Your Base Scenario LPA
In the typical client situation, we run at least four Lifestyle Protection Analysis™ scenarios.
Your Base Scenario will consist of the plan assumptions you deem most likely and desired, at least for planning purposes. For instance, if you are in the Peak Growth stage and plan on a strong decade ahead before you transition to full retirement, your Base Scenario LPA will simulate, and stress test this game plan. If you are a business owner and your game plan is to position your business for a sale in five years, then travel around the world for a couple years before deciding on your next gig, that may be your base scenario. It’s whatever you want to set as the first of several scenarios to consider.
Once you have your Base Scenario zeroed into, we typically run a few variances to show you your options. Could your plan work if it was seven years until transition instead of ten? How much more could you spend each month if you stretched it to twelve years? We also run scenarios tied to alternate goals, such as the purchase of a second home or a sailboat or other luxury items on your wish list (if you have any). Does your plan continue to pass our standards even when you tie up capital in additional standard of living items? Or maybe your game plan is the opposite, downsizing personal assets and upgrading travel. You get the point, scenario testing to help you explore ideas and capabilities, so you know your limits.
Once you have Base and Alternate scenarios dialed in, all that remains are Stress Test scenarios, which you can read about on another page.