Having trouble understanding these two sheets. When I indicate retirement as a life event (so end of income stream), it seems to double count that income (income and life event). Then in the retirement planner, my income does not stop after my intended retirement year even those I specified it as a life event.
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Hi @srcrockett ,
I suggest you review the How to Use the Cash Flow Forecast Sheet article:
and also the Retirement Planner Template article:
for a better understand on how these sheets work and how they work together.
Indicating retirement as a life event doesnāt end an income stream. You would need to give the income stream an end year.
Let us know if that helps.
Jon
Thank you Jon. I have reviewed the two articles a few times as Iām sure Iām just doing something wrong. However I still canāt figure it out. In the cash flow spreadsheet I set up overrides for my paycheck and my wifeās paycheck (they appear in bold now). I set an end year as 2041. My expectation was that after 2041, our paychecks would no longer increase cash flow. However what appears to be happening is that while my āLife Eventsā goes to zero (and as a result the duplicated column as well), my āUnadjusted Incomeā remains (increasing at the % I indicated), so the cash flow calc picks up that income. I guess I could set up another override starting in 2041 with an āexpenseā but that seems like not the intended solution so just looking for some guidance.
Actually I believe Iāve figured it out. Just needed to add another life event and put it at $0.
Separate question - do you agree that if Iām using the cash flow forecast as an input into the retirement planner the āwithdrawalā rate may be double counting expenses? Assuming that I would be using withdrawals to cover expenses and nothing else.
@srcrockett ,
Iām glad you were able to figure it out and get it to work.
The net cash flow numbers transfer over to one of the retirement sheet columns.
If you have a negative cash flow, you are going to need to cover that gap with a reduction of your investments. (well, you could cover it with credit cards or a loan, but these sheets donāt make that assumption.) That gap would reduce your investment value.
Likewise, if you had a positive cash flow in one year, that amount would be added to your investment totals in the retirement sheet.
These are the assumptions the sheets make. They might not apply to everyoneās situation.
But I donāt follow how you are counting it twice. But perhaps you are making some assumptions that the spreadsheet doesnāt.
If you sell assets in your investment account, that turns into cash, or āincomeā that can offset cash flow. Itās not a cash outflow. Unless you set up a life event in your cash flow spreadsheet to reflect asset sales youāre not getting any credit from the proceeds.
Say you start with $1,000, you make $50 in investment gain, and you have $50 in expenses to cover. You sell $50 of assets to cover. $1,000 + $50 (inv gain) - $50 (withdrawal) = $1,000. Of course the $50 withdrawal is used to cover the $50 in expenses. Instead it seems the spreadsheet says $1,000 +$50 (inv gain) - $50 (withdrawal) - $50 (expenses) = $950.
What am I missing?
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Yes, if you sell assets in your investment account and transfer them to a non-investment account, that would add to your cash.
While you might consider that income, you might also consider it a transfer transaction (not income) from your investment account to your cash/checking/non-investment account.
Moving the asset (from selling the investment) from one account to another doesnāt change your net worth.
For the retirement sheet to work, I wouldnāt include selling assets in your investment account part of the Cash Flow sheet, even though I realize it could affect Cash Flow.
The Retirement sheet, on its own, will calculate whether any investments need to be sold or not based on the yearly Cash Flow.
Your method of entering the withdrawal is likely forcing the double counting.
If these sheets donāt work for you, of course, you donāt need to use them.
Or feel free to modify them for your own needs.
Jon
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Understood, thank you for the clarification and insight!
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Hi, Iām stuck in the same place you were and hoping you could help with post retirement income and expenses. I understand the following:
-post retire income: Added life event of retirement and set it to ā0ā. That removed the duplicate income but still keeps the unadjusted income and hence an inaccurate cash flow. How did you handle this? I was hoping to use the withdrawal rate in retirement as income to compute cash flow.
-post retire expenses: Iād like to add some way to reduce expenses post retire, do you understand any way to do this?
I have 2 categories for my paycheck. One through retirement where income increases as a % annually. And another that starts at retirement and goes through the rest of estimate life. The latter I set at $0 for the amount/year column. Does that answer your question?
On the expenses side, I think youād have to take each category and override for the post retirement period. You can use negative %s in the change/year column.
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Itās been a second since this has been updated.
In the cashfow forecast, my income seems to be calculated based on my current yearly income with no opportunity to end that income stream.
Then when I āretireā that income continues to be considered as income as part of the ācash flow forecastā
Sorted this by changing O2 to
=IFNA(ARRAYFORMULA(IF(ISNUMBER(L2:L), ( IF(L2:L >= 'Retirement Planner'!C$22, 0, C11*POW(1+E5,L2:L-AF10)) ) ,IFERROR(1/0))),IFERROR(1/0))
To accommodate for if Iām past retirement age to no longer account for income.
Then on āRetirement Plannerā rather than worrying about the 4% withdrawal, I just added the cashflow, which was negative.
Does this make sense?
That can work, @jackson.joel. but an easier way is to create a āLife Eventā that overrides your salary category (e.g. āPaycheckā) with a zero value. Just fill in a new row in the Life Events table, use the proper salary category, set the start date to your retirement age and set the amount to zero.
@jono ā this may be a dumb question (so pre apologies). I find the Cash Flow Forecast and Retirement Planners really good tools to help create the What If future analysis. As far as the Retirement Planner, how does it account for the Contributions (e.g. to my Roth IRA) in the growth? The growth appears to be an assumption on the balance at the Beginning of the Year (pro-rated year1), but does that miss the $14k (max contribution) year over year?
Was the intent to capture that in the āInvestment Adjustmentā section?
Hi @jl20 - Glad you are finding the tools helpful. Thatās a good question about the IRA contributions.
On the cash flow side, Iād probably consider the yearly contribution to your Roth IRA (good for you!) as a negative amount to your yearly cash flow.
But Iād likely try to add the yearly about as an Investment Adjustment during the years that you make the contribution.
The Investment adjustments donāt count as part of the investment growth in the year that they occur. But, a positive investment adjustement will increase the value of your investments at the end of the year and the start of the next year. So it will be part of the future years gain.
Iād give that a try and see if the numbers look right.
I tried to build this so it will have a way to handle many possible financial situations. But, I also know itās not able to handle all situations.
Did that answer your question?
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@jono ā I believe you answered my question - so thank you!
My next move is to consider what to do with any positive cash flow (from the Cash Flow Forecast) that wasnāt going to be used directly in Retirement Planning. I can foresee that I would either need to use the Life Events in the Cash Flow Forecast and/or Investment Adjustments to prevent over investing assumptions.
The Cash Flow Forecast and Retirement Planner tabs are seriously impressive add-ons that help give great context to Present and Future financial states. Iāve gain more insight with these tools in Tiller than the information I received during my years with āMint.comā .
Sincere thanks to all who created these!!!
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If you have yearly positive (or negative) cash flow, that amount gets counted as part the yearly changes in the Retirement planner.
Letās say you had $50,000 in positive cash flow. That would add $50,000 to your Investment balance. Of course, you might decide to keep that money in checking rather than Investment accounts, in which case you most likely would not be earning that investment rate.
But the Retirement sheet does take that cash flow result into account.
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