PRC2015/Silver User`s Manual - Pralana Retirement Calculator
Contents
1. Zoom You can use this button to increase or decrease the magnification level on all PRC pages at the same time When you click the button you ll see a pop up display that asks what zoom level you want PRC will assume the value you enter is a percentage value so it isn t necessary to enter the sign View License This button takes you to a page where you can view the PRC License that describes your rights and restrictions as a PRC user View Change Log This button takes you to a page where you can view the changes made to PRC Silver since its initial release OPERATING PRC2015 SILVER PRC2015 Silver is Self Registering PRC2015 Silver a normal Excel file that self registers itself to the computer it is first downloaded to It cannot be copied to another computer Operating PRC2015 Silver PRC2015 Silver operates just like a normal Excel file except that Excel menus are not required and are normally hidden PRC icons are provided for Saving and Exiting Exit Macro Problem on Mac Computers If you re operating PRC2015 Silver on a Mac computer you may experience this error each time you exit using the X icon on the upper right side of the page MS Excel has encountered a problem and needs to close We are sorry for the inconvenience This is an Excel problem for which we have not identified a software fix When you click the X everything actually works as expected but Excel experiences a failure after saving the file and has2. 60000 5 012 13 744 13 744 690 516 690 516 anae me aal soom 222m noana cnnan emn t12 0761 sere cenae eenme You can see that this example above is illustrating a negative cash flow situation where the regular savings account is depleted in the year 2029 At that time PRC starts making withdrawals from the Roth account until it becomes depleted in the year 2032 at which time it starts making additional withdrawals from tax deferred savings to cover the negative cash flow Here s another shot showing the strategy set to Tax Deferred Before Roth Change Currency Units Change Withdrawal Order a ONC Ee EE a EE SAVINGS CONTRIBUTIONS 345 i 690 175 728 962 2024 64 59 67 500 7 500 134 50 000 13 500 27 357 7 500 3 750 2 588 710 948 40 917 754 453 2025 65 60 67 500 7 500 149 50000 13 500 30 369 7 500 3 750 2858 782 120 45 454 780 432 2026 66 61 12 750 152 250 165 50000 2 550 33 112 582 115 330 746 199 46 328 907 857 2027 67 62 18 870 3 330 6 654 60000 3 774 1 331 36 251 74 643 760 549 47 219 882 412 2028 68 63 18 870 3 330 4 306 60 000 3 774 861 38 129 33644 775 175 48 127 856 946 2029 69 64 18870 3 330 1 941 60000 3 774 388 40 021 7 672 782 410 49 053 831 463 2030 70 65 18 870 3 330 27 457 60 000 10 741 21 084 21 084 748916 49 996 798 912 2031 71 66 18 870 3 330 i 60 000 5 504 16 130 16 130
3. These periods are defined based on their starting years Period 1 begins in the Starting Year as previously defined and Period 2 begins in the year you specify on the row labeled Period Start Year For each period PRC allows you to specify separate tax rates for earned income and for interest on regular savings Tax Rate on Earned Income This is the effective tax rate on your earned income such as your salary pension and Social Security income Effective tax rate is determined by dividing your total federal state and local income taxes and your FICA taxes by your Adjusted Gross Income Tax Rate on Regular Savings This is the effective tax rate on the earnings from your regular savings which may differ from that on your earned income if you have tax free investments or investments taxed as capital gains If the earnings on your savings is taxed as regular income just enter the same value you used for Tax Rate on Earned Income however do not leave this field blank if you have specified a non blank Period Start Year If you do enter a blank in this field it will be highlighted in yellow to warn you that you ve told PRC not to tax the earnings on your regular savings Savings Assumptions Notice that PRC allows you to define your assumptions for three interdependent savings categories tax deferred accounts Roth accounts and regular accounts For each account category data fields are provided through which you can specify the
4. 720 014 50 958 770872 2032 72 67 18 870 3 330 60 000 5 098 15 854 15 854 690 962 51 938 742 900 2033 73 68 18 870 3 330 26 898 60 000 5 064 15 966 15 966 661 386 52 936 714 322 2034 74 69 18870 3 330 26 721 60 000 5 058 16 138 16 138 631 247 53 954 685 201 INIS 7S 7NI TR RIN aan oR SNS an ann KASA 16 24a 1R 340 RNN 537 saaa 655574 You can see that the example just above is illustrating the same cash flow situation but in this case PRC covers the negative cash flow with additional withdrawals from tax deferred savings starting in the year 2029 USER SUPPORT The User Support page provides six buttons to provide various user functions Submit a Question You can click this button to bring up a pre addressed email using your default e mail tool to submit a question or report a problem to Pralana Consulting LLC 15 PRC2015 Silver User s Manual Access the User s Manual You can click this button to bring up the User Support page on the PRC website and then download the PRC Silver User s Manual Import Data You can click this button to initiate the importing of data from a prior version of PRC Silver After the button is clicked a new window will appear in which you can select the PRC Silver file from which you want to import the data After selecting the file just click OK and the import process will commence When complete an import complete will pop up
