Summary:
The sustainable spending chart is a visual representation of a client's sustainable spending for their plan over time.
Each bar on the chart represents a historical scenario that the client's plan has been tested against.
The chart shows the maximum amount that can be spent each year based on withdrawals, contributions, income, taxes, spending, inflation, and asset returns.
The red line on the chart represents the worst-case scenario, and the green line represents the best-case scenario.
The chart allows advisors to stress test against different scenarios and figure out what is sustainable over time.
Full video:
Description
Imagine you have a client named John who is nearing retirement age. John has worked hard his entire life and built up a significant nest egg, but he wants to ensure he keeps his savings. He comes to you to help create a sustainable spending plan for his retirement years.
As a financial advisor, you know there are better ideas than simply guessing at a spending plan for John. Instead, you turn to the sustainable spending chart on Timeline Planning. This powerful tool allows you to test different scenarios and see what is truly sustainable for John's particular situation.
You start by inputting John's income, investments, planned spending, and contributions into the plan. The Timeline calculation engine then runs simulations of different scenarios, considering historical economic data like inflation and market fluctuations.
Using the sustainable spending chart, you can show John that you have done your homework and that his plan is sustainable at a certain level of spending. It also gives you a chance to think through with John how much he wants to spend in different life phases.
In addition, the chart can be downloaded as a PDF and added to your own reports, and the data can also be downloaded as a spreadsheet. It is also included in the auto-generated reports that you can create from timeline planning and can be custom branded.
In conclusion, the sustainable spending chart is a powerful tool that allows financial advisors to test different scenarios and see what is truly sustainable for their clients' particular situations. Providing a detailed and realistic look at what a client's retirement might look like helps them make informed decisions about their spending.