(above).Interpret the bottom-line forecast chart
Tip: For easier reading, click (above).
This graph shows how the value of your savings and investments changes over time, based on the information you specified in your lifetime plan.
Typically, the value of your savings and investments increases before retirement. These increases are from the contributions you make as well as the growth of your investments over time.
After retirement, it's likely that the value of your savings will decrease as you sell investments to pay for your living expenses. The value will also decrease any time you have to dip into savings to pay for special expenses such as buying a home or your child's college tuition.
When savings withdrawals are necessary, the Lifetime Planner figures out how much money needs to be withdrawn to cover the cash shortfall as well as to pay taxes on the realized gains from selling an investment. The Lifetime Planner withdraws money first from taxable investments. Once that money is depleted, it withdraws from stock options. If still more money is needed, withdrawals come from your tax-free retirement accounts. This withdrawal technique is designed to minimize taxes and maximize your investment growth.
A good lifetime financial plan is one in which the value of your savings and investments is always greater than $0 at the end of your plan. This ensures that your current plan is sufficient to accomplish all your financial goals. Any positive balance at the end of the your forecast is money left over for your heirs and for paying estate taxes. If the value of your savings ever dips below $0, you won't have enough money to cover your expenses, meaning your financial plan needs work. If this happens, you'll need to revise you plan so that you save more, invest more aggressively, and adjust your long-term financial goals.
You can specify your contributions and the rate of return you expect on your investments in the Savings & Investments place(in the Lifetime Planner).
How do I add a new investment account to Savings & Investments?