5. Contribution Contribution OER Start Stop Amountin Increase Contribution Converted s Annual to Tax to Tax Taxable Future Age Age Today s Relative to to Roth to Today s s Increase Deferred Deferred 5 Inflation n z Savings Savings Savings Personal Income Streams Whose Employment income 55 0 0 10 0 5 0 5 0 EE Joe s Social Security Joe 85 Barb s Social Security Barb 85 The following is a line by line description of the fields in the Income table above Income Streams This is simply a description field where you can enter a brief description of each of the income sources Whose This field contains a pull down menu containing your name and your spouse s name if applicable Since the start and stop times for each income source are specified in ages rather than being tied to certain years PRC needs to know whose age is being specified Start Age and Stop Age This is the age of the person selected in the Whose field in the year the income source is expected to begin and end respectively Amount in Today s Use this field to specify the income amount in today s dollars and it will be adjusted over time in accordance with one of the next two fields 10 PRC2015 Silver User s Manual Note on annual income adjustments PRC Silver allows you to specify income sources with annual adjustments based on inflation or based on fixed rates independent of
6. EA GR ee Ge AR ee Ge Re RA Ge ee RA 16 PRC2015 Silver is Self RegisteriNg esse ee ee ee ER Re ee Re ee ER Re RR ee ee ee ee RR ee RR ee ee Re ee Re ee ee ee ee 16 Operating PRC2015 SilVer uisstsesee ee Ek Gee ees ed eg Een Si Ge ee ee Ge ee Ee Ge be ee ee Se ee bee ee ee ee 16 Exit Macro Problem on Mac ComputerS iss esse se ee se ee AA AR AA AA ee ee AA 16 PRC FILE N ed ie EE EE EE RR EG 16 PRC2015 Silver User s Manual INTRODUCTION Pralana Retirement Calculator PRC Silver Edition is designed to occupy the space between free low end on line calculators and Pralana s high end PRC Gold calculator It offers much more than the quick and dirty assessments available with the on line calculators but lacks the robustness of PRC Gold PRC Silver is a high fidelity tool designed to model your financial future with rich details and then provide useful outputs that will provide insight into the possible range of outcomes to help you make decisions This manual is intended to help you get to know PRC Silver and learn how to get the most out of its capabilities We ll begin by sharing with you the design philosophy of PRC Silver then provide an overview of its operation then explain how it s structured and then address the details PRC SILVER DESIGN PHILOSOPHY Most of us understand that the future is inherently unpredictable yet many of us still desire an effective tool to assist us in making key financial and lifestyle decis
7. Excel if necessary and bring up the selected PRC file Once it s up you can continue working with it make more changes and then save it again Once you have the file where you want it and with the name you re happy with then most subsequent saves to prevent loss of your work can be done with the Excel shortcut ctrl n Ss So fundamentally PRC is now managed just as any other Microsoft Office file and you can save the PRC Gold file under as many different names as you choose Just click the save as icon and type in whichever filename you wish and click Save within the Excel pop up Every time you do this you ll be creating new files To bring up a particular file later just use either of the two methods described above 17
8. are exempt from income taxes unless they exceed a multi million dollar threshold so if you re modeling inheritance enter 0 in this field e f you re modeling the sale of your home and your profit falls beneath the capital gains exemption level you won t have to pay any capital gains taxes Therefore enter 0 in this field empl inc inheritance downsize home pension S CONVERTER PRC Silver expects your income amounts to be specified in terms of today s dollars however there may be cases where you know the amount in terms of future dollars and need some help in converting it to today s dollars for example pensions are commonly defined in future dollars Therefore in conjunction with every row in the Income table PRC Silver provides a convenient dollar converter to help you with this conversion To use it just enter your Future value and PRC will convert it to today s based on the current age and future age of the associated person Then you ll just need to note the amount in the Converted to Today s field and enter it into the Amount in Today s field EXPENSES The Expenses page is another simple table that allows you to define a detailed expense profile with up to 30 separate expense items for each scenario As with the INCOME page the page title identifies which of the three scenarios this data is associated with EXPENSE STREAM DEFINITION Scenario 3
