In working out the capital needs analysis, it became apparent that there was need for an additional $17,000 of savings annually over what was previously calculated. The first reason had to do with a recent job development that resulted in a projected moderation in Richards raises in salary to a level 12 percentage points below the inflation rate and that made his job more risky. The second was the running of the total portfolio management approach, which indicated that the assumed investment rate needed to be lowered to 5 percent. Richard took the news in stride and said he thought I was too negative. Things would work out in the job. He would just have to invest more aggressively than originally planned. Monica, on the other hand, was shaken. She thought that their tolerance for risk would have to be cut back. She said she would consider taking a full-time job if necessary. Richard shook his head as if to say no but didnt speak. Monica thought they could downsize by selling their house and realizing an extra $100,000. She wondered what level of insurance she could afford and whether they should cut back on the amount. Richard didnt like that idea. Monica said disagreement on financial matters was a feature throughout their marital lives. She thought that I should make the recommendations. She pledged to follow them. Somewhat surprisingly to me, Richard agreed as well.

1. Complete the financial plan.