Case Studies

No one wants to splurge today and starve tomorrow or do the opposite. Rather, we want to enjoy a stable living standard through time. Economists call this consumption smoothing—maintaining your household's living standard through time and across times—good times and bad times. MaxiFi takes the guess work out of financial planning. It calculates what you should spend annually (your spending targets) to have a stable living standard.

Alex and Justin would love to own a more expensive home but they want to be sure it’s something they can truly afford before making an offer.

There may be many ways to assess the damage from a sudden downturn in the market like we experienced in March of 2020. You can look at the percent decline in the Dow or the S&P 500. You can look at the decline in your own portfolio (which will likely be less--perhaps much less--than the decline in pure equities. These abstract measures, though alarming or frightening, don't tell you a whole lot beyond "not good"! A more practical assessment involves looking at the impact on your annual spending allowance, what MaxiFI Planner refers to as your annual discretionary spending.

The couple realizes that there are tax breaks associated with contributing to a 401(k). But they don’t want to have less liquidity going forward.

Eve and Owen are finally starting to get serious about retirement planning. How much retirement saving is really needed?

Sandy and Erin both want to retire at 65 and send their daughter to college. Their big question – can they afford for Erin to change to a less remunerative, but more satisfying career? In particular, what will it mean for their sustainable living standard?

A couple nearing retirement finds that delaying Social Security gives them 22% more to spend every year starting today!

Jake and Missy always planned to retire at age 66. But they've saved well, their mortgage is paid off, and they are getting tired of working.

Jack and Sue are considering taking out a mortgage on their home and investing in bonds. They want to reap the alleged tax breaks from having a mortgage and they are also keen on investing the equity in their home — but doing so safely since the mortgage repayment is a for-sure obligation.

John and Vanessa recently retired and are taking another look at their finances. They realize, given prevailing low interest rates, that their lifetime of saving matters to their ongoing spending capacity.

Should Gina Get an Advanced Nursing Degree?

A couple has just retired and wants to determine if converting 401(k) assets to a Roth will raise their living standard.

A couple discovers important information about asset allocation, risk analysis, and a new concept, expected lifetime utility maximization.

A couple have a major decision, which will influence their investment risk. They need to decide how aggressively to spend through time.

Concern about sequence of return risk is a common worry among those who have explored risk analysis.

A young couple considers whether they can afford having the husband stay at home to care for their child.

A husband wants to know the impact of choosing self-employment

Congress has just passed The Secure 2.0 Act. The new law has a number of provisions, including several that expand voluntary and increase mandatory contributions. But the big banana, which Wall Street loves, is the ability of retirees to defer taxable withdraws from their IRA accounts from the current age 72 to 73 in 2023, if you reach 72 in that year or later, and to 75 starting in 2033.

Someone trying to explore FIRE—financial independence, phased retirement options, and downsizing—will have a lot to think about. But the most critical and obvious problems are often lost in the technical weeds of tax efficiency strategies as if once you discover the secrets of a Roth ladder things will begin to fall into place.

Uncle Sam provides several tax breaks for clergy, which makes their planning more complicated than for laypeople. This case study illustrates how to model the most common and important of these tax breaks: the parsonage housing allowance.

Paula and John love children and would love to have another. But Paula is worried it will compromise their comfortable financial situation.

MaxiFi calculates how much life insurance is needed to fully protect survivors' living standards. But a household's need for life insurance changes annually as there are fewer years of labor earnings that will be lost through death and fewer years of survivor spending that need to be sustained.

Kathy and Frank are going through a rough patch and are thinking about getting divorced.