For a plan where the household is not yet retired, the ‘Can I Afford My Goals?’ report will provide a section called Additional Savings Needed if the plan shows a funding deficit for one or more goal levels. To calculate the additional savings amount needed, we assume the household will save each month from the current date up until the all principals of the household are retired to make up the funding deficit shown for each goal level in the report. We adjust the monthly savings amount each year for the annual Inflation rate entered for the plan. We also adjust each year’s savings by the household’s survival probability and then discount the total savings accrued back to today’s dollars to make sure that it covers the present value deficit for each goal level. The monthly savings amount is assumed to be after-tax savings.
Articles in this section
- How is the Spending Reductions Needed section of the ‘Can I Afford My Goals?’ report determined?
- If the balance sheet calculation uses actuarial net present value for retirement expense goals (incorporating life expectancy), doesn’t that mean half the population will live longer than the planning horizon?
- Is the Household Balance Sheet independent of current/future asset allocations?
- What is the Funding Percent on the Household Balance Sheet?
- What is the Surplus/Deficit on the Household Balance Sheet?
- How are 529 Plan evaluated in the Balance Sheet?
- Where does goalgamiPro use the different Present Value calculations?
- How are Social Security balance Sheet values calculated?
- What is the difference between Actuarial and End of Life expectancy methods?
- How is the Additional Savings Needed section of the ‘Can I Afford My Goals?’ report determined?