quicker financial planning tool

This could be a compatability issue if your web browser (Explorer) or operating system (Windows) versions are older and not compatible with current versions. You can try updating them using the "Windows Update" item on the Tools Menu. If that doesn't work, you can try using a different browser to access the program, such a Firefox. You can google Firefox and, from their website, download their browser to your desktop. Then select their browser from your desktop and go to "www.retirementinanutshell.com". If neither of those options work, please call our toll free number, 888-909-9970 and we will work with you to solve the problem.

The program is designed to be used as an everyday tool in your practice, not just once in awhile. Many programs are so expensive, time consuming, and complicated that they can only be justified for high net worth clients. Doesn't every client deserve to know where they stand financially and don't you want to know where they stand? It also works best as an interactive tool that you use during a client meeting or review. Once you get used to using Retirement in a Nutshell you should be able to give the client a list of items to bring to a meeting (that is available on the website) and then enter the information during the meeting. It should also be used during client review meetings since the situation may have changed and need to be updated. It is simple and quick enough to use with every client or, at least, most of your clients. While you can have the client complete an intake form (also available on the site) and have an assistant enter the information, we have found it really is more effective if you do it yourself.

There are four ways you can learn to use the program:

1. Sign up for one of the scheduled demonstration webinars available on the website. They last about an hour and you should be able to immediately begin using the program.
2. There are short 1-3 minute videos on every aspect of the program that are accessible from the home page or from the data entry pages. They will help you with data entry or how to interpret and use the report.
3. The FAQ's (Frequently asked Questions) are accessible from both the home page and the data entry pages. They will often address a problem you may be having in deciding how to enter data or interpret the report.
4. Call our toll free number: 888-909-9970. You can call any time nights or weekends included. If we are not available, we will call you back very quickly. It is typical for new users to call us when they are preparing their first few plans to discuss how to enter data or how to interpret the report information. If you want to schedule refresher training or a one on one webinar, we will be happy to do that as well.

No. You may list either person first depending on what criteria the advisor feels is most important such as: the primary earner; age; client preference of who should be first or something else.

The program only measures cash flow to the year, not the month. These are long term projections so the month is really not that important in the larger picture. Also, not listing the birth date provides a higher level of security since names cannot be matched up with birth dates to identify a particular client.

One of the biggest time savers and most effective aspects of the program is the backwards calculation of the client's current living expenses. The program takes the client's gross income and subtracts taxes and savings (which include all investment contributions, Social Security contributions, Defined Benefit Contributions, and College contributions). If money hasn't been saved it simply must have been spent. It is actually much more accurate that itemizing or estimating retirement income needs because it takes every dollar into account. In addition, the advisor does not have to ask the client financial questions that some clients may be reluctant or embarrassed to disclose such as charitable giving, rehab for a family member, etc.

The program takes one further step, which is to subtract payments of limited duration such as house payments, loan payments, and other limited term liabilities because these payments are going to go away some day. The program does show them separately, on their own line on the cash flow report. After those types of payments are subtracted, what is left is everything else which is what we call, "Expenses that Continue for Life". It establishes the current standard of living that the clients are experiencing. It becomes the starting baseline.

When you apply the inflation rate to those expenses it becomes the measuring stick for every year going forward to see if the clients are going to better better-off or behind in future years and by how much given their current income, investment, and debt profile. This is what every client worries about and wants to know when they first arrive. Retirement in a Nutshell helps you answer this question and to lift the burden of "not knowing" off of their shoulders. What a gift you are giving to them and, if there are shortfalls, you can identify them, make them less scary, and help them to work toward a solution. Don't be too concerned about telling the client they have shortfalls. Usually, they are well aware they don't have enough, but it helps you and them to quantify the problem and set goals.

Ask the clients what age they would like to model fully retiring or working less. The Social Security age is the age the clients want to start drawing Social Security. Ordinarily, it will be the same or later than the retirement age because of the 50% reduction in Social Security payments for every dollar earned over a minimal amount if the clients are still working.

It is really just a matter of how many pages long you want the report to be. For younger clients it should at least go past their retirement ages. For older clients you should use a higher age so they can see the effects of inflation and cash flow issues if they live beyond their normal life expectancy.

By clicking the What-If button, the program makes an exact copy of the plan currently loaded and displayed at the top of the data entry section of the screen. You will notice that pressing that button also clears the Description field of the Plan entry screen. You will need to enter a new description for the What-If copy so you can distinguish it from the original plan from which you made the copy. Then you need to hit the Save button and it will load the What-If copy of the plan and display it's description at the top of the data entry screen. This way you know you are working on the new plan. For example, if you wanted to show a later retirement year for the client and spouse, you might enter a description like "Retire at Age 70" and then change the retirement age field on the Plan screen and hit save. The program will then change when all the cash flow items automatically start and stop to reflect retirement at age 70. You can also change anything else you want to model in the plan such as putting in an earlier alternate withdrawal start date on a particular investment to begin 72t withdrawals before the specified retirement age.