9. in the screenshot below This will always correspond to the most recent scenario selection made on the Home page 12 PRC2015 Silver User s Manual Expense Definition Tabular Projections Clear Expense Table Adjust for Description Amount First Year Last Year Inflation kid 1 college 25 000 kid 2 college 25 000 2016 2019 kid 2 high school 8 000 2014 2015 M house pymt 15 840 2014 2023 other expenses 50 000 2014 2030 v other expenses early ret 54 000 2031 2050 vy other expenses late ret 45 000 2051 Vv purchase down sized home 200 000 2031 2031 v As you can see this table contains only five columns of data Each of the 30 rows in this table can be associated with a specific expense item and can apply to a single year to the rest of your life or to any span of years in between and can be adjusted for inflation or not Description This is simply a field where you can enter a brief description of each expense Amount The amount of the expense in terms of today s dollars First Year The expense will begin in the year specified in this column If it has already started you ll need to enter the starting year specified on the Home page Last Year The expense will continue through the year specified in this column For single year expenses the first and last year should be the same If the expense las
10. starting balance and the expected rates of return ROR PRC2015 Silver User s Manual along with best and worst case ROR alternates Please note that all ROR fields are for nominal not inflation adjusted values Tax Deferred Accounts Use these fields to enter the starting balance expected best and worst case ROR for your tax deferred 401k and traditional IRA accounts Roth Accounts Use these fields to enter the starting balance expected best and worst case ROR for your Roth 401k and IRA accounts Regular Accounts Use these fields to enter the starting balance expected best and worst case ROR for your regular normally taxable accounts Growth and Decline of Savings Categories For every year in the projection PRC determines your overall cash flow by subtracting total expenses from total income Positive differences result in contributions to regular savings and negative difference result in withdrawals from regular savings Therefore the growth or decline of regular savings is a function of the rate of return specified for regular savings and your annual cash flow If and when the balance of regular savings goes to zero PRC will attempt to make up any residual negative cash flow by making withdrawals from tax deferred or Roth savings accounts That s why we said above that the three savings categories are interdependent PRC provides you with a control to specify your preferred order of withdrawals from tax deferred and R
11. withdrawal strategy with each click so you can immediately observe the effects 14 PRC2015 Silver User s Manual of one strategy versus the other Here s a screenshot showing this button with the withdrawal strategy set to Roth Before Tax Deferred Change Currency Units Change Withdrawal Order SON COME ae a a nn SAVINGS CONTRIBUTIONS 2023 63 58 67 500 7 500 119 50 000 13 500 24 345 7 500 3 750 2 320 690 175 36 466 728 962 2024 64 59 67 500 7 500 134 50 000 13 500 27 357 7 500 3 750 2 588 710 948 40 917 754 453 2025 65 60 67 500 7 500 149 50 000 13 500 30 369 7 500 3 750 2 858 732 120 45 454 780 432 2026 66 61 12 750 152 250 165 50 000 2 550 33 112 582 115 330 746 199 46 328 907 857 2027 67 62 18 870 3 330 6 654 eooop 3774 1 331 36 251 74 643 760 549 47 219 882 412 2028 68 63 18 870 3 330 4 306 60000 3 774 861 38 129 33 644 775 175 48 127 856 946 2029 69 64 18870 3 330 1 941 60000 3 774 388 40 021 7 672 790 082 41381 831 463 2030 70 65 18870 3 330 27 726 60 000 9 319 19 393 19 393 777 550 22 784 800 334 2031 71 66 18 870 3 330 28 213 60000 3 908 23 495 13 495 764 290 9 727 774017 2032 72 67 18 870 3 330 28 707 60 000 3 949 13 042 3 128 9 914 747 153 747153 2033 73 68 18 870 3 330 29 086 60 000 4 230 12 944 12 944 719491 719491 2034 74 69 18 870 3 330 29 068
12. PRC file for each version of your plan Both methods work but your file management chore is easier when the tool handles multiple scenarios You can use PRC Silver and never give any thought to scenarios and never once click any of the six buttons associated with them When you receive PRC Silver the multiple scenario mode will be disabled and Scenario 1 will be active and is truly all you need to establish and evaluate your financial plan and then do all sorts of what if s with it In fact this is the very reason we made the scenario related buttons appear as they do to almost make them invisible for users who didn t want to bother with the additional complexity Further all of these buttons will be disabled when the multiple scenario mode is disabled to prevent you from accidentally switching scenarios With that said the multiple scenario mode can be enabled by clicking the toggle button labeled Enable Multiple Scenarios on the lower right edge of the Home page As you click this button multiple times you should notice that the indicator just above the button alternates between Enabled and Disabled When it is enabled the six scenario related buttons in the upper left side of the Home page will be functional Please see the description of the Home page for the use of these buttons COMMON FEATURES OF ALL PAGES All PRC pages are color coded in a similar manner fields with a white background and dark blue font are y
13. PRC2015 Silver User s Manual Table of Contents INTRODUCTION ER EE EE N EE N EE N 2 PRG SILVER DESIGN PHILOSOPHY Ese besoe es Gee Ee Ee EE Re ee saves ES eke ee EK Ke beg ken es gee Ge ee ee Dog ese 2 8 ASA OR ER EE EE N 3 STRUCTURE ee ER OE Ee EE GR ee Ee ee ER ee Re Ee GRA ee Ee ee We EG aai ee Se ee ee Ee ie ane 4 MORE ON SCENARIOS RE EE OR EE OE OE EE iaai 4 COMMON FEATURES OF ALL PAGES ee ees see ee see dee ee se ee se ee ee ee ee ee ee ee ee ee ee de eed AA ee AR de de de Ge ee ee ee ee ee 5 PAGE BY PAGE DISCUSSION RE EE EE EE EE EE aaia akaa aani 6 FAQ vla RE EL OE N OE EE OR N 6 Slade EL AE EA MA EL N OE eeeeee eee 6 Scenario ele EO EE EE EE EE ET 7 DemogiaphiEs sr ee ee ER eee eee Ee eee 7 Inflation ASSUMP ONS ESE MEE ss SE Ee EG DE stentless 03 GE RR Ee GE Ge RR Ee ie SR Re oe Ee se Ge Dee RES Ee si se 8 AE dT ele oa OE EE N EE N N EE N GE EE Ge 8 Savings ASSUIM PUONS AE RE EE RR RE ER ER EE EE 8 Growth and Decline of Savings Categories iss se es ee EE Ee RA AA ER Ge RA ee ee ee ee AA Ee Ee Re ee ee ee 9 Other Buttons on the Home Page iss ees ees ee Ee ER AA EE Ee RA ee ee EE ee de ee ee ER Ee de de ee ee AE ee Ee de ee ee ee 9 Mee EE EE RE EE OE OE 10 id km RE ER EO RE RE OE EE 12 TABULAR PROJECTION ee ees ee oe eg se Ge ee aieea eg Ge ee ee se Sk Di Oe oe n ee de ee ge gee de EE eed 13 BEE ie EE EE OE RE EE RE 15 OPERATING PRC2015 SILVER ees ee ee se ee ee ae ge ee RA GR ee Re GR Ge Re GRA Ge Re GRA Ge ee
