By: Andrew Rosen, CFP®, CEP®

Financial Planning can be very complicated.  Balancing all the information and changes in a client’s life is a real art form.   To help everyone I work with, I’m always trying to simplify the process.  In my experience, there are 4 high level factors which determine your probability of success.

Because of this, I’ve created The 4 Levers of Financial Planning.

Lever 1: How long you work.

This is one of your biggest factors in determining your financial success.  Every year you work, the following list of things happen.

  1. One less year of spending down your savings.
  2. One more year of saving for your retirement.
  3. One more year of compounding retirement assets.

These three things directly correlate to a better probability of success.  Your assets have more time to grow and compound.  The added bonus is they’ll have to fund your life for less time.

Lever 2: How much you save.

The rate at which you save (especially in proportion to how much you spend) heavily affects your probability for success.  Some will have to work longer to make their plan work.  Unfortunately, they got a late start or their lifestyle didn’t afford them the opportunity to save appropriately.

I can’t speak enough about the wonder of compound interest.  Saving more, and letting it compound, allows your nest egg to grow.  That allows more flexibility with Lever 1. You’ll notice a direct link with savings and retirement year.  Thus, saving makes my list of crucial items to consider.

Lever 3: How much you spend.

Knowing how much you plan to spend in retirement is critical to crafting a working financial plan.  Spending is also a big variable when it comes to modeling.  We take into consideration what it will take to make you happy in retirement.  Then, we use that to combat how long you work or save.

Be cautious though.  I’ve found most people don’t want to sacrifice lifestyle in retirement.  Rather, it’s more common to see someone want to do more (travel, or spend, etc.) come retirement.

Unfortunately, some don’t understand if you want to retire earlier, you have to spend less (or save much more).  Some retirees are forced to spend less out of sheer lack of other options (which, coincidentally, is why it is so important to save).

Lever 4: How long and healthy you live.

Sometimes, we can’t control this as much as we’d like.  The viability of a financial plan rests on how long it lasts.  If you retire at 60 and pass away at 61, it is very easy to make your financial plan work.  Conversely if you plan to live until 105, it’ll be a challenge.

Certainly, none of us know how long we will live; this is the variable with which we have the least amount of control.  But, there are some good resources (like that can help you estimate.

The quality of life we have in retirement also is a big factor.  If you are healthy and will spend more on traveling, that can be a drain on finances.  On the other hand, if you have lots of health problems, expect to spend more on medical expenses instead.

Do a little research.  Take the quick survey, then add a few years on the back.  If you assume you’ll spend at the same rate as when you first enter retirement that should be a conservative enough buffer (just in case you do live to 105)!

Balance is key.

Of course, many other factors will come into play in your financial plan (like return on investments or where you will live in retirement).  However, I’ve run 1,000’s of financial planning models in my career.  I can truly boil it down to these 4.  When a plan doesn’t work, I always refer back to these levers; they are the easiest ones to control and have the most impact.

Figuring out the right balance is difficult.  Generally, adjusting some combination of these 4 leads to an appropriate plan.  A lifelong planning firm like ours takes great pride in not only creating a plan, but making sure we stay on track to that plan.

Our job as financial planners is not to tell you which levers you must sacrifice.  Rather, it is to open your eyes to impact of each. We’ll work with you to determine the appropriate balance to accomplish your goals.


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Andrew Rosen

In his role as Financial Planner, Andrew forges lifelong relationships with clients.  He coaches them through all stages of life and guides them to better achieve their life goals.  For more information about Andrew or the other firm partners, Kyle Hill and David Levy, click the link below.

Find out more about Andrew Rosen, CFP®, CEP®
Find out more about Kyle Hill, CFP®
Find out more about David Levy, CFP®