Welcome to video three of our Get Started series, Operations, Profile and Goals.
By now, you're probably wondering how the planner operates. Once you complete the onboarding process and enter your information, we're calculating. We sum up any expenses you enter, then we calculate your taxes and add them to your expenses. We subtract your expenses, inclusive of taxes from your income and we compute any gap or surplus. You choose a withdrawal strategy to fund gaps in a savings strategy for your surpluses. You make the important choices, and we assess your chance of success in funding your lifestyle through longevity, under multiple assumptions and reflect them back to you.
I want to introduce you to the toggle. Your plan is based on certain assumptions, which we allow you to influence. For example, you'll enter a growth rate for your assets and a general inflation rate. The toggle allows you to view your outcomes on the dashboard through one of three particular viewpoints, optimistic, pessimistic, or average. So if you tell us your investments will grow at 2% pessimistically and 6% optimistically, you can apply the average assumptions and see how your plan will work out with 4% growth on your investments. You can also combine these viewpoints with three budget scenarios and three withdrawal strategies. Changing the viewpoint is one way to explore the interactivity between elements of your plan and changing the assumptions is another.
Now we're going to go into my plan and edit your assumptions, profile and goals. Looking at the assumptions you see that we allow different inflation rates for different areas as this is more realistic than applying one average. In this section, you have the ability to modify the longevity inflation assumptions that will underlie your plan. You can toggle between the different views here as well. Note that when you make any changes, the plan update meter reflects any changes to your plan.
Navigating up to your Profile and Goals, you'll start your profile by entering your birthday, sex and longevity age. If you have a spouse, you'll add the same information for them and the planner will use your marital status to guide your tax treatment. In the objective section, you'll share, what's important to you and notes is a good space to keep notes for yourself, our coaches, or anyone else looking at your plan.
I want to point out the charts available to the right when you're working in My Plan. The Key Info charts will display your Lifetime Income Projection, Savings Balances, and Projected Expenses. The tax charts summarize your tax liabilities, your total tax, your state tax, and your federal income tax. There are a variety of other charts available in the Insights Library. We'll look at those as we move through the series.
Finally, let's set up your excess income. Excess income is any income greater than your expenses and savings modeled in the planner. And you can view your excess income in the Surplus-Gap chart. We go to Money Flows, Excess Income to tell the planner how to handle our excess income. Many of us has money links such as spending $10 a day at Starbucks or impulse buying. This might lead you to set your excess income at 90% or less. When you do this, the planner spends the 10% differential. The most intentional way to model a little flexibility in your plan would be adding a line item in your budget as a cushion and setting your excess income at 100%. When you identify the percent of excess income you're saving in the plan, you also want to consider what account you'll use for your excess income. Do you want the excess income somewhere safe, or do you want it invested in growing at a higher rate?
Thanks for letting us help you on your journey. We'll see you in video four - Accounts and Assets.