In this article
Overview
A Retirement Target-Map does not utilize a Distribution percentage rate/Withdrawal rate to illustrate annual cash flow during retirement. Instead, the Cash Flow Details page illustrates the following:
Annual desired spending money (What you want) - Spendable money (What you have) = net surplus added to the savings (impacted by selected rate of return), OR net withdrawal from savings (also impacted by selected rate of return).
One cannot select a desired order of withdrawals from various retirement savings vehicles. However, you can illustrate the impact of an annual cash flow distribution if you know the annual dollar amount.
The distribution does not automatically withdrawal from its asset and there is no percentage calculation performed upon an asset to derive a distribution amount. The advisor must calculate an annual dollar value and intentionally enter it onto an Asset-Map or Target-Map.
Asset and Distribution Cash Flow on an Asset-Map
Use the Asset option from the Actions Menu.
Select the desired asset type (retirement, non-retirement), who the interested member is, what the current value is and where it is located.
Complete the Details tab and Notes tab and Save.
Use the Cash Flow option from the Actions Menu.
Select the desired cash flow type, who the interested member is, what the current value is and where it is located.
Complete the Age/Date fields to show when the income source becomes available.
Asset and Distribution on a Target-Map
Create and Edit a Target-Map. Both financials will be visible on the What you have page. Decide which financial to apply to help fund the need and be sure not to unintentionally "double-dip" by selecting both.
The effects of selecting one over the other is varied. Often, when the rate of return is set to low, the present value equivalent of the entire cash flow (expressed in the far right column) is overall more than the present value of the asset. That's because in a low rate of return environment the asset (listed in the Assets Available section) would not be earning much.
Yet, in a higher rate of return environment, the asset could be worth more because it is a growing investible asset that could benefit from the higher average rate of return. The cash flow would not. Choose whichever is appropriate to solve the need or enhances the conversation.
The option to include a Distribution only on the Target-Map and not on the Asset-Map is also provided to illustrate a scenario. In other words, you don't have to add a distribution cash flow tile on the Asset-Map to illustrate the impact of a Distribution. Just add it to the Target-Map's What you have page. Here's how:
Try clicking the "clone" icon to make an exact duplicate of the current Target-Map to work from.
On the clone's What you have page, click the "Add Custom Cash Flow" button and enter a desired annual amount over preferred amount of time.
Tags: GMIB, RMD, Annuity, IRA, Retirement, Cash Flow, Pension, distribute, annual, conversion, distribution, drawdown, draw
3/2024