What Do Living Expenses In Retirement Include
Expected annual living expenses in retirement: Do not include expected taxes here as the program calculates this separately. Include living expenses such as utility and grocery bills. Make sure you enter this in today's dollar terms. In other words, do not attempt to adjust this figure for inflation. The program will do that for you by using the Annual Inflation setting.
Note that you do not have to input annual living expenses before retirement because the program assumes that whatever income that is not saved (contributed to investments) is spent on living expenses. However, non-recurring spending items before retirement, such as weddings, college education, etc. should be entered in the Goals & Additional Expenses section.
Also note that (for plans with a spouse/partner) if one of the partners in the plan retires before the other does, the net salary income of the spouse/partner who is still earning a salary will be used for Annual Living Expenses In Retirement before any investment funds are used. For clients with no spouse/partner (or when both partners are working) the salary income is assumed to either be completely spent or contributed to investments.
If you would like to treat this input as a desired income amount in retirement then enter the amount of disposable (after-tax) income you would like to have each year. This must be expressed in today's dollars. The program will adjust this number for inflation going forward from today. Major goals/expenses and expenses that don't occur every year in retirement will be entered in the Goals & Additional Expenses section.