Controlling Discretionary Spend, IRA Distributions to spouse, Suggestions

I am a new user and trying to initially build a simple economics based model. I have a few areas that I've been trying to resolve and hope you can help:

1. is there a way to control discretionary spend so that unused funds will be driven to end of the plan and essentially be a potential benefit for my heirs? I have entered planned annual spend by category in the "Special Expenditure" area, therefore have accounted for all projected spending over time. I have tried other solutions found in the forum without success. This includes adjusting SOL and smoothing withdrawals.

2. What is the best way to manage my IRA distributions so they are equally distributed to my wife upon my end of plan? We have a 5 year age difference and I am planning EOP for myself/her at 94/96 respectively. Based on the Total Income report, distributions end when I pass. I have selected the married option.

3. I've notice my that my annual mortgage spend is different from what I entered in the primary housing mortgage field. year 1 its 10% higher, year 2 is 6% lower and works its way to 26% lower over 10 years. The other home support costs are equal to my inputs. Can you help me understand the variance?

4. Life Insurance Suggestion - Based on teh forum responses, it appears the best way to drive automatic life insurance to zero is by adjusting Estate Planning percentages. It would be great if this calculation could be disabled based on end user desire.

5. Report Suggestion - I think it would be great to have a high level cash flow report as there are a number of reports which would support generating this overall summary report. I'm not a financial planner so possibly the reports generated are industry standard. I have found very useful simple high level cash flow reports provided within large financial institution 401K/IRA modules.

Possibly I should have sent separate questions by subject.
Thanks in advance


dan royer's picture

I can return to this and provide some more details later, but to begin (and others may have advice too):

1. Use a special expenditure in the final year or two. Indicate in retirement assets that you do not intend to spend 100%

2. Wife should inherit the balances of your IRA and other retirement accounts.

3. mortgage is shown in "today's dollars" so those are represented as cheaper every year relative to current year dollars (i.e., today's dollars). Taxes and insurance, however, are presumed to adjust to inflation and thus hold steady down the column or go up if the house value is increasing relative to inflation.

4. Yes, that's an issue.

5. I think some people might find this useful and it will be included in an online version that is under development now. I, however, don't find that kind of thing useful at all--perhaps that's just me. :)

Thank you Dan for the quick response. I will ask a few questions about number 1 and 2 in subject specific topics.

I just downloaded, so very new. How do I put in my normal spending, food, cars, utilities, etc?

dan royer's picture

The program is not designed for within-year accounting like that. Say the program indicates that you have 80K of discretionary spending each year in today's dollars. The program doesn't care what you spend that money on. But if you want to take $80K and divide it by 12 and create a monthly budget you can do that. You can, however, enter as special expenditures amounts that are not typical such as a special vacation. Your discretionary spending is for things outside of taxes, housing, Medicare B and whatever you stipulate as "special expenditures."

OK but where do i enter discretionary spending for a basic example? I see the special expenditures but not even a place to enter a lump sum for discretionary spending. Do i enter it as a special expenditure? BTW i would not call Food, Gas, etc discretionary.

dan royer's picture

Sure. "Discretionary" is perhaps a term economists use to distinguish it from fixed costs like mortgage, but regardless, you can see in the Total Spending report that discretionary spending is in the first column of that report and it is distinguished as "what's left over" after everything to its right. (i.e., after everything in the columns to its right). Start with "total spending" and subtract taxes along with everything in the total spending report (except discretionary spending) and you end up with discretionary spending.

So the program is solving for your highest available spending pattern (whether you call it discretionary or whatever) after certain off-the-top expenses that you see in the Total Spending Report. You can add anything you like to those "off-the-top" expenses by creating "Special Expenditures."

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