Incoming Cash Flows - Pension, Rent and Wages

The Incoming Cash Flows panel is designed to be used for cash flows of which the client already has access or will have access to in the future. The Income Discovery tool assumes that clients will use these cash flows with withdrawals from retirement savings, Social Security benefits, and annuities to generate their retirement income.

If your client receives a pension, rent payments, or additional income from employment (post-retirement), they are modeled in this tab. The Incoming Cash Flows tab contains fields to specify the cash flow amount as either a monthly or annual payout, start year of the cash flow, the number of years for which the cash flow is expected, as well as the type of inflation adjustment for the cash flow. The inflation adjustment can be either a fixed percentage cost-of-living-adjustment or linked to the CPI-U.

One-time Cash Flow

If the client has a single payout cash flow, such as from the future sale of real estate or expected inheritance, it can also be modeled in this panel as cash flow with a length of One-time.

Single Life, Joint Life and Survivor Benefit

While doing lifespan based planning, the incoming cash flows can be modeled as linked to either of the member's life or both lives in the Number of Years field. Scroll to the end of the drop down list in that field to tie the cash flow to one of the lives. The cash flow linked to a member's life stops after that member dies, but joint life cash flow continues to pay out, either to the same benefit amount that was paid while both members were alive (100% survivor benefit) or a reduced benefit after the death of one of the members, which is specified as the percent of the benefit paid while both members were alive.

Excess Incoming Cash Flow 

If the cumulative ICFs combined with Social Security and annuities are more than the required income in a year, then the excess is deposited into the systematic withdrawal portfolio to grow and fund future withdrawals (in the Advanced mode, the deposit happens to the first taxable account in the withdrawal order). In such cases, the presentation of retirement income by source tables and charts show only that component of the ICF required to meet the desired income and the excessive cash flow shows under a separate deposit column in the tables. This is done so that the retirement income by source charts and tables don't lose their presentation effectiveness because of the presence of a large ICF, such as sale of the house or inheritance. This would increase the y-axis scale of the charts, thereby reducing the retirement income bars on the chart to such a small size that would be ineffective at communicating the variation and composition of retirement income over time.


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