so use or adjust that number.
  • In how many years will you retire? Try to account for inflation.
  • There are publicly available independent calculators that can be of use like NerdWallet.

Go to Calculator


2. How have your investments been performing? Make sure you’ve set realistic goals for returns and prepared for swings in the market.

3. Have you planned for additional medical expenses?

EP’s Lynn Ballou says, “Many people think Medicare will cover their medical expenses in retirement and are surprised, even shocked, with how much they still have to pay out of pocket.”

The average 65-year-old retired couple can expect to pay between $265,000 and $395,000 in healthcare costs over the course of their retirement. AARP has a calculator where you can generate your own estimate:

Go to Calculator


4. Are you prepared for long-term care costs?

Separate from medical expenses, long-term care includes assisted living and nursing homes that many people need later in life. The average cost now runs about $7,000 a month or $84,000 a year, so considering long-term care insurance is a good idea.

5. Have you considered market volatility and asset allocation?

Make sure you have a well-diversified portfolio that builds in more stable assets as you get closer to retirement. If you need help reviewing your portfolio, contact an EP Wealth Advisor for a free portfolio review.

6. Are you aware of underlying fees?

Be clear on what you’re paying advisors and financial brokers, because that takes away from your return. It’s why EP Wealth Advisors has a fee-only model, so you know exactly where you stand.



Once you have the motivation and can see your steps and challenges, you can make a plan that solves the problems you’ve identified and helps you achieve your goals. Your plan should include your current budget plus known issues like medical costs, long-term insurance, and a buffer for market volatility. Constructing a comprehensive plan can become an overwhelming task, however. So if you need help, please feel free to contact an advisor.



  • Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice. Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment losses. Future financial conditions and events can never be accurately predicted. No analysis, plan, or report has the ability to accurately predict the future.
  • Developing a Financial Plan, working with qualified advisor and/or financial planner, or diversifying your portfolio do not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. All investment and investment related strategies are subject to profit and loss.
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