Retirement FAQs

How can I project the impact of withdrawing money before retirement in retirement planning?

The retirement toolkit projects based on the planned consumption of funds during retirement, but if you withdraw money before either income earner is retired, you can see the impact of the withdrawal in your retirement planning projections by adjusting the total saved field in the retirement planning toolkit for the investment you withdrew money from.

Note: Make sure you account for taxes and early withdrawal penalties from your investment.

Where does my lump sum go after my age passes the start age?

Lump sum income is always a future projection. Once you have received the money, you need to enter the amount into one of your investments in retirement savings and contributions in order for the toolkit to account for that money in projections. Lump sum amounts are not always certain, and we don’t usually have an exact time frame. By entering it once you receive it, you will be able to get an accurate projection. Note: Remember to delete your lump sum information once you have added it as savings.

Why does the system change my savings start ages for me?

The retirement toolkit provides a great deal of flexibility by allowing you to adjust withdrawal start ages for all investments. However, this also means our toolkits must perform validations that will keep your projections consistent. When you change your retirement age, the system will automatically change investment withdrawal ages to match the new retirement age. This allows you to keep gaps from forming between when you retire and when you start funding your retirement, you can then modify start ages as you see fit, what we are trying to avoid is projecting money being consumed before or after you actually retire.

How is the Tax Status shown on the worksheet

Tax status is made visible on retirement planning and the retirement report by using colors. On retirement planning, the start age cells are colored red for taxed, orange for tax deferred and green for tax free. On the retirement report, the account cells are colored coded the same way. This lets you know the current tax status of your investments, incomes, lump sums, and work in retirement.

Why do earnings and contributions projections change through the year?

In Retirement Savings we calculate contributions and earnings, in the current year, based on changes you make to a retirement contributions and savings investment in retirement planning. The toolkit accounts for changes made to the amount you save per month and the total saved amount. Each time you change the total saved amount, we begin projecting earnings forward from the month the change was made. If you change a contribution amount, we account for each contribution amount separately. For example, if you had one amount for two months and then changed it to another amount for three months, we project and add each of those totals together to determine your total contributions. We do this in an effort to project earnings and contributions as accurately as possible in the current year.

Is there a difference between projections done before and during retirement?

Any savings projected in retirement savings is projected using monthly earnings, which include all savings before retirement and untapped savings during retirement. In retirement spending, savings are projected using annual earnings, which include those investments that you have started to consume in retirement.

Also, we require the user to define separate return rates for pre-retirement and post-retirement. We also provide the ability to set a separate return rate for each investment. Depending on the rate that is setup, it will impact projections both in retirement savings and retirement spending.

Why is the total savings in retirement savings different from the total savings available in retirement spending?

Retirement savings is designed to accumulate and project your retirement savings from all of your investments plus the lump sum income you believe you will receive. Retirement savings also adds in the projected earnings you will receive. In contrast, retirement spending is accounting for only those investments and lump sums you have decided to consume at retirement. Let’s say you have 4 investments and 2 lump sums accounted for in retirement savings. In planning the funding of your retirement, you decide to start by consuming from 2 investments and 1 Lump Sum in your first retirement year. All 4 investments and 2 Lump Sums will be accounted for in your retirement savings, but your retirement spending will show the available savings  from the 2 investments and 1 lump sum you have decided to use.