FAQs About Our Financial Planning Software

Frequently Asked Questions

1When I pressed "continue" on the Registration page after entering my e-mail address and password nothing happened - why? Or, I tried to sign in and pay but when I selected "continue" nothing happened - why?
This could be a web browser compatibility issue. You can try updating your browser software and see if that corrects the problem. If that doesn’t work, you can try another browser. Google Chrome seems to work best. To see if it has something to do with your computer or the firewalls and security system of your employer, try accessing the program on a different computer that is not a part of the employer system. If that solves the problem, you can contact your employer security personnel and ask if they can help you authorize Retirement in a Nutshell as a safe software on your system. If none of that works, please call our toll free help-line number, 888- 909-9970 and we will work with you to solve the problem.
1What is the best way to learn the program?

After you register and sign in to the program, you will find a menu item at the bottom of the data entry screen titled "Help Videos". A list of all of our Training/Help videos will be displayed.

There is one video that you should watch first called "Understanding the Backwards Calculation of Expenses. The way Nutshell calculates client living expenses is very simple but also very different than what you may have seen before. It is much faster and more accurate than the usual methods of itemizing expenses or simply asking the client how much income they need in retirement. We were able to get a U.S. Patent on the way Nutshell calculates client living expenses. It is critical you understand it to make sure the program gives you accurate cash flow results. If you're still not sure how it works after watching the video, please call out toll free number 888-909-9970 and we will go over it with you until you have a solid understanding.

There are also short videos for every data entry menu item like "Entering a Client" or "Entering Income" etc. that are specific to just that entry screen. When you are entering client information, you will find a tab at the top of every entry screen titled "Help Video" that will take you directly to the pertinent help video for that screen. If you have questions when you are entering data on an entry screen, just click on the "Help Video" tab and review the information. If you still have questions after watching the video, write them down and call our toll free line 888-909-9970.

Lastly, there is a video titled, "How to Read and Analyze the Report" that will help you understand the best way to to review the report, find and correct errors, and how to present it to your client. It will have many tips to save you time and get the most out of the report. It is a little longer than the other videos, but covers a lot of ground and will save you a lot of time later if you take the time up front to watch it first.

1Does it matter which client is entered or listed first?
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 Client Entry Screen has fields for “Client A” and “Client B”. After you enter their First Name, that is what will display on the rest of the entry screen menu items. The reports generated by the program will only display the client first names as well.
2Why do you enter just the birth year for the client and spouse and not the whole birth date?
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.
3Why does the program only allow me to enter the first three letters of the client's last name?
For security reasons and to avoid having any Personally Identifiable Information (PII) stored on the website, you only enter the first three letters of the client's last name. This should be enough to allow you to search for any of your client records. Only the client's first names will appear on the report cover and pages. By not entering the full last name or the client's Social Security number, any account numbers, address, phone number, or birth date (just the birth year since the program is only accurate to the year), we have completely eliminated any client PII from the report and the program. This means that, in the event of a breach or hacking of the program, no usable information can be obtained and your client's information is secure. This will avoid any notification requirements to regulators or clients in the event of a breach. With all of the system breaches occurring these days, even with the best security measures, there is still a risk. If you explain this to your clients, they should appreciate that their information is safe.
1How should an advisor determine the retirement age and the Social Security age to enter on the Plan page?
Ask the client what age they would like to model fully retiring or working less. The Social Security age is the age the client wants 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 client is still working. The age entered here determines the year when salaries and contributions to investment accounts stop and the year when pensions and withdrawals from investment accounts start. You can change the start and stop year for just a particular income or investment item . under the Optional Entries for that item.
2How should the "Report To" age be determined?
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.
3How does the What-If function work?

By clicking the What-If/Copy Plan button, the program makes an exact copy of the plan currently loaded and displayed at the top of the data entry section of the page. You will notice that pressing that button also clears the Description field of the Plan entry page. 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. Before making any data entry changes, you need to click the Save button and it will load the What-If copy of the plan and display its description at the top of the data entry page. This way you know you are working on the new plan.

