Discretionary Spend Evaluation
I previously asked a question on how to drive discretionary funds to my end of plan. In my case, I have accounted for projected annual spend within the housing entries or Special Expenditures (SE) area.
- define funds I can save for other purposes outside of routine annual spend and project the aggregate amount.
My assumptions are:
- SE are post tax. Please confirm.
- In the modeling, its assumed the SE are consumed each year and not carried forward into future years. Please confirm.
- It was suggested to enter SE near end of term to drive targeted funds to end of plan. This generally worked but required numerous attempts to adjust Estate standard of living adjustments in order to control life insurance spend and still left relatively high annual SE funds during the middle years.
- I also tried adjusting smoothing withdrawals and adjusting the Assumptions standard of living entries which resulted in similar additional life insurance adjustments ot drove a high spend to current year.
- Assuming my perspective is correct in the assumptions above, I'm thinking that I could leave projected spend in the SE section and then create a new file (either ESP or a spreadsheet) where I enter the ESP projected discretionary funds and essentially create a projected savings plan with after tax dollars which could grow over time at some assumed interest rate. I could revisit the plan annually and update based on whether I actually did or didn't use the discretionary funds during the previous year. Does this seem like a practical solution?