The default for a cash inflow, if the money isn't spent on expenses, is to go into taxable accounts proportionally based on their balances at that time. But you can change this as seen [...]
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126 ArticlesCan I cancel my account?
Yes. Please email with your username, and we can turn off auto-renewal for your account.Your subscription will remain active through the end of the current billing period and will not renew after that [...]
I want to create my own asset class. How do I do this?
You can create your own asset classes and assign annual returns to them in Global Settings > Asset Class Mapping. When adding custom asset classes, you will also map those asset classes to pre-defined asset classes for the purposes of running Monte Carlo simulations. This is because we will not have standard deviation and correlation data for the custom asset classes. After entering the asset [...]
I have plenty of salary income left over to pay for an expense I entered in the Goals & Additional Expenses section. I am not yet retired. The expense starts next year. But this expense is being paid for out of my taxable investments and not my salary. Why is that?
You should only enter a goal/additional expense before retirement if the funds to pay for this expense will not come out of regular salary income. All expenses before retirement (Official Retirement Date Of The Plan) are first funded from contributions that would have gone to investments and then from the investments themselves. Note that the "Official Retirement Date Of The Plan" is determined by [...]
If I'm still working but not earning enough to cover my expenses, how do I model those expenses?
Enter such expenses in the Goals & Additional Expenses section. Set the Start Age to start now or sometime before retirement, and these expenses will be paid out of investment accounts. For example, say you are paying for a child's college education before retirement, and that expense will last four years. In the image below, this expense will start when at 56 and will last for 4 [...]
Where do I enter the payout of a life insurance policy?
Enter a payout or potential payout for life insurance in the Additonal Cash Inflows section. In the screenshot below, there is a life insurance payout when one plan participant dies at his life expectancy of age 90. The life insurance proceeds go to the surviving spouse. Like all cash flows from the Additional Cash Inflows section, the proceeds here will go into taxable investment accounts [...]
I want a future cash inflow to go into a single investment account. If I enter it in the Additional Cash Inflows section, the inflow will be spread out among all of my taxable investments. How can I make sure it goes to one account?
You can achieve this by using an Annual Contribution instead. In the example below, this one-time cash inflow goes only into this one account when the person is 60 years old. One caveat to this: If one spouse is retired and the other spouse is still working, do not give this contribution to the working spouse. The program will assume the contribution comes out of salary income and will deduct it [...]
Where do I view and edit Monte Carlo assumptions such as volatility and the distribution used
Select your username at the top right and then go to Account. You will then be able to navigate to the Monte Carlo Assumptions section. You can change the distribution used (Normal vs. Laplace). The Laplace distribution means extreme events are more likely than the Normal distribution implies. You can also view and edit the standard deviations for asset classes and the correlations among asset [...]
Can I enter Qualified Charitable Distributions and will they be accounted for properly?
Yes, you can enter these and the program will accurately handle the fact that they will not be taxed. QCDs are first taken out of Required Minimum Distributions (RMDs) and then, if necessary, out of Qualified Tax-Deferred account balances. The amount deducted is not taxed. Look at the screenshot below to see how to enter [...]
Why do the Dashboard and Monte Carlo projected investment values differ?
The Projected Investment Value at End of Plan shown on the Dashboard uses static annual return assumptions. uses varying investment returns across 1,000 simulations. The median is the 500th result out of 1,000 simulations, which generally will be lower than the static projected investment value seen on the Dashboard.Because Monte Carlo accounts for market variability and the timing of returns, its [...]