For example, if you wanted to show a later retirement year for the clients, you might enter a description like "Retire at Age 70" and click save and then change the retirement age field on the Plan page to 70 and click save again. The program will then change when all the cash flow items automatically start and stop to reflect retirement at age 70. If you change the client retirement or Social Security withdrawal ages you might need to also go to the Income items for any Defined Benefit Pension or Social Security and update the annual income amount to reflect the later retirement age. You can also change anything else you want to model in the plan such as an earlier alternate withdrawal start date on a particular investment to begin 72t withdrawals before the specified retirement age.

4Are there any rules for making What-If changes to a plan?
There is one thing you need to keep in mind when making What-If changes. If you are trying to compare results to the original plan you copied, do not make any changes that will affect income, taxes, contributions or withdrawals in the current year. This is because the program is calculating the client's current year expenses backwards and any changes you make in the current year will change your baseline expenses and you will be comparing apples to oranges. Just make the changes you want to reflect begin next year. A few months will not make that much difference to the long term results.
5How do you update a plan you prepared in a previous year?

The first thing you need to do is to go to the Plan/What-If page and make a copy of the last plan you prepared for that client. The description field will be blank and you can give it a new name, such as "Update for 20xx" to differentiate it from the plan you are copying, and click save before making any other changes. The program will make an exact copy of the last plan and amounts you entered as if they are starting in the current year. This means you do not need to enter all of the items you entered for the previous plan. This saves a lot of time, but the amounts will need to be updated as part of reviewing it with your client. You can eliminate items that are no longer there and add any new items that were not there last year.

You can describe this to clients by suggesting that planning is like flying from San Francisco to New York. You aim for New York right after take-off but the winds and weather will blow you off course and you need to adjust your heading on each review to still reach New York which represents your retirement goals. If you don't make those mid-course corrections you might end up in Miami or not reach your retirement goals at all.

1How do you determine the Gross Income for a self employed individual whose income varies from year to 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 gives themselves a bonus 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. For self employment income, select Salary from the Income Type drop down menu and check both the "Contributing to Social Security" and the "Self Employed" boxes on the Income data entry screen.

2Why is the amount for a salary displayed on the Income and Expense report and the Cash Flow report different from the amount I entered for salary?
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.
3How do I enter income if the client wants to work past retirement age?
Enter or select the Income Item you want to extend past retirement then click on the "Optional Entries" tab at the top of the Income data entry page. 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 page. 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 both the start and end year you desire. Remember, the program assumes that Salary stops when the client reaches the retirement age you entered on the "Plan/What-If" page, so if the client is starting a new salary after the retirement age you entered on the Plan page, you must enter an "Alternate Stop Year" under optional entries for that income or it will not show up at all.
4What if the client is going to retire or change jobs in the middle of the year?
Enter the income as if the client is going to work for the full year and retire next January. You want the program to calculate the client's living expenses using a full year's income to establish the baseline standard of living the client has been accustomed to before retirement. This allows you to see how the future cash flow for the client compares to their current standard of living. Because you are trying to look at the big picture over many years, a few months is not going to make a significant difference.
1Explain the backwards calculation of expenses and why it is important?

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, and Defined Benefit Contributions). If money hasn't been saved it simply must have been spent. It is actually much more accurate than 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 temporary "Extra Cost Items" (such as out of pocket college costs) because these payments, or expenses, are going to go away someday. 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. They know how it feels and it gives them a reference point against which to compare future years.

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 be better-off or behind in future years and by how much given their current income, investment, and debt profile. The first question of every client is, "Am I OK financially?" Retirement in a Nutshell helps you answer this question and to lift the burden of "not knowing" off 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.

