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

[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.

[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