1st year's high consumption level.
I have been using ESPlanner on and off for a year and continually have the present year's consumption more than twice the ensuing years. The living standard per adult is more the twice the ensuing years. The saving columne in the present year indicates a (six figure number), which I believe to be additional monies which can be use to smooth consumption. Am I correct in my assumption? I would like to also add, this occurs on every model I run. I know the present year's Standard of living index can only be set to a 100 value. Can anyone assist me !Thanks Tom
RSS
Without detailed information on your specific financial situation (your database) we can't figure this out. You may have special expenditures in your first year, you could have extraordinarily high insurance needs, you could be paying off a mortgage, your tax bite the first year could be very high, it's possible there's a bug somewhere that we haven't seen before, ... A detailed examination of the various reports should show you where the money is going that first year.
Bottom line, for whatever reason, ESPlanner is convinced that you need to spend more the first year than the rest and that your standard of living the rest of the time is lower in order to make up for the spent assets. If you think this is wrong, you should open a support ticket, upload your database, and provide us with detailed information about which profile is giving you the problem and why you believe the results are wrong.
The biggest single reason for seeing a difference in the standard of living over time is "borrowing constraints". Basically ESPlanner attempts to spend your money smoothly from "now" until you die without borrowing. If you are spending more now than you can afford smoothly and can't borrow or you can't borrow and come into money later you'll see variability in your living standard.
But with the information in hand, that's the best we can say.
Best,
Dick Munroe