2I don't see any place to enter the client's expenses?
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.
3What if I want to enter the amount for the client's expenses and don't want the program to calculate them backwards?
There is a way to enter the annual expenses and override the backwards calculation. On the Inflation/Taxes data entry page, select the previously entered data to enable editing. Select the "Override Expenses" tab 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.
4What if I want to change the expenses or the tax rate in some future year such as at retirement?
You can do this by selecting the "Override Expenses" or "Alternate Taxes" tabs on the data entry page. 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.
5I hit the "Enter Expenses/Taxes" button and nothing happens?
The program only allows you to enter one set of inflation and tax information for 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 enable editing for you to make whatever adjustments you wish.
6Are taxes entered as a percentage or a dollar amount?
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. The percentage represents the effective or average rate on gross income, not the marginal rate.
7How do you display unusual, extra expenses that are not included in the backwards calculation of current expenses or that are there right now but not there for the rest of the client's life?
On the Loans/Liabilities data input page, select "Extra Cost Item" in the “Liability Type” dropdown menu. Enter a Description that identifies what the expense is. You can enter zero for the Current Balance and then the monthly cost for the expense under Monthly Payment. You can then enter a start and end year for that expense. You also have the ability to enter a "Payment Growth Factor" if the expense is going to rise each year by some percentage. Examples of items that would fall in this category are out of pocket college costs or health care costs that exceed the inflation rate or jump up due to exceptional health care costs in later years.
1What should be entered as an investment?

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 as well as non-qualified brokerage and mutual fund accounts. 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.

Clients will often forget to tell you they are accumulating excess savings in their bank account every month. This is savings and needs to be entered as an investment item so the savings will be deducted when calculating their expenses backwards.

If a client is spending principal from an account to pay expenses each month, that account should be entered as well as the amount of the withdrawals. The cash flow report will then show when that account is depleted and no longer available. 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.

2What determines when contributions to investment accounts start and stop?
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 entry page. You can override this default assumption for a particular investment by selecting the "Options - Contribution" menu bar at the top of the Investment entry screen and entering an alternate contribution start or stop year in the appropriate fields.
3Are contributions flat or do they increase over time?
There is an item called "Contrib. Growth Factor" on the Investment entry screen that allows you to enter the rate you want the contributions to increase each year as a percentage. We recommend you enter the same rate that you entered for inflation under the premise that, over a long number of years, the contribution limits for qualified accounts will be increased for inflation and clients will also increase their contributions accordingly. If you want the contributions to remain flat over time, just leave the field blank or enter zero.
4Are withdrawals entered as a percentage or dollar amount?
You may enter them either way. If you enter them as a percentage, the withdrawal amount will 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. If you enter a dollar amount for Withdrawals and want the dollar amount to go up each year to keep up with inflation or for other reasons, you can select the “Options Withdrawal” tab at the top of the Investments entry screen and enter a percentage amount you want the dollar withdrawals to go up each year. It will not work for withdraws entered originally as a percentage because it would involve a change in the percentage of another percentage and the results would be skewed.
5Since contributions and withdrawals can be started during the year and the program is only calculating values on a yearly basis, how is that handled?
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 balance remain flat or appreciate over time.
6What if I want to reduce the investment rate of return at retirement to be more conservative?
Select the "Options - Investment” tab at the top of the Investment entry screen. From the drop down menu for "Alt. Growth Rate" enter the new growth rate for this account and in the field marked "Alt. Growth Year" enter the year you want the new growth rate to start.
7What if I want to change the start or end year for a particular investment to something other than the current year or retirement age specified on the Plan screen?
Select the "Options- Investment" tab at the top of the Investment entry screen and enter an “Alt. Start Year” or “Alt. End Year. This will allow you to adjust the start and end year for the Investment item itself. This will override the automatic start and end years controlled by the retirement age you entered on the Plan/What-If entry screen, but just for that particular investment item. Examples would be if the client knew they were going to a lump sum of money next year or the client is intending to liquidate an investment account and use the money for something else.
8Why is there $1 showing for the investment amount when I didn't enter an amount for that item?
If you enter a zero amount for the value of an investment or leave it blank, the investment will not show up on the cash flow report at all. The program is designed this way so that, if you take large withdrawals from an investment account and run it down to zero, the investment item will not show up beyond that year on the cash flow report. To make sure the item shows up on the report, the program automatically inserts a value of 1$ if you leave the "Current Value" for that item blank or enter a zero.
9What if I want withdrawals to start in a year other than the year of retirement?
Select the “Options - Withdrawal” tab at the top of the Investments page and you can manually enter an “Alt. W/D Start or End Year” that will override the program default years for just this investment. You may also specify an optional secondary withdrawal year and rate for an investment. This is useful when a client wishes to decrease or increase their retirement income in a future year for that item.
10How can I display RMD (Required Minimum Distribution) withdrawals from an investment account?
On the "Options - Withdrawal" tab for Investments, there is a box you can check called "Use RMD after age 70" If you check this box, the program will automatically calculate the RMD for each year, starting at age 70 and display the appropriate withdrawal amount.
1How do I enter College funding?

