Why be 100% Funded (instead of 70%)?

Share on

In the Reserve Study industry, the Percent Funded range of 70-130% is described as the “strong” range. So why shoot to be 100% Funded and not the lower (more attainable) target of 70% Funded?

The answer lies in understanding that we are planning ahead for the future, something we do not control. Due to expenses that can occur higher than anticipated, or earlier than anticipated, there is a good chance that your Reserve plan will not work out exactly as intended. So that’s why we recommend our clients shoot for the 100% point, the “bull’s-eye”, rather than the edge of the target (the 70% point). If you miss the bull’s-eye, you’re still close to the center of the target. If you aim for the outer circle and miss slightly, you’re off the target.

So aim for the bull’s-eye, the center of the target. That means aim for being 100% Funded, where your Reserve cash equals the deterioration of your Reserve components.