The purpose of a Target-Map is to illustrate if a household is either funded, underfunded or over funded to meet the desired cash flow given certain assumptions.
The resulting side-by-side comparison of "What you want" and "What you have" reveals the present values of the cash-flows desired and the available resources to fund that capital requirement. A visual summary indicates this proportionately through the use of a progress bar representing 100% of the funding requirement.
Other defining factors in the mathematical model are:
- An assumed Expected Net Return on Capital,
- An assumed Annual Increase of Contributions
- ...for a Duration of Contributions
A Capital Deficit (or Surplus) is indicated along with the required monthly Additional Contributions to Fund per month (or Surplus Contributions when over funded), spread over the duration in years prior to the first cash-flow event.
The summary sentence provides an explanation of the Target-Map conclusion in the form of an action statement relative to the funding levels for this scenario.
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