Forum Posts

Understanding Current Year Recommendations

ssnichols@omsoft.com — Wed, 10 Mar 2010 18:27:03 -0600

The table below gives the 2010 recommendations from my retired mother-in-law's situation and I'm trying to make sense of the negative numbers in the "Current Amount" column. It would appear the program thinks she is not spending any money on current consumption (the negative $42K) while withdrawing approximately only $7,000 from current assets (would that that were the case!) Am I reading it correctly? And why would it think that? More importantly, what do I need to change in the inputs to make it more realistic?

Recommended Amount
Consumption 17,461
Saving (54,540)

Current Amount
Consumption (42,961)
Saving (7,078)
Thanks,

Steve

Health Saving Account

brucegalvin@revelationfp.com — Tue, 09 Mar 2010 12:26:33 -0600

I asked this question last December and did not get a response. I have a number of clients that have either Health Savings Account or Health Reimbursement Accounts. When they retire (for HRA) or retire/leave employment (HSA) they have a balance in their account that is theirs to use for health related costs.

Where to I show this account balance since it won't be taxed if used for health related costs when use it?

Do I just enter it as special receipt with no tax consequences? I know an HSA is like an IRA that has an underlying investment while a HRA has no investment option.

Thanks,
Bruce Galvin, CFP

Database still shows 2009 as first year for analysis

spillane56@verizon.net — Mon, 08 Mar 2010 18:20:05 -0600

I just set up a new file for a client and noticed that the program is defaulting to 2009 as the first year in the analysis. My computer's date and time are correct (March 2010). Am I missing something?

Thanks,

Rick

Adding Special Withdrawals in Retirement Accounts - Thanks

jeffwortman — Mon, 08 Mar 2010 09:14:09 -0600

I want to pass along a big THANK YOU for adding the feature that allowed special withdrawals in retirement accounts. You listened to the requests and that is appreciated. In my case (at age 59) I was able to make adjustments that increased our lifetime annual consumption over 10% and allowed my wife to stop working a year earlier than originally planned. With the ability to adjust for tax bracket thresholds and other life events I am now able to see a very nice improvement in our planned standard of living. Thanks again for you excellent product and great support.
Jeff Wortman

Work More, Required Savings Go up

Dennis112 — Sat, 06 Mar 2010 20:35:44 -0600

I started with a basic scenario working until age 65, then I tried setting up a new profile. The only change I was I worked part time for 3 more years.

This caused both my recommended consumption, and my recommended savings to go up. Hardly what I was looking for.

I was hoping that by working longer I could avoid having to save as much, but instead the program is suggesting I consume more which not surprisingly causes savings to go up.

Hmm.

Dividend income?

BD1 — Sat, 06 Mar 2010 12:14:43 -0600

Hello, as an early retiree I receive most of my income as dividends form high-yield investments. What is the best way to enter this income stream?

Roth Conversion During Retirement

kiphartk@hotmail.com — Fri, 05 Mar 2010 16:33:20 -0600

I am 60 and retired. Since I am hoping to hold off taking Social Security as long as possible, my income will be much lower over the next ten years than later. Consequently, I plan to move some money from my 401K account to a Roth over the next ten years. At the same time, I will be needing to also withdraw some retirement money for living expenses. (At least, ESPlanner runs show that balancing 401K withdrawals with using up my taxable assets is the best course.) I can't see any way in ESPlanner to have both Roth contributions and 401K withdrawals over this time. Is this (still) true?

Calculating Relative Variance Spreadsheet

jtpalermo@hotmail.com — Sat, 27 Feb 2010 17:02:54 -0600

I located on this site an Excel spreadsheet that calculates the Avg Nominal Return, Relative Variance, and Beta of an asset for inclusion in the Monte Carlo section of Define a new asset.

Question: Is this spreadsheet still good to use?

