This is the nitty gritty section of the analysis. Using the path with the median ending value, we break down the cash flow for each year. There are twelve data points for each year:
- Beginning Portfolio Value - The value of all of the investment portfolios included in the plan at the start of the year.
- Total Net Income - The sum of all of the income streams included in the plan for that year.
- Total Net Goals & Fees - The sum of all of the goals. This column will also include the advisor fee if you opted to show the advisor fees as a distribution in the fees section in the client profile.
- Excess Income + Contributions - The sum of all the incomes and contributions to the investment accounts that weren’t directed towards goals. Note: If income and/or an RMD is in excess of the total goals for a year, then the excess will display in this column as a taxable bucket contribution.
- Gross Taxable Distributions - The amount of money taken out of the Taxable accounts to meet that year’s goals. This is a pretax number, so it may be higher than the Net Goals number.
- Gross Tax Deferred Distributions - The amount of money taken out of the Tax Deferred accounts to meet that year’s goals. This is a pretax number, so it may be higher than the Net Goals number.
- Tax Exempt Distributions - The amount of money taken out of the Tax Exempt accounts to meet that year’s goals. Since taxes have already been paid on this money, this number will always be either equal to, or less than the Net Goals.
- Total Gross Distributions - The total amount of money taken out of the investment accounts to meet the Net Goals. This number can be higher (taxes on distributions), equal to (all distributions came from the Tax Exempt accounts), or lower (some goals were met with income) than the Net Goals.
- Total Capital Gains Taxes - The amount of capital gains taxes paid in that year. This is estimated based on historical turnover, the Simulated Net Return, and the Capital Gains Tax Rate you have entered for that year.
- Effective Tax Rate - The Effective Tax Rate is simply Total Income Taxes divided by the Total Gross Income. Total Gross Income includes both earned income in the plan and any gross tax-deferred distributions.
- Total Income Taxes - The amount of Income Taxes paid in that year. This is based on the distributions made from the investment accounts, as well as actual income streams, to meet the Net Goals.
- Simulated Net Return - This is the investment return used in this year for this run. Based on the model used in this year the program constructs a normal (bell) curve of the possible returns (based on the average return and standard deviation) then the program randomly plucks a return from that curve. The return shown is a net return with portfolio expenses removed. Note. If you opt to use the reduce return option in the fee section of the profile the return shown will be net of both portfolio expenses and advisory fees. Click here for more information on entering fees.
- Cumulative Wealth (Future Dollars) - The cumulative wealth is the simulated 50th percentile value of the portfolio at the end of each year in Future Dollars discounted at the rate you specify. To learn more about how to adjust the discounted rate, click here.
- Cumulative Wealth (Today's Dollars) - The cumulative wealth is the simulated 50th percentile value of the portfolio at the end of each year.
For Goal-Based plans funds are withdrawn from the plan in the following order Income, RMD, Taxable, Tax Deferred & Tax Exempt.
For Safe Savings rate plans funds are contributed to the plan in the following order Tax-Exempt, Tax-Deferred & Taxable.