How to interpret 'Recommendations' in the report

Good questions Charlie. Let me take a shot at them for you.

The Current Recommendations report shows, of course, just this current year. It compares your current life insurance holdings to what you really need as per ESPlanner. But for the most part, you'll notice that the same information is given in the Annual Recommendations report. In other words, the consumption and saving recommendation for the current year is given on the first row of the Annual Recommendations report. The current recommendation report simply is showing you how to respond in the current year--consume more/consume less; save more/save less; buy more term insurance/buy less. But, again, you may as well just view this in the Annual recommendation report because it's essentially the same information.

If your "current amount" is 10K more than the recommended consumption, this means that if you value smooth living standard as we all do, then you should lower your living standard (consumption) by 10K and save that 10K for future consumption. You don't have to go earn more, you just need to spend less. In other words, ESPlanner is saying that in order to live within your means--which will mean smooth living standard--you should save, rather than spend, that 10K.

How was that determined? That was determined by the very complex math analysis that ESPlanner does. It understands your tax situation, your income, how many people live in your home, the ages of your children and when they might move away, future income, future taxes, retirement, and on and on and on. So it accounts for all of these variables and smooths your living standard as best as is possible.

What to do about it? Of course one response is, as you say, to try to make more money, enter that amount into ESPlanner, and recalculate. But the other response is to look at your household consumption and think about the sustainability of your current consumption. ESPlanner is telling you that current consumption is not sustainable over the long haul. But there's really a lot of responses. You could borrow money, you could spend it anyway and let ESPlanner reveal the consequences of that. In order to model the "spend it anyway" response, just go to assumptions and bump up the "standard of living" for the current year to match what you want to spend (or some compromise). ESPlanner will then calculate a new plan that allows you to spend, rather than save, that 10K. But the consequence will be worked out in future spending. That is, ESPlanner can't make money, it can only optimize and rearrange your economy is some pretty fascinating ways.

I think I already answered the next question you have. There are certain stubborn facts in your economy: number of people in the household, ages, taxes, income, etc. But there are also variables that you can manage like when to take SS, contributions to retirement, and so forth. Consider that our variables are not on/off toggles, but sliders, and you realize there are nearly infinite ways to adjust your economy. The more familiar you get the more creative you'll become with it. It can be addictive once you start to understand the variables and their impact. The program is too versatile and complex to list the appropriate responses.

The current year isn't "off." One thing you need to keep in mind is that the 10K there is not money you are short, it's money you are spending that you should be saving. If you want to ramp up to this balanced economy, there are things you can do so that you don't have to face that fact in the current year. You an adjust your living standard as I suggested above, you can borrow (not sure if that's a good idea or not), you can draw down saving that you may have, you can contribute less to your IRA or 401k for one or two years, you can tell ESPlanner to take SS at 70 instead of 65 (and see the power of "dynamic programming"), you can lower your living standard in retirment, and perhaps other things.

You are getting it. Stick with it.

Dan