How to add in lump sum assets later

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berniek
Posts: 1
Joined: Sun Jan 02, 2011 4:41 pm

How to add in lump sum assets later

Post by berniek »

We have a small vacation condo, presently rented. I'm retiring (partially if I can get work) now. When housing recovers, we will probably need to sell the condo. How can I add it the resulting lump sum money to my retirement money originally stated, but perhaps 5 years later?

Thanks. Looking forward to replies from this fine group.

Berniek
jimr
Posts: 821
Joined: Thu Feb 28, 2008 6:48 pm

Re: How to add in lump sum assets later

Post by jimr »

If you click on the "Additional Inputs" button, you'll see a section at the bottom of the pop up window where you can enter additional cash flows.

Enter the lump sum as a "Taxable savings" cash flow and set the start and end year to be the year that you plan to sell the house.

Once you do this, run the planner and check the table at the bottom of the "Detailed View" panel to be sure the planner did what you expected.

Good luck and don't hesitate to post more questions if this doesn't make sense.

Jim
RonnyTease
Posts: 2
Joined: Sun Jan 15, 2023 3:47 pm

Re: How to add in lump sum assets later

Post by RonnyTease »

"Enter the lump sum as a "Taxable savings" cash flow and set the start and end year to be the year that you plan to sell the house."

OK, but the house sale is non-taxable for me, so presumably setting it to 0% tax rate would work. But then the proceeds show up under taxable column on the details page. And it does not appear to account for the appreciation that would/should accumulate in the 15 years leading up to the sale. Of course, I could calculate this outside of the tool, but that doesn't seem like a good way to do it.

Why does the software just not account for assets/expenditures of this nature? I would expect that the vast majority of users would need to deal with this instance.
jimr
Posts: 821
Joined: Thu Feb 28, 2008 6:48 pm

Re: How to add in lump sum assets later

Post by jimr »

The "taxable savings" cashflow is shorthand for "contribution to the taxable portfolio." The contribution itself isn't considered to be subject to taxes. For that cashflow type, the taxable percent field is grayed out because it's not applicable.

All amounts in the detailed view table are shown in present value dollars, adjusted for inflation. That means if an amount in a column stays the same from year to year, it's exactly keeping up with inflation. If an amount decreases, that means the amount is losing purchasing power each year. If you set the COLA type to "track inflation" the amount will exactly keep up with inflation over the years. You can also set a fixed COLA percent to have that particular cash flow adjust at a rate greater than inflation or less than inflation. If you use no cola, the cash flow is assumed to be a fixed dollar amount that doesn't change with inflation (an example of this would be something like an expense cash flow that represents a fixed rate mortgage payment).
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