14. RC2015 Silver User s Manual situations where some inputs fields are mutually exclusive you can enter data in either one but not both or where an entry in one field demands a corresponding entry in another field Considerable care has been taken to minimize the keystrokes and clicks required to get your data entered so you won t find many pull down menus and you ll find check boxes for yes no types of inputs and toggle buttons for selecting mutually exclusive functions such as whether to display results in today s dollars or future dollars The clock for PRC ticks once per year So all income and expenses for a year should be entered as Jan 1 values Alternatively if it is nearer to the following year you can enter the starting year equal to the following year on the Home page and enter current savings figures which may be nearer to the following year s starting values PAGE BY PAGE DISCUSSION HOME As stated above the Home page is where you define your age and the major variables typically associated with what if exercises life expectancy inflation and rates of return It also contains a graphical projection of its output to enable you to easily make changes to these key variables and instantly observe the effect on the projections Here s a screenshot F PRALANA RETIREMENT CALCULATOR Silver Edition v2015 1 Home Income Definition Expense Definition Tabular Projections hide Excel Menus User Support Modeli
15. ch income stream and separate tax rates for each of two selectable periods of time with separate tax rates for earned income and interest income In contrast PRC Gold contains tax tables and performs detailed tax calculations users do not specify effective tax rates e Since the future is inherently unpredictable an effective mechanism needs to be provided to enable the user to quickly and easily investigate the sensitivity of the plan to the major unknowable variables Allow the user to specify a confidence interval using nominal best and worst case values for inflation and rates of return and then generate separate projection for each set of values To simplify analysis simultaneously present all results on the same PRC2015 Silver User s Manual graph In contrast PRC Gold uses three different analysis methods to generate a range of likely outcomes fixed rate Monte Carlo and historical analyses e To facilitate a decision making process and sensitivity analyses the tool should make it easy for the user to define and compare major alternatives as well as small variations Support the detailed definition of three independent sets of inputs scenarios PRC Gold also supports three mostly independent scenarios but it goes further by presenting side by side and overlaid comparisons of scenario analysis results OVERVIEW PRC Silver is the result of an engineering design process to provide a high fidelity calculator in an e
16. define and or analyze Anytime you click one of these buttons you ll notice that the scenario indicator above the graph changes to correspond to the scenario you just selected All data displayed on the Home page as well as the Income and Expense pages is associated with the selected scenario Note At any single point in time all four pages of PRC Silver are associated with the same scenario and the number of that scenario is identified on each of those pages When you elect to change the scenario which you do from the Home page all four PRC pages will reflect the corresponding component of the selected scenario The next row of buttons allows you to save all of your data for the active scenario as either Scenario 1 2 or 3 With this feature you can establish your basic scenario Home Income and Expense pages save it into the other scenarios and then edit the other scenarios rather than having to enter all the data manually into all three scenarios You can make changes to any or all of the data displayed and when you re ready to save it just click the Save as Scenario x button associated with whichever scenario you want it to represent Please note though that this save operation will include not just the contents of the Home page but also the contents of the Income and Expense pages as well As an example let s say Scenario 1 is the active scenario as indicated by a 1 in the Active Scenario field You e
