When you enter your details into the Planner, you describe your income and expenses. The plan doesn’t match income or withdrawals to specific expenses, it funds your expenses from any income available and then withdraws from savings.

You will have “Excess Income” any time your monthly income from ALL sources – including Required Minimum Distributions (RMDs) – is higher than what you have specified for your expenses and savings. Some years, you may earn more than you have designated in your budget, so you will need to tell the tool whether to save all or part of your excess income.

See this video to learn more about the Excess Income in your Plan.

You can view your Excess Income in your Insights > Surplus Gap Chart

We recommend you head over to Money Flows > Excess Income and select an appropriate percentage and account to save your Excess Income.

If you are someone who carefully monitors their cash flow and is good at saving extra money, then you might tell the system to save 100% of your excess income.

On the other hand, if you are someone who might be more apt to spend whatever money you have earned each month, you might want to specify that the system saves less than 100% of the projected excess income. When you do this, a percentage will be saved and a remaining portion will be automatically spent by the Planner.

The tool will automatically default to choose "Cash," a default account for your excess income, which is an after-tax account with the ordinary income tax treatment and rates of return of 0% for optimistic and 0% for pessimistic. If you see an account named “Other Savings” Insights > Savings Chart, this is the default account for Excess Income.

We recommend designating one of your own After-Tax accounts by pressing the ✎ (pencil) icon when asked “How should we handle excess income?” You also want to consider the growth rate of the account you’ll use for your excess income. Do you want your excess income somewhere safe with a low growth rate, or do you want it invested and growing at a higher rate?

See this video to learn more about the Excess Income in your Plan.