Confused about the Target-Maps math & calculations?  Download this sample.  

Notice how each of the first 4 Target-Map scenarios shows the same gap on the Target-Map summary page.  Ultimately, they're using all the same numbers and calculations, but some of them show the year-by-year breakdown of cash flows.  

Feel free to pull out your financial calculator and test these net-present value calculations on your own. Can you get the same results?

Additional Notes:

  • Learn all about our Cash Flow Details chart of a Target-Map in this article.
  • The Percent Funded is a division of the capital available by the capital required.
  • Rate of Return - is calculated using this formula:
(1+Return)/(1+COLA)-1

With the addition of COLA (inflation) into the mix you might think that if a Rate of Return is 5% and COLA is 1%, then the effective rate is 5%-1%=4%. But that's not the case. The formula above calculates returns on investment with inflation.
(Reference How to Calculate Returns on Investments With Inflation for more details. This link will take you to a 3rd party website with no affiliation or relationship with Asset-Map Holdings, Inc. We cannot guarantee the accuracy of their content.)

  • We conveniently display a multi-color bar to indicate the percentages of the sources of funding (cash flow, assets, insurance) which contribute to the overall funding of the project. This helps to display for the client what is funding their project (cash flow sources verses assets in retirement, for example) and allows the advisor to determine if the current course should be followed or if modifications need to be made.

Tags: verify, net, present, value, capital, requirement, retirement

11/2020

Did this answer your question?