College funding is not a retirement income asset but out of pocket costs for college or contributions to a college savings account are cash flow items that must be taken into account in the backward calculation of living expenses.

There are two ways to handle college related cash flow. The simplest way is to just enter the out of pocket cost or contributions to college accounts as a liability on the Loans/Liabilities screen and not enter the college funding account as an investment item since it will not be a retirement income source. You do this by going to the Loans/Liabilities menu item and on the drop down menu for Liability Type, select Extra Cost Item and enter a Liability Name like "College Cost for Brandon". Under Monthly Payment enter the monthly out of pocket cost. If it varies from month to month take the annual cost and divide it by twelve and enter that amount. Then put a start year which can be the current year and then an end year when the college costs will stop. If you have more than one child or person you are contributing to for College, enter the other ones as separate Liabilities since the start and stop dates might be different for each one.

The second way is a bit more complicated. If you or your client really need to enter and show the college savings account as an asset on the balance sheet, you can enter the college savings account as an Investment item. In this case, select the Investments menu item and select "New Investment". On the Investment data entry screen, enter the Investment Type from the drop down menu. For 529 Plans you would select Tax Free or taxable for accounts that don't get special tax treatment. Enter an assumed Growth Rate for the account from the drop down menu. Enter the rest of the investment fields as you would for any other investment. The program assumes that the Monthly Contributions to the account start in the current year and they stop at the age you entered for retirement. Normally, for College, this is not the case so you will need to select the "Options - Contributions" tab at the top of the entry screen and enter the year the contributions will stop as the "Alt. Contribution End Yr." You will also need to select the "Options - Withdrawals" tab and enter the "Alt. Start and End Yr." for the years you will be withdrawing the funds to use for College. On the main "Investment Details" screen you will want to enter the "Withdrawal Rate" as a dollar amount rather than a percentage. You can take the account balance in the year college withdrawals will start and divide it by the number of years it will be withdrawn for college to find the dollar amount. If you want the withdrawals to increase over the college years, you can enter an "Increase $ W/D Factor on the "Options - Withdrawals" tab.

