The Results screen you will have the opportunity to review some assumptions for your goal and then you can move over to the other tabs for the results.
Modular Goal: "Planit Learning Circle" Session
The Modular Goal Process Flow replaces the Retirement & Education Goal calculators in PlanPlus Planit Versions 5.9 & higher. In this session you'll learn about the benefits of this new approach.
To view more sessions like this one please click here.
Results - Assumptions Tab
On the <Results> screen you first have a few assumptions to set up for this specific goal on the Assumptions tab.
Average Tax Rate
This the the average tax rate which will be used to calculating the tax on investment income pre-retirement.
The Modular Goal Process does use a full T1 tax calculation, but does it does use this Average Tax Rate on pre-retirement since in the pre-retirement period the Modular Goal Process does not use the current taxable incomes it only uses it at Retirement.
As just explained above, the number that you enter in the Tax Rate field, will be used to determine the taxes payable on any investment income earned during the pre-retirement period. So if you have a client who is currently 45 and they are retiring at age 55, this tax rate will be used between now and age 55.
This table will provide you with some suggestions for identifying the tax rate.
Portfolio: This is where you can specify what investment assumptions you want to make relative to this goal. This drop down will be populated with all of the standard portfolios available on the site, plus several other options, depending on what you have already done for the client. In this case we are going to use the “Custom” option which allows me to manually choose the return and standard deviation I want to use.
Return on Assets: As mentioned above, if you select “Custom” you can manually enter your return assumption to be used for your analysis. Or if you select one of the portfolio options, the return for that portfolio will be displayed. The portfolio returns will be adjusted based on the return reduction factory you used on the <Planning Assumptions> screen.
Standard Deviation: This number will be populated for you if you select one of the standard portfolios, but if you use a custom return, you’ll have to set a reasonable standard deviation for that rate of return assumption.
Investment Income Distribution: When you click on the Colored Pie Chart you can view the Income Distribution. When you select a standard portfolio, the income distribution that is typical for the asset allocation of that portfolio will be displayed. You may then retain that income distribution or edit it to recognize your implementation approach.
To better assist you we have created some case studies for the Modular Goal Planning Process.
- Case Study #1 – Using the Modular Goal Process Flow for Retirement
- Case Study #2 – Using the Modular Goal Process Flow for Education
- Case Study #3 – Using the Modular Goal Process with Multiple Goals
Along with these Case Studies there is also some Exercises with answer keys to help you out,they are as follows:
- Exercise # 1 – Creating a Modular Retirement Goal Needs Analysis
- Exercise #2 – Creating a Modular Education Goal Needs Analysis
To proceed through the case studies please click HERE