There is one thing you need to keep in mind when making What-If changes. You do not want to make any changes effective in the current year. This is because the program is calculating the client's current expenses backwards and any changes you make in the current year will change your baseline expenses. Just make changes you want to make immediately begin next year.

This is something that you need to discuss with the client. Generally, it is good to use a conservative average over the past several years. If it is a fast growing company you could enter a higher cost of living percentage for future increases than you ordinarily would. It is helpful to have this type of client bring two or three past tax returns with him/her. Since the program calculates the client's expenses backwards by subtracting taxes and savings from income, what you are looking for here is the actual amount of money the client is putting in their pocket each year from the business. If you are looking at the Schedule C for the business, you will want to add the depreciation back to the net business income since this is an accounting item and not an actual cash expenditure for the business. If the client normally bonuses themselves an amount at the end of the year, you may want to enter the bonus separately and use a conservative average so you can break this particular item out on the cash flow report when you are analyzing the client's cash flow. Use the Salary category for self employment income and check both the "Contributing to Social Security" and the "Self Employed" boxes on the Income data entry screen.

There are two adjustments to salary that are subtracted when the salary amount is displayed on the two reports. They are contributions to Social Security and contributions from the client's salary to a Defined Benefit pension plan. These items are money taken out of the client's salary income and are, essentially, savings sent to the government or pension administrator to provide income later. Since this is not money going to the client to spend, it is subtracted at this point. Remember, the program calculates the client's expenses backwards by subtracting taxes and savings from their income.

If you click on the "Optional Entries" bar at the bottom of the Income data entry screen it will allow you to enter an alternate end year for this specific income item which is different from the age for retirement you entered on the Plan data entry screen. If the client wants to work part time after retirement, you can enter that work as a separate income item and use the optional entries to put in whatever start and end year you desire.

The program calculates the client's expenses backwards by taking the clients income and subtracting taxes and savings. If the money has not been saved, it must have been spent. This is more accurate than itemizing and saves both you and the client a lot of time. All you need to do is enter the inflation rate you want to apply to living expenses going forward.

There is a way to enter the annual expenses and override the backwards calculation. On the Expenses/Taxes data entry screen you can click on the "Optional Entries" menu bar at the bottom and enter the starting annual amount you want to use and then the year you want it to start. You can start it in the current year if you would like or some future year. The program will enter the amount in that year and then increase it each year based on the inflation rate you entered.

You can do this by selecting the "Optional Entries" menu bar at the bottom of the data entry screen. You may then enter the year in which you want the new annual expenses to begin and the amount. You may also enter a year in which you would like the tax rate to change and the new percentage rates or dollar amounts you want to use.

The program only allows you to enter one set of expense and tax information per a plan. If you have already entered the inflation and tax information, the button will not allow you to enter another set. You can edit and change what you have already entered by simply clicking on the line displaying the values you already entered and it will open the data entry screen and you can make whatever adjustments you wish.

You may enter taxes either as a dollar amount or a percentage. It is preferable to enter the actual dollar amount from the client's latest tax return as long as the income has not changed dramatically. The tax return is more accurate than just a percentage because it takes into account the client's unique deductions, credits, and other items that impact their tax situation. If the client does not have their tax return, you can start by entering a percentage and then refine it later. There is a tax table available which helps to give you a starting point percentage for federal and state income taxes (California). The percentage represents the effective or average rate on gross income, not the marginal rate.

Any account that will be used to generate future cash flow should be entered. Retirement accounts, 401k's, 403b's, 457's, IRA's, etc. should be entered. You should enter whole accounts as an item rather than the individual investments inside an account in order to save space. It is important to try to keep the cash flow report streamlined for client comprehension. Defined benefit plans should be entered under income since they will be exchanged for an income stream at some future point in time. Accounts used only as a source of emergency funds should be entered as Assets.

The default assumption is that contributions will start in the current year and stop in the year before the retirement age entered on the Plan data entry page. You can override this default assumption for a particular investment by selecting the "Optional Entries" menu bar at the bottom of the Investment entry screen and entering an alternate start or stop year in the appropriate fields.

Right now, they increase over time at the inflation rate you entered. It was felt that over many years, the retirement plan limits would increase to keep pace with inflation and so would the contributions to retirement plans. There are some situations where you might want the contributions to be flat. We are looking at adding the ability to give you that option.

You may enter them either way. If you enter them as a percentage, they can increase or decrease with account value depending on the rate of return you select. If you want to drain an account over time, you can enter a large dollar amount and the program will display when the account will reach zero.

