Most people measure investment success by beating the S&P 500 or accumulating a magic retirement number they’ve heard about. But here’s what Kevin Engbers, CFP®, CEPA®, Wealth Advisor, CEO & Founder at Pinnacle Wealth, wants you to know: “Markets and milestones don’t know who you are or what matters most to you.”
The family index number changes that equation entirely. It’s your personal rate of return. It’s the specific percentage you need to achieve your goals, fund your lifestyle, and maintain financial confidence for life.
What Exactly Is a Family Index Number?
Think of your family index number as the bridge between your financial strategy and your life’s purpose. While traditional planning focuses on generic benchmarks, this number is deeply personal.
“The family index number is really your personal rate of return that you need to achieve to accomplish your goals,” Kevin explains. It considers your risk capacity, timeline, and what truly matters to your family. “It’s about outperforming fear, anxiety, and uncertainty. It defines your needed return, not Wall Street’s.”
How Your Family Index Number Gets Calculated
Creating your family index number involves both math and meaning. Kevin and his team start by understanding your complete financial picture:
1. The Financial Foundation
- Your current income and assets
- Existing liabilities and spending patterns
- Cash flow analysis
- Various goal timelines and amounts needed
2. Your Personal Goals
- Education Funding: What level of education support matters to your family?
- Home Ownership: Is a second home or a lake house part of your vision?
- Charitable Giving: Are there missions or organizations you’re passionate about supporting?
- Retirement Timing: When do you want or need to step back from work?
3. Risk Assessment
The calculation also factors in both your risk tolerance (how much volatility you’re comfortable with) and risk capacity (how much risk you can actually afford to take). “Beyond the numbers, we factor in your values, your purpose, and your priorities because money alone doesn’t define True Wealth,” Kevin notes.
Real Client Examples: When the Numbers Tell a Story
To better illustrate how this process works in real life, let’s take a look at a few examples of clients that Kevin has worked with.
A Stressed Couple Who Could Sleep Better
Kevin recently worked with a couple feeling anxious because their previous advisor kept comparing their returns to the S&P 500. They were taking unnecessary risks trying to keep up.
After calculating their family index number, “we discovered that they really only needed to average a 5.5% rate of return” to meet the goals that mattered to them. Even with stress testing for higher inflation and market volatility, that 5.5% target gave them confidence. “That shift from chasing the market to living with confidence completely changed their outlook.”
A Family Facing Hard Truths
Not every family index calculation brings good news. Kevin worked with another family whose index number came out to 15.7%. “What that meant was the goals they were trying to accomplish in the time frame they wanted to accomplish them with and the amount of money they could commit towards those goals, they had to make 15.7% all the way out to have that accomplished.”
That’s simply not achievable with confidence. Kevin had to deliver tough news: they needed to either delay goals by 8-10 years, find another $1,500 monthly to invest, or reduce their goal amounts. “Those were hard conversations,” Kevin admits. But better to face reality early than discover shortfalls later.
The Stress Testing That Builds Confidence
Your family index number isn’t just calculated once and forgotten. The Pinnacle Wealth team stress tests it against different scenarios:
- Various inflation rates
- Different market conditions
- Timeline adjustments
- Goal modifications
Once you know your family index number, say it’s 6.8%, the focus shifts entirely. “Our focus then becomes on how consistently we can achieve that 6.8 or better return.” This approach provides “less anxiety and more confidence, which frees you to focus on the people and the things that are important to you.”
Why This Number Changes Everything
“When people don’t know what return they need, they kind of live in a constant state of uncertainty, wondering, Am I doing enough? Am I taking on too much risk?” Kevin observes. They worry about government shutdowns, inflation spikes, and market crashes.
“Once you know what your family index number is, that noise kind of fades.” Your family index number helps you stop asking how much is enough and start asking enough for what? “It transforms planning from a spreadsheet exercise into a values-based life strategy,” Kevin explains. Your financial resources work in service of your purpose, not the other way around.
Kevin uses a sports comparison to try to explain their thought process: “Our goal is to really make sure we’re getting on base consistently. We’re not stepping up to the plate, trying to hit a home run. We want to make sure that we’re scoring runs by singles and doubles.” This approach “allows people to breathe easier because they don’t feel as much is on the line.”
Your First Step: Starting the Conversation
“It really starts with just a single conversation, one focused not on products and performance but on purpose,” Kevin advises. The discovery process begins with questions about what matters most to you:
- What are you working towards?
- What would make life feel more confident, peaceful, and fulfilling?
- Why are you here? What’s your purpose on this planet?
- What role does money play in that purpose?
“Remember, money is a tool. It’s not the goal,” Kevin states. From there, the team develops your statement of financial purpose, runs the mathematical calculations, and determines your personal rate of return target.
Beyond the Calculation: Your Complete Financial Foundation
Your family index number works alongside two other cornerstones in Pinnacle Wealth’s financial planning process:
- Your personal statement of financial purpose
- Your financial life game plan
Together, these create “the foundation and provide the fuel to your financial life game plan and ultimately your road map of True Wealth.”
Your family index number is the translation point between your life’s purpose and your financial planning. It’s a personalized target that helps bring clarity, reduce anxiety, and make decisions aligned with what truly matters to your family. Ready to discover your family index number? It starts with one conversation focused on purpose. The Pinnacle Wealth team is here to help.