17. e start of the associated year PRC2015 Silver User s Manual Spouse Name As with your name entering Your spouse s name here will enable you on the Income page to specify income start and stop based on your age rather than by year If you don t have a spouse just enter a blank with the DELETE key Spouse Age This is your spouse s age as of Jan 1 of the specified starting year All computed PRC outputs are as of year end but the age column will reflect your spouse s age at the start of the associated year If you don t have a spouse just enter a blank with the DELETE key Life Expectancy Enter the maximum ages to which you and your spouse expect to live PRC models a death occurring on Jan 1 of the year in which the specified Life Expectancy is reached Recall that PRC advances age on Jan 1 refer to Your Age description Inflation Assumptions Nominal This is average general inflation rate that PRC will use to generate the Income Expenses and Savings Average lines on the graph as well as the data shown on the Tabular Projections page Best This is the best case general inflation rate that PRC will use to generate the Savings Best Case line on the graph Worst This is the worst case general inflation rate that PRC will use to generate the Savings Worst Case line on the graph Tax Assumptions Notice that PRC allows you to specify your tax assumptions for two separate time periods referred to as Period 1 and Period 2
18. gs 75 000 250 000 z 325 000 2015 45 45 135 000 15 000 4 500 98 840 32 400 1 080 7 180 15 000 82 180 280 000 362 180 2016 46 46 135 000 15 000 4 741 2 115 231 32 400 1 138 9 027 15 000 z 5 69 992 300 385 z 370 376 2017 47 47 135 000 15 000 4 038 114 645 32 400 969 8 976 15 000 gt 58 324 321 161 379 485 2018 48 48 135 000 15 000 3 365 89 082 32 400 808 16 076 15 000 gt F 72 156 342 337 414 493 2019 49 49 135 000 15 000 4 163 gt 88 540 32 400 999 17 224 15 000 86 604 363 921 450 525 2020 50 50 135 000 15 000 4 996 63 019 32 400 1 199 43 378 15 000 126 651 385 919 512 571 2021 51 51 135 000 15 000 7 307 62 519 32 400 1 754 45 635 15 000 167 415 408 341 575 756 2022 52 52 135 000 15 000 9 659 62 037 32 400 2 318 47 903 15 000 gt i 208 879 431 194 640 073 2023 53 53 135 000 15 000 12 051 61 574 32 400 2 892 50 184 15 000 a 251 030 454 486 705 516 2024 54 54 135 000 15 000 14 482 50 000 32 400 3 476 63 607 15 000 304 981 478 226 783 207 2025 55 55 135 000 15 000 17 595 50 000 32 400 4 223 65 972 15 000 359 224 502 422 861 646 2026 56 56 135 000 15 000 20 724 50 000 32 400 4 974 68 351 15 000 413 758 527 084 940 842 The information contained in this view corresponds exactly to the graphical view presented on the Home page but the tabular form enables you to see exactly what s going on year by year It clearly show
19. ht of the button and the Select Scenario x and Save Scenario x buttons will become functional again PRC2015 Silver User s Manual Change Currency Units PRC allows you to view its outputs in terms of either today s dollars or future dollars Located just above the graph each click of this button alternates the currency units from Today s to Future and then back again Change Withdrawal Order Located just to the right of the Savings Assumptions table each click of this button alternates the preferred withdrawal order from Tax Deferred Before Roth to Roth Before Tax Deferred and then back again The current setting is displayed just to the right side of the button INCOME The Income page is a simple table that allows you to define a detailed income profile with up to 10 sources of income for each scenario With this information PRC will create an income profile that represents your annual income level for every year for the rest of your life and that profile is represented by one of the lines on the graph on the Home page Be aware that the page title identifies which of the three scenarios this data is associated with INCOME STREAM DEFINITION Scenario 2 in the screenshot below This will always correspond to the most recent scenario selection made on the Home page Home Income Definition Expense Definition Tabular Projections Clear Income Table Personal Company Annual R ai oe a A Fixed
20. inflation If the income is a function of inflation you should use the Annual Increase Relative to Inflation field if it is not a function of inflation you should use the Fixed Annual Increase field You need to be aware that only one of these fields can be chosen for a given income source and as a result both fields will be highlighted with a red background if they both contain non blank inputs On the other hand if both contain blanks the income level will remain at a constant level in terms of future dollars over the entire span of that income source Annual Increase Relative to Inflation Enter a zero if the income is adjusted at the same rate as inflation Enter a positive value if it gets adjusted faster than inflation or a negative value if it falls behind inflation Fixed Annual Increase Enter the specific percentage value by which the income is to be adjusted each year Here are some examples and you can reference the screenshots above and or below e Example 1 To model employment or Social Security income that exactly tracks inflation just enter a zero in the Annual Increase Relative to Inflation field e Example 2 To model pension income with a specified COLA level such as 2 just enter 2 in the Fixed Annual Increase field e Example 3 To model fixed annuity income that remains at a constant level forever just enter a zero in the Fixed Annual Increase field Personal Contribu
