What do you include when asked to determine the value of your total economic wealth? If you are like most investors, you probably turn to a balance sheet of financial assets such as stocks, bonds, mutual funds, real estate holdings, and retirement savings accounts to calculate your financial net worth. This traditional definition of wealth, however, is incomplete. It overlooks what may be your largest asset – your “human capital.”
Human capital is the present value of all your expected future income, including your pension income and Social Security benefits. Our approach is to evaluate your current income, your savings rate, and your work or retirement situation to help determine how significant an asset human capital is for you and its affect on your overall asset allocation.
Your human capital should drive life insurance selection and asset allocation decisions in pre-retirement and retirement. In pre-retirement, incorporate life insurance into your asset allocation to help mitigate risk and enhance the economic value of your portfolio. In retirement, for example you may purchase a guaranteed lifetime income annuity to hedge against the risk of outliving your retirement savings.
With our guidance in the assessment of your financial situation and the establishment of your goals and priorities, we can develop long-term wealth strategies for you that may provide solutions that address both asset allocation and insurance needs.
