The Industry Standard
The Risk Questionnaire
In the financial industry, most planning starts with a form, built out of questions like these. How would you feel if your portfolio dropped 20 percent in a year? If the market fell sharply, would you sell, hold, or buy more? On a scale of one to ten, how would you rate your tolerance for risk?
The trouble is what that measures. It captures your mood on the day you filled it out, not your facts. Ask the same person in March of 2020 and again in December of 2021 and you get two different investors. Recency bias does that to all of us, and a number that moves with the headlines is a poor foundation for a thirty year decision.
You circle some answers, the software adds them up, and out comes a label. Moderate. Conservative. That label picks your portfolio.
It is an easy way to run a business. The form does the work, the label makes the decision, and nobody has to sit across the table in a bad market and explain why the plan still holds.
A client who is worried about the market will say yes to almost anything that promises to take the worry away, and this industry has no shortage of products built for that moment. We would rather start with your facts. Those do not change when the market does.
Our Starting Point
Your spending number comes first
In the financial industry, most planning starts with a form, built out of questions like these. How would you feel if your portfolio dropped 20 percent in a year? If the market fell sharply, would you sell, hold, or buy more? On a scale of one to ten, how would you rate your tolerance for risk?
The trouble is what that measures. It captures your mood on the day you filled it out, not your facts. Ask the same person in March of 2020 and again in December of 2021 and you get two different investors. Recency bias does that to all of us, and a number that moves with the headlines is a poor foundation for a thirty year decision.
You circle some answers, the software adds them up, and out comes a label. Moderate. Conservative. That label picks your portfolio.
It is an easy way to run a business. The form does the work, the label makes the decision, and nobody has to sit across the table in a bad market and explain why the plan still holds.
A client who is worried about the market will say yes to almost anything that promises to take the worry away, and this industry has no shortage of products built for that moment. We would rather start with your facts. Those do not change when the market does.
How We Get There
The Retirement Reservoir™
Box 1
Reservoir One · Years 1–3
Short Term
This reservoir holds your first three years of spending, set aside before you need it. It is nearly all bonds and cash, built on individual Treasury bonds laddered to mature in one, two, and three years, alongside bond ETFs. The small remainder sits in the most defensive corners of the stock market.
It matters that this sits apart from your checking account. Checking pays close to nothing in interest, and money sitting in easy reach has a way of getting spent.
Box 2
Reservoir Two · Years 4–9
Intermediate
This one holds the next six years of spending, balanced between stocks and bonds. It has more time to work with than the short reservoir, so it can take on more risk.
But every dollar here is still money you are going to spend within the decade, and that sets a ceiling on how much risk belongs in it.
Box 3
Reservoir Three · Year 10 +
Long Term
This is the reservoir where long-term growth is the primary goal. This strategy is most responsible for managing longevity risk, the odds of running out of money too early.
It can take real risk because nothing is drawn from it for at least a decade. Ten years is long enough to recover from a bad market.
The Biggest Decision
Social Security is not a breakeven calculation
In the financial industry, most planning starts with a form, built out of questions like these. How would you feel if your portfolio dropped 20 percent in a year? If the market fell sharply, would you sell, hold, or buy more? On a scale of one to ten, how would you rate your tolerance for risk?
The trouble is what that measures. It captures your mood on the day you filled it out, not your facts. Ask the same person in March of 2020 and again in December of 2021 and you get two different investors. Recency bias does that to all of us, and a number that moves with the headlines is a poor foundation for a thirty year decision.
You circle some answers, the software adds them up, and out comes a label. Moderate. Conservative. That label picks your portfolio.
It is an easy way to run a business. The form does the work, the label makes the decision, and nobody has to sit across the table in a bad market and explain why the plan still holds.
A client who is worried about the market will say yes to almost anything that promises to take the worry away, and this industry has no shortage of products built for that moment. We would rather start with your facts. Those do not change when the market does.
The Depth Behind It
Then the real planning starts
Once we know the shape of your income, the rest of the work finally has something to organize itself around.
Income and Social Security
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Claiming strategy for you and your spouse, including the survivor decision
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Required minimum distributions and what they will do to your taxes, whether you need the money or not
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Healthcare from the day you retire until Medicare begins, and how that cost interacts with the rest of the plan
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Insurance and annuities you already own. Whether they are structured correctly, whether they still fit the plan you have now, and whether you are paying for something you no longer need.
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Taxes
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Roth conversions planned year by year inside a target bracket, not done all at once
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Multi-year tax projections and IRMAA thresholds, which raise your Medicare premium
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The widow's tax trap
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Asset location across taxable, tax deferred, and Roth accounts
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Tax loss harvesting and the 0 percent long term capital gains bracket
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Estate and Legacy
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Estate documents, beneficiary review, and trust coordination
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Charitable giving through QCDs, donor advised funds, and appreciated stock
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Education funding for children and grandchildren
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While You Are Still Working
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Mega backdoor Roth and after tax 401(k) contributions
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Equity compensation and business owner exit planning
None of these can be answered on its own. A Roth conversion that makes sense by itself can push you into a higher Medicare premium bracket and pull more of your Social Security into taxable income. The plan is what tells us which order to take them in.
We have built more than 500 financial plans. Will Allen holds the Chartered Retirement Planning Counselor (CRPC®) designation. Jonathan Brummel also builds retirement plans, and he does the tax projections, the claiming analysis, and the conversion sequencing. Between the two of us, that is forty five years in this business.
Some of what a plan requires we do not do ourselves. An attorney drafts the estate documents, a CPA files the returns, and Medicare comes with its own rules and deadlines. We have people for all of it, and we coordinate the pieces so they agree with one another. We accept no referral fees from any of them, and we pay none.
The First Year.
Learning to spend it
For many people the biggest challenge in retirement is spending too much. When someone is spending ahead of the plan, we look to catch it early, while a small course correction is all it takes.
The opposite problem gets discussed far less. Plenty of our clients spend too little, and that is understandable. You spent decades earning a paycheck and saving whatever you could out of it. Now the paycheck has stopped, the saving has stopped, and for the first time in your adult life the money is moving in the other direction. Every instinct you built along the way is telling you to be careful.
That adjustment is harder than people expect. We work through it with you, and for most clients it gets easier each year.
The Hard Years
The Steady Hand
Every client eventually has a year when not much goes right financially. Sometimes it is the market. More often it is everything else. A roof and a car in the same twelve months. A medical diagnosis. An adult child who needs help, and you were never going to say no.
By the time one of those years arrives, we already know a great deal about you. We know your goals and what your spending has actually been. And we built the portfolio around both of those things. So when a challenge arrives, the question is which reservoir absorbs it and what, if anything, has to change. That is what we mean by walking through it with you.
Your Next Step
Start with the questions that actually matter.
We would rather start with a conversation than a form. Tell us what you want retirement to look like, the things you have always wanted to do, and who you would like to take care of. That is when we get to work.
Planning sets the spending number. See how we build the portfolio to accommodate that.
Planning strategies discussed here are general in nature and are not personalized advice. Portfolio positioning is approximate and varies by client circumstance. The Retirement Reservoir is a planning framework shown for illustration only and is not a guarantee or projection of future results. Tax, estate, and insurance outcomes depend on individual circumstances and on current law, which is subject to change. Sentara Capital does not provide legal or tax preparation services. Social Security projections rely on assumptions that may change, including future legislative action. All investing involves risk, including the potential loss of principal.
CRPC® is a registered service mark of the College for Financial Planning. Standard designation disclosure to be added per compliance review.