21. ions that will shape our future despite the uncertainties PRC meets that desire with this design philosophy e Effective financial and retirement planning is not a one time endeavor so make the planning and analysis process as painless as possible for the user Have the tool save the user s data from one planning session to the next make it easy to understand and use and make it fast and interactive It is very similar to PRC Gold in this respect but considerably easier to understand and use e There is high value in basing projections on detailed inputs rather than rough estimates despite uncertainties in future rates of inflation rates of return life expectancies and so on Enable the user to define key assumptions income streams and expenses in as much or as little detail as desired Further never ask the user to specify how much he she plans to save or how much he she will need to live on Rather apply this simple concept for every year in the projection assume that income minus expenses determines contributions to or withdrawals from savings and then grow or shrink the savings balances in accordance with this and the user s inflation and investment assumptions It is virtually identical to PRC Gold in this respect e Taxes need special treatment since they are a big lifetime expense and are commonly not a consistent percentage of a person s income over time Provide the user with the ability to specify the taxable percentage of ea
22. ng period begins in year as Enable Multiple Scenarios Active Scenario gt t ba Change Currency Units sd Select Scenario1 Select Scenario 2 Select Scenario 3 Save As Scenario 1 Save As Scenario 2 Save As Scenario 3 Demographics Joe Barb Current Age 60 60 Life Expectancy 100 100 Inflation Assumptions m 7 N Tax Rate on Earned Income Tax Rate on Regular Savings Income Expenses Savings Expected Savings Best Case Savings Worst Case Tax Deferred Accounts 000 6 0 Roth Accounts T 6 0 Regular Accounts 6 0 Change Withdrawal Order The following is a field by field discussion of the data entry fields on the Home page shown above Starting Year Modeling Period Begins in Year This field tells PRC the year you wish the modeling to begin and it assumes January 1 of the specified year This year will be the basis for determining today s dollars PRC2015 Silver User s Manual Scenario Selection PRC Silver allows you to define and analyze three completely independent scenarios however it only does one scenario at a time The currently active scenario number is displayed above the graph in the screenshot above note that the title over the graph is GRAPHICAL PROJECTION Scenario 3 as well as in a field called Active Scenario just beneath the Starting Year field The first row of buttons just beneath the Active Scenario allows you to select the scenario you wish to
23. nter all your data for scenario 1 on the Home page the Income page and the Expenses page and then return to the Home page To save it click the Save as Scenario 1 button Now let s say you want Scenario 2 to be just like Scenario 1 except that you want to investigate the effects of starting Social Security benefits at a different age So you go to the Income page and you will see the current data for Scenario 1 Change the Social Security start age to the different setting and then come back to the Home page Then click the Save As Scenario 2 button to save the current data on the Home Income and Expense pages as Scenario 2 data When you do this the active scenario will automatically be changed to 2 If you wish to continue working on scenario 1 just click the Select Scenario 1 button and the contents of all data fields on all pages will again reflect scenario 1 data Demographics Your Name Entering your name here will enable you on the Income page to specify income start and stop based on your age rather than by year This design choice was made because you probably have a particular retirement age in mind and you probably have a good idea of the age at which you plan to start Social Security benefits but you may not know the year in which those events will occur Your Age This is your age as of Jan 1 of the specified starting year All PRC computed outputs are as of year end but the age column will reflect your age at th
24. oth accounts when regular savings is depleted If you specify that PRC is to take tax deferred savings before taking Roth savings negative cash flows will be handled via withdrawals from tax deferred savings until they too are depleted At that time any subsequent negative cash flows will be covered via withdrawals from Roth savings The converse will occur if you specify that PRC is to take Roth savings before tax deferred savings Other Buttons on the Home Page Hide Excel Menus You can click this button to eliminate the MS Excel menus that will otherwise occupy the top portion of every screen and thereby devote the entire screen to PRC displays None of the Excel menus are needed to operate PRC however if and when you should desire to see those menus just press the Escape button on your computer User Support You can click this button to go to the User Support page Enable Multiple Scenarios If you just want to work with a single scenario you can click this button to disable PRC s multiple scenario mode In this case the word Disabled is displayed just to the right of the button and the Select Scenario x and Save Scenario x buttons will be disabled This will prevent you from inadvertently changing scenarios and overwriting data you ve entered but have not yet saved relative to the active scenario To enable the multiple scenario mode just click the button again and the word Enabled will be displayed to the rig
