How to enter a future one-time payment on additional inputs?

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frp user
Posts: 65
Joined: Fri Feb 29, 2008 12:55 pm

How to enter a future one-time payment on additional inputs?

Post by frp user »

Jim,

I am unclear as to how the calculator would work for future income (or expense) which does not start today.

For example, if I anticipate receiving a one time payment of $ 10,000 (in future dollars) 10 years from now and want to add this one time event on the additional inputs page as “Misc Income” applicable 10 years from now, do I simply add the $ 10,000 or do I have to discount it back to today’s dollars before entering it?

Thanks for clarifying this.
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admin
Site Admin
Posts: 79
Joined: Thu Feb 28, 2008 5:27 pm

Re: How to enter a future one-time payment on additional inputs?

Post by admin »

Thanks for trying out the planner and for the question.

Your assumption about the need to discount the future payment seems correct for the scenario you've described. It may be a little counter intuitive, but all simulation inputs need to be given in today's dollars. I probably could have done the discounting internally, but because it's easier to think about things like expenses and social security in present-value dollars, I made everything work that way. Internally, I reduce the portfolio value and any non-cola'd payments by the inflation rate at the end of each simulation year in order to account for inflation.

I hope that explain things clearly enough, but please don't hesitate to contact me again if you have additional questions.

Regards,

Jim
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