Need help understanding trajectories

jtpalermo@hotmail.com — Thu, 25 Feb 2010 17:08:34 -0600

My trajectory results are this after summing the columns:

0-25% = 0
25-50% = 0
50-75% = 0
75-100% = 350
100-125% = 2000
125-150% = 1000
150-175% = 400
175-200% = 90
200%+ = 100

I do not understand how to interpret this data. Am I correct in saying that 50% of the time I am projected to be in the 2000 range? I have searched the forum and read through the documentation for two hours now. I either missed the explanation or the explanation is not out there. Can someone explain this to me in very simple terms.

Tax Calculation on Regular Assets

fnovosel@comcast.net — Wed, 24 Feb 2010 17:48:52 -0600

ESPlanner allows various spending behaviors to be used when calculating smoothed consumption patterns under Monte Carlo. When the most conservative spending pattern is selected, i.e., no real returns earned on asset classes, the regular asset income is zero in constant dollars because you are essentially only earning the estimated inflation rate. Do the fedaeral and state tax calculations include a current tax liability for the nominal rate of return on real assets inasmuch as the tax law levies tax on nominal income, not just real income. How does the program deal with this issue generally to avoid understating pro forma tax liability and potentially overstating consumption capacity?

Use proceeds from vacation property sale used to pay down mortgage on primary residence

wayne@usfamily.net — Mon, 22 Feb 2010 21:04:57 -0600

I ran a simple scenario to see what happens when the vacation property is sold for more than its mortgage value to see what happens with the excess proceeds. E.g. value of property $100K, mortgage balance $50K. Remaining proceeds after mortgage extinguished: $50K. (No repurchase of another property.)

The $ appear to simply remaine in some undescribed account that does not show on output tables. It is used for consumption later.

I would like to use it NOW to extinguish a primary residence mortgage. Is there a way to do this?

real estate wipe out of data

netmouse@optimum.net — Mon, 22 Feb 2010 12:01:40 -0600

It is really annoying to have data for expenditures and receipts wiped out when changing one of the dates on the real estate tab. I am playing with these dates to see different scenarios and this is a problem.

primary home change

netmouse@optimum.net — Mon, 22 Feb 2010 11:32:08 -0600

Is this right? That if you indicate the Primary Home was changed in year X, that is considered a sale and ESPlanner calculations will use the capital gains home sale tax break.

How do you then indicate that you did not buy a new home nor rent one. Instead, you moved into the vacation or real estate home making it now the primary home that would also get the tax break if sold 2 years later?

On the Vacation Home folder, you can indicate the original purchase price and current market value, and indicate a Change (it was sold) in year X, but there is no way to indicate that this became the primary home as of year Y giving you the tax break.

On the real estate tab you can indicate the year the property will be sold, but again there is no way to indicate that it became your primary residence as of year Y giving you the tax break.

Monte Carlo Asset Income to Asset Percent

joed912@aol.com — Sun, 21 Feb 2010 19:25:42 -0600

This is a question regarding the way the Monte Carlo results are applied to the asset portfolios. After running with Monte turned on, when you go to the Detail Report and the Husband Retirement Accounts tab (or the Wife's Retirement Accounts tab): take the subsequent year's retirement account asset income and divide it by the prior year's retirement account assets. The result is a percent. When you copy that formula down through the years, the percent is almost entirely a constant. (The same applies to the Main Report using the Regular Assets and Total Income tabs to get the corresponding data).

This constant earning percent is counter to what I would have expected for a Monte simulation. I thought the asset growth would have varied across the years (dependent on the random draws) and not be a constant. Why does the constant occur? What am I missing?

Thanks in advance for whatever clarification you can provide.

Joe

loans owed to me

mike azevedo — Sat, 20 Feb 2010 20:15:07 -0600

this question was askes by james 2 years ago and never answered. i am looking for the answere to this question.

mike

I've loaned money to a child that she used to buy a home. She pays an amount each month which is taxable to me (interest) and part which is return of principal and not taxable. This loan will continue for 15 years. How do I enter the income? I thought of entering the interest payments and the principal payments as separate special receipts but there is no way to negatively "grow" the interest amount since this decreases every year. Must I enter each year's interest & principal and select "in dollars" for each?

Thanks
James