25. our data entry fields fields with a dark blue background and either white or yellow fonts are descriptions or fields automatically filled in by PRC Silver Fields with a small red triangle in the upper right corner contain hidden comments that will appear when you place the cursor over that field There are many of these throughout the various pages to provide guidance regarding the specific meaning of a field or to clarify potential user questions regarding that field PRC Silver tries to call you and your spouse by name everywhere possible so it starts by asking for your names on the Home page Thereafter when you see input data that is unique to either you or your spouse it will refer to the corresponding person by name Many pages contain buttons that you can click to invoke some PRC Silver operation All of these buttons have a similar appearance with 3 D effects and the function they perform written on them in bold white font All pages are organized in a table format where you simply type in the data requested and PRC Silver validates your inputs as you provide them to ensure the data you enter is in a proper range In numeric data entry fields such as years ages and dollar amounts a blank is treated as a zero or not applicable however please understand that a blank is created via the DELETE key not via spaces Buttons are provided to help you clear the tables Conditional formatting is employed to alert you to certain P
26. owing e Hide Excel menus e Submit a question to Pralana Consulting LLC e Access the downloadable user s manual e Change the magnification level of all pages at once e View the PRC Silver change log e View the PRC Silver license Navigation between these pages is done via the blue buttons at the top of the screen The current page is indicated by the bright blue button You ll also notice two icons on every page one at the upper left and one toward the upper right The one on the upper left is the Save icon Just click it anytime you wish to save your work The x icon toward the upper right is the Exit icon Click that whenever you re ready to quit working on your file PRC Silver will always do a Save before it exits to be sure your work isn t lost MORE ON SCENARIOS A scenario is defined to be the complete set of user input fields on the Home page the Income page and the Expenses page and the corresponding projections created by PRC in response to those inputs The PRC2015 Silver User s Manual concept of multiple scenarios simply means that there can be multiple different versions of the data on these pages and that the tool is capable of managing and working with these different sets of data The purpose of multiple scenarios is to enable you to create and evaluate different versions of your plan and maintain them over time within a single copy of the PRC Silver file The alternative isto make a separate copy of the
27. s the following key information e your income separate into taxable and non taxable categories e income from the growth of regular savings e Required Minimum Distributions e the profile created from the expense page e taxes on income e taxes on the growth of regular savings e cash flow which is simply the annual difference between total income and total expenses e personal and company contributions to tax deferred savings and personal contributions to Roth savings e withdrawals from tax deferred and Roth savings that are associated with covering negative cash flow situations e annual balances on regular tax deferred and Roth savings as well as the grand total amount in overall savings In any given year income and expenses are expressed in year beginning values and savings balances are year end values with respect to inflation adjustment PRC recognizes there is no practical difference in the value of a savings account between the last tick of the clock in year x and the first tick of the clock in the year x 1 and applies inflation to the year end savings balance in year x based on the year x inflation Inflation which occurred in year x is applied to Income and expense upon the first tick of the clock in year x 1 If you have money invested in tax deferred as well as Roth accounts and want to investigate the optimum withdrawal strategy the Tabular Projection page has a feature to make it easy it contains a button that changes the
28. tensive output displays in both graphical and tabular form and the transparent manner in which it generates outputs from the user s inputs e Simultaneous generation and display of projections based on expected best and worst case values of the major unknowable parameters of inflation and rates of return e Ability to create and analyze three completely independent scenarios e Ability to save your data from one planning session to the next and import data from an earlier version of PRC Silver PRC2015 Silver User s Manual STRUCTURE PRC Silver is partitioned into five pages e Home e Income e Expenses e Tabular Projections e User Support The Home page is where you define your age and the major variables typically associated with what if exercises life expectancy inflation and rates of return It also contains a graphical projection of its output to enable you to make changes to these key variables and instantly observe the effect on the projections The Income page allows you to define a detailed income profile with up to 10 sources of income for each scenario The Expenses page allows you to define a detailed expense profile with up to 30 separate expenses for each scenario The Tabular Projections page contains a tabular view of PRC Silver s output projection for the active scenario including income expenses taxes cash flow and year by year savings balances The User Support page contains buttons to do the foll