To be conservative, the program assumes the annualized amount of withdrawals come out at the beginning of the year and the annualized amount of contributions are made at the end of the year. For this reason, if contributions and withdrawals of equal percentages are made in the same year, the account value will deteriorate a bit. You would need to use a higher growth rate than withdrawal rate to have the account appreciate over time.

Select the "Optional Entries" menu bar at the bottom of the Investment entry screen. This allows you to select the new rate of return you want to use and the year you want the new rate to start.

Select the "Optional Entries" menu bar at the bottom of the Investment entry screen. This will allow you to adjust the start and end year for the Investment item itself, for contributions, or for withdrawals. This will override the retirement age setting for just the particular investment item.

If you enter a zero amount for the value of an investment or leave it blank, the investment will not show up on the cash flow report at all. The program is designed this way so that, if you take large withdrawals from an investment account and run it down to zero, the investment item will not show up beyond that year on the cash flow report.

College funding is not a retirement cash flow item, but it does qualify as savings and needs to be taken into account for calculating current expenses and cash flow, until funding stops and the account is terminated. There are two ways to enter college funding. If you want to show the investment account value each year and on the balance sheet, you should enter it as an investment account, and put College somewhere in the description field. You will need to enter an end date for the investment itself in the year it will be withdrawn to pay for college. You do this by selecting the "Optional Entries" menu bar at the bottom of the investments screen and entering an end year for the investment. If you don't want to show the college investment account and just show the contributions, you can enter it as a Liability and put College in the description line. You will also need to enter an end year for the liability in the year contributions will stop. Either method will work.

For the Description it is best to ask the client how they refer to the property (i.e. Oak Street Rental). For the value of the property, ask the client what they think it would sell for today? This is not a critical value since it only affects the balance sheet and not cash flow. The client should have a fairly exact idea of the rental income, insurance, and property taxes. The annual maintenance can be estimated based on the age of the house.

Click on the "Mortgage Entries" menu bar at the bottom of the Rental Property data entry screen. Enter the mortgage information. The program will net or subtract the mortgage payments from cash flow for the years it is in effect.

Ask the client the average balance kept in the account on a monthly basis. Sometimes clients will keep exceptionally large sums in their checking account and this is the only way you will find out.

That is completely up to the advisor and client. If you want to show these items on the balance sheet you can enter them. Some advisors only enter depreciable assets if they are collectibles or extremely valuable.

No, they should be entered only if the client carries a balance and makes monthly payments. If the client pays off the credit card every month, it should not be entered because it is just a handy way to pay expenses and is accounted for in the backwards expense calculation.

Use the current year as the starting year and then use the "Loan Length Calculator" provided on the Loans/Liabilities data entry screen, to calculate the length of the loan and round up to find the end year. You may have to estimate the interest rate depending on the type of loan if the client is unsure of the rate.

There are two possibilities. They may be spending so much and saving so little that they do have a shortfall situation which needs to be analyzed and addressed. The other possibility is that the clients are actually saving more of their income than represented by their regular retirement account contributions. They may be accumulating money in a savings or checking account that is building up each month. Those contributions are savings and if they are not entered as an investment, the backwards calculation of expenses will show too high a number and, with inflation, create a very high target to achieve. Also, the account where the savings are accumulating will not be shown as growing and available for income later so it can inflate the cash flow shortfall in both ways. It is important to query the client and make sure all savings has been accounted for and entered.

Unfortunately, many clients have not saved enough for retirement. Usually the clients in this situation know it, but they just don't know the magnitude of the problem. Retirement in a Nutshell will at least quantify the problem so you can begin to work with them to improve their situation. There is a page of the report that does a present value calculation to quantify the additional amount the client will need to save starting today to address the shortfalls. If the numbers are bigger than the clients can save right now, you should discuss saving what is possible. If there is no way to reposition assets for a greater return or increase income right now, you may discuss tightening their belt or working part time after retirement. The cash flow report will show the shortfall amount, year by year, so you can tell the client the amount they would have to tighten their belt or the amount they would have to make if they work part time. Usually, the shortfall amount is much less than the amount the clients were making when they were working full time. This would allow them to work fewer hours per week and have more choice in where they work, making the option more attractive. Perhaps, they can develop a small business at home and work for themselves. You can create a What-If copy of the plan and model various options and scenarios until you come up with one that both you and the clients feel is realistic.

For compliance reasons, you are able to project generic sums of money if they are not labeled as a specific client account. If there is more than one hypothetical amount of the same category that is going to be projected, then each amount will have a sequential number associated with it so you can distinguish between them. If you want to see which hypothetical amounts correspond with current client assets, you can refer to the Balance Sheet.