1How do you know what to enter for the various Rental Real Estate fields?
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.
2How do you enter the mortgage for a rental property?
Click on the "Mortgage Details” tab at the top of the Rental Property data entry screen. Enter the mortgage information. The payments for the mortgage should not include any property tax or insurance impounds because those items are already accounted for on the Rental Real Estate Tab. The program will net or subtract the mortgage payments from cash flow for the years it is in effect.
1Should you enter checking accounts as an asset?
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.
2Should Savings Accounts be entered as an Asset or an Investment?
If Savings Accounts are used as an Emergency Funds source, they are normally entered as an asset. If the savings account is large and going to be used as a retirement income source then it can be entered as an Investment item. One thing clients will often forget to tell you about that impacts the backward calculation of expenses is money that is building up in the savings account each month and is not being spent. You need to ask the client if this is the case and enter it as an Investment so the monthly or annual build up can be entered as a contribution and would be subtracted as savings in the backward calculation of expenses.
3Should items like cars and furniture be entered as assets?
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.
1Should all credit card balances be entered?
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 backward calculation of expenses.
2How do you determine the starting or end year for a revolving equity line or credit card payments?
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.
3How do you display unusual, extra expenses that are there right now but not there for the rest of the client's life?
On the Loans/Liabilities data input screen and on the "Liability Type" dropdown menu, you would select "Extra Cost Item" and then enter a Description that identifies what the expense is. You can enter zero for the Current Balance and then the monthly cost for the expense under "Monthly Payment". You can then enter a start and end year for that expense. You also have the ability to enter a "Payment Growth Factor" if the expense is going to rise each year by some percentage. Examples of items that would fall in this category are out of pocket college costs or health care costs that exceed the inflation rate or jump up due to exceptional health care costs in later years.
1How do you handle the situation when you have a wealthy client with high income and the cash flow report shows that they have big cash flow shortfalls after retirement?
There are three 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. Another 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 backward calculation will show too high a number for their expenses 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. The third possibility is that the client is currently paying out of pocket for an unusual expense that is temporary, such as college costs. This is a temporary Liability that should be entered on the Loans/ Liabilities data input screen as an "Extra Cost Item". By doing this, it will reduce the Annual Living Expenses now and reduce the amount needed in future years.
2How do you handle a client who is not wealthy but still has shortfalls after retirement?

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.

On the second page of the "How to Read this Report" section is a list of ways to address shortfalls. You should go over this list with the client to see what strategies are viable for them. 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, after tax, 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.

3How come the Balance Sheet shows the account descriptions as they were entered but the Assumptions page and the Cash Flow report just show generic descriptions such as "Tax Deferred - Qualified" and what do the numbers after the generic labels mean?
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.
4What to do if your plan shows big shortfalls at retirement?

This is probably one of the more common questions we receive. If the plan shows big shortfalls after retirement, there are two possibilities: 1) The client did not save enough to maintain their current lifestyle with inflation built in or; 2) there is a problem with the data they did or didn't give you and the way it was entered into the program.

The first step is to make sure there isn't missing or incorrect information or something that was not entered into the program correctly. If the clients have a very high annual income then that can result in a very high living expense number that, with inflation, will create a very high target at retirement. In this case, the first question to ask is whether they are really spending all those dollars they receive in their bank accounts each month or is there money building up that they are not spending. If that is the case and they are not sure of the monthly build up then ask them how much it builds up over a year and divide by 12. You can enter that savings account under investments and enter the contributions as a monthly amount. This will increase the savings amount the program calculates and reduce the living expenses and lower the target for retirement and reduce the shortfall.

The second question to ask is if there are any current out-of-pocket expenses that are temporary and will go away in a future year. A good example of this is payments for college costs or to a college savings account. Another may be payments to support a parent or disabled family member for a period of time or temporarily higher health care expenses. If there are these types of costs, they would be entered under liabilities as an extra cost item and you can enter them starting in the current year and ending in some future year. This will also reduce the current living expenses and lower the bar and shortfalls at retirement.

If you have checked these items and double checked the taxes and contributions to investment accounts then they may actually have a large shortfall in maintaining their current standard of living at retirement. You could make a What-If copy of the plan and get a little less conservative with investment returns or reduce their living expenses at retirement a bit by going to the Inflation/Taxes input tab and open up the screen and select the Override Expenses tab and enter a lower expense amount at retirement. You can look at what the program calculated for expenses in the retirement year and calculate how much a 10 or 20% reduction would be and enter that amount. The program will then adjust that number for inflation going forward.

Try not to view shortfalls as a bad thing. They get the client's attention and cause them to disclose things they might not have told you about and they will help you make sure all of the entries are correct. Also, they realize they need you to help them address the problem. On the second page of the 'How to Read this Report" pages is a checklist of items that might help address a shortfall. The last resort is to work longer part time or work longer full time, if there are no other reasonable options. We believe that knowing is better than not knowing or worrying and making it bigger than it is.

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