29. tions to Tax Deferred Retirement Savings If the income source is employment income and you are contributing a percentage of it to tax deferred savings you can enter the percentage value in this field Otherwise just leave it blank Company Contributions to Tax Deferred Retirement Savings If the income source is employment income and your company is contributing a percentage of your income to tax deferred savings you can enter the percentage value in this field Otherwise just leave it blank Personal Contributions to Roth Savings If the income source is employment income and you are contributing a percentage of it to Roth savings you can enter the percentage value in this field Otherwise just leave it blank Note All of the previous three fields can be used on the same income source Taxable With this field you can tell PRC the percentage of the income source that is taxable Examples For each of these examples you can refer to the screenshot below 11 PRC2015 Silver User s Manual e Employment income is generally 100 taxable however if you are contributing 10 of that income to tax deferred savings then it is only 90 taxable In this case you d enter 90 in this field e Social Security benefits are taxable if your benefits exceed certain thresholds depending upon your filing status A maximum of 85 of your benefits are taxable worst case In this case you d enter 85 in this field e inheritances
30. to close A manual workaround is to use Excel s menu to close the PRC file PRC FILE HANDLING When you download PRC and the computer asks you what you want to do with the downloaded file tell it to Save and then Open That will ensure it gets saved on your computer and you ll find the saved PRC2015 x Silver file in your Downloads folder When the file opens you can click the various buttons to explore PRC and modify the data fields as you like When 16 PRC2015 Silver User s Manual you re ready to save the modified file you have two options 1 you can use the Excel shortcut Push the Ctrl and the s buttons simultaneously which we ll call ctrl s to save the file in the original location your Downloads folder and with the original name PRC2015 x Silver or 2 you can click the PRC save icon to do a save as operation which then allows you to specify the folder and filename of your choice When you re finished working with the file click the X icon to exit If you ve made further changes since the last save you ll be asked whether you want to save again to ensure you don t lose any work To bring the file back up you have two options 1 bring up Excel by double clicking its icon and then use Excel s File menu to locate and select the PRC file you just saved or 2 navigate to the folder containing the saved PRC file using Windows Explorer on Windows machines and then just double click it That action will start
31. ts indefinitely you can leave this field blank Adjust for Inflation Check this box if you expect this expense to increase at the rate of inflation If it s a constant expense such as a fixed rate home mortgage leave the box unchecked TABULAR PROJECTION PRC Silver generates a fixed rate projection based on all of your input data and presents it in a single tabular projection page As with the INCOME and EXPENSE pages the page title identifies which of the three scenarios this data is associated with TABULAR PROJECTION Scenario 3 in the screenshot below This will always correspond to the most recent scenario selection made on the Home page As you can see the columns are organized into the following categories e Income e Expenses including taxes e Savings Contributions e Withdrawals e Savings 13 PRC2015 Silver User s Manual Expense Definition Tabular Projections Change Currency Units Change Withdrawal Order income expenses SAVINGS CONTRIBUTIONS _ wiTHDRAWals SAVINGS O O Required Income Personal Company Other Minimum Taxes on Es RE Personal a Non from AS py Contributions Contributions DER Withdrawals Withdrawals Distributions Specified Taxeson Growth of Contributions Taxable Growth of Cash Flow to Tax to Tax from Tax from Roth Deferred k Eak from Tax Expenses Income Regular Defi d Def d to Roth Defi d Savi Savi income ie Deferied See z erre z ere eee erre vings wings wings Es avings vings win
32. xtremely easy to understand and easy to use package Like any calculator what it does is just math It collects certain information from you does the math and then presents the results What makes it unique is e The depth of user control it provides coupled with a user friendly interface o Expected best and worst case inflation rates o Expected best and worst case rates of return for each of three savings categories tax deferred Roth and regular o Annual adjustment of up to 10 income stream can be dependent on or independent of inflation Taxability of each income stream can vary from 0 to 100 Separate effective income tax rates for each of two user selected time periods with separate rates for earned income and investment returns Accommodates up to 30 fixed or inflation adjusted expenses Withdrawal priority Tax Deferred before Roth or Roth before Tax Deferred is under user control and can be toggled back and forth from either the graphical display or the tabular display to enable immediate assessment of the associated effects o Currency units today s dollars or future dollars are user selectable e Contributions to and withdrawals from savings are always accumulation phase as well as distribution phase a function of annual cash flow e Synchronization is maintained between three interdependent savings account categories tax deferred Roth and regular despite long term negative cash flow situations and withdrawal priorities e Ex
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