Should "Retirement Spending" input include expected taxes?

[frp user]

DEAR JIM,

FIRST OF ALL I WOULD LIKE TO THANK YOU FOR YOUR WONDERFUL RETIREMENT PLANNER. I HAVE TRIED SEVERAL OTHER CALCULATORS BUT YOURS IS THE MOST DETAILED AND THOROUGH.

I ASSUME THAT SINCE THERE ARE ENTRIES FOR DIFFERENT TAX RATES, THAT THE RETIREMENT INCOME COLUMN IS THE ACTUAL EXPENSES AND SHOULD NOT INCLUDE ANY TAXES. IS MY ASSUMPTION CORRECT? IN OTHER WORDS IF MY YEARLY EXPENSES ARE $80,000 I SHOULD ENTER THAT AMOUNT AND NOT $100000 (PRE TAX).

IF THE SIMULATION SHOWS A SUCCESS RATE OF 99% AND YET THERE IS THE YELLOW SIGNAL,SHOULD THE RETIREMENT INCOME BE DECREASED TILL THE GREEN SIGNAL COMES ON?

ONCE AGAIN THANKS FOR A WONDERFUL SITE AND FOR YOUR HELP.

[admin]

Thanks for writing about the planner. I assume you are asking about the retirement spending field in your question about taxes. The answer to that is yes, the retirement expenses field should not include taxes.

The retirement income field on the main page is assumed to be 100% taxable at the income tax rate. Income that you specify on the additional inputs tab can be entered with a "taxable percentage" so you can specify exactly what percent of the income is taxable.

The yellow signal with a high probability of success is probably from using the flexible spending policy and having a case where the "percent of expenses funded" goes below 80% at some time in the plan. You could set a floor on the "percent of expenses funded" at 80% and see what probability that results in.

I hope this answers your questions. If it doesn't or if you have more, please don't hesitate to write again.

Regards,

Jim