other expenses

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Joined: Wed Apr 13, 2016 4:35 pm

other expenses

Post by julaney »

I am new to the Forum and to this tool. I read your documentation and followed the guidance for adjusting spending levels by using the other expenses in the additional input section. I am planning to retire this year so my portfolio is basic and only includes a tax deferred portfolio value. I calculated my yearly required cash flow from my tax deferred portfolio in a separate spreadsheet that included all other income sources. When I entered the calculated yearly expenses (in my case changed 3 times over 30 years) and reviewed the detailed data, the data shows my initial expense in the first year and then shows it gradually decreasing over the 30 years. I want the number to be constant for 4 years and then drop down for another 6 years and then drop down again and hold constant till the end of life - 30 years.

I think I followed your instructions correctly but then again.. likely user error. Any common mistakes that can make this happen?

Posts: 634
Joined: Thu Feb 28, 2008 6:48 pm

Re: other expenses

Post by jimr »

First, the most common source of confusion is due to the fact that all of the dollar amounts in the output table are shown in today's value dollars.

What that means is that if you have an expense that exactly keeps up with inflation (eg COLA Type = Track Inflation), it will show up as the same dollar amount each year in the output table. Conversely, if you have an item that's not keeping up with inflation (eg COLA Type = NO COLA), that item would be shown decreasing each year by the inflation rate.

So if you want an expense to exactly keep up with inflation, use 'Track Inflation' and if you have an expense that's a fixed dollar around (eg mortgage payment), use 'NO COLA'.

Does that help at all?


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