Data Entry: Goals

Identifying a client's goals is the last step of the initial data entry process. For a brief overview on entering goals in a financial plan watch this short video.


RightCapital pre-populates a number of cards in step six of the data entry.

Start by indicating a number of retirement-related Goals: the intended retirement age(s), the retirement expense, and assumed health care and long-term care costs.

Adding Goals to a financial plan

When a financial plan has been completed, users can add or adjust goal information in the Profile > Goals screen.

Additionally, financial goals can be added directly to a proposed plan within the Retirement > Analysis module. This allows for an easy comparison of scenarios with different financial goals. For more information on adding financial goals to the Retirement > Analysis module click here.

Retirement information

Retirement Age

You can specify the client and co-client's retirement age.  By default, RightCapital assumes the clients retire at the start of the year, or you can check the box to indicate the specific month of retirement.

If you choose to specify the calendar month, the age entered will determine the calendar year of retirement, and the month selected will indicate which month in that year they expect to retire.  Note that this may be prior to or after their birthday at which they turn the retirement age.

Retirement Expense

The retirement expense number should not include taxes or expenses that you have previously captured, such as mortgages, loan payments, or insurance premiums.

You can either enter a single lump-sum number or break out retirement expenses by category.  To enter expenses by category, select the 'A detailed worksheet' option in the Living Expenses card:

This will now give you the ability to break out expenses into different categories.  Categories are shared between the retirement and pre-retirement expense entry and the Budget screen.  You can add additional categories if you wish.

You can see the total expenses at the bottom of the card, and the total will also be displayed as the 'Monthly expenses' number.

By default, the retirement expense value will increase based on general inflation assumptions. This is indicated by the Spending strategy > Inflation Adjusted dropdown menu. RightCapital provides four additional dynamic spending strategies which incorporate behavioral and market conditions when projecting expenses into the futre. Retirement spending strategies can be created or adjusted within the Advisors Portal > Models > Retirement Spending tab. Click here to learn more.

Pro Tips:

  • Retirement spending strategies can be adjusted for proposed plans within the Retirement > Analysis > Action Items.

Retirement Health Care Costs

Please review our separate article on how to reflect retirement health care costs.

Annual retirement Long Term Care cost

The average Long Term Care Costs are based on published Long Term Care Cost research by Genworth Financial. Advisors can choose between the following options:

  • In-home care national average- $53,768
  • Assisted living national average- $51,600
  • Nursing home national average- $105,850

We plan to review the data on an annual basis.

Health and Long-term care cost default to assumptions based on recent research. These values are expressed in today’s dollars — the projections will use health care cost inflation assumption to increase over time.

Adjust or remove the data cards if desired. Long-term care costs default to the last two years of each client's planning horizon; the timing can be adjusted in the LTC card.

College goals

If a child was added to the family profile, RightCapital will generate a College goal for each child associated with the client.  You can also manually add a College goal by clicking the 'Add Goal' button and selecting "College".

Anticipated college costs

College costs are used within the College Goal as a reference for advisors.

National average costs are from CollegeBoard.org published data. Specific college costs are taken from published Department of Education data.

We plan to review the data on an annual basis.

If portions of college costs are expected to be covered by a scholarship/grant or via student borrowing, you can enter those values to reduce the net cost that the client expects to cover.

All amounts are expressed in current dollars and inflated using the Education inflation assumption for use in the projection and in our Education tool.

Charitable Giving goals

Users can model unique estate & tax planning scenarios by choosing from two gift goal options:

1

Personal Gift: Allows users to model a gift from the client to another individual. Users can specify who the gift is for, which can be a specific child, grandchild, or other family member entered in the Profile / Family screen, or they can select “Other individual” if they don’t want to enter the specific person’s name. Personal gifts can be entered as a percentage of salary income or an annual amount.

Any gift to a single individual in excess of the annual gift tax exclusion will reduce the client’s lifetime gift/estate tax exemption amount, which could ultimately result in higher estate taxes reflected in the Estate analysis.

2

Charitable Giving: This goal allows users to donate assets to a charity or donor advised fund. Charitable giving can be entered as an annual amount or a percentage of salary income. All asset types can be given to the “Charity” recipient while only cash and appreciated assets can be given to a “Donor Advised Fund”. If charitable giving and other deductions exceed the standard deduction in a given year, RightCapital will automatically itemize deductions when calculating taxes.

When adding a charitable giving goal card, the ‘type’ field allows users to specify the following charitable giving strategies:

  • Cash: This charitable giving type can be used to reflect a scenario where clients are donating cash to charity or Donor Advised Fund. When donating cash to a donor advised fund the amount is added to the DAF balance listed in the Profile > Net Worth.

  • Appreciated asset to charity: This can be used to reflect scenarios such as someone donating stock or tangible assets to a charity or Donor Advised Fund. When donating appreciated assets to donor advised fund, the assets will be added to the DAF balance listed in the Profile > Net Worth.

    When this option is selected, you can enter a ‘cost basis ratio’ which is the percentage of the amount that is basis, as opposed to growth. When a stock or asset is donated to charity, there are no capital gains taxes paid when assets are liquidated.

    • For example: if a stock was purchased at $20,000 and is now worth $100,000, the cost basis ratio should be 20%.
  • Donor Advised Fund: Distributing from donor advised fund to charity will reduce the balance of the DAF listed in the Profile > Net Worth by the amount specified.

Donor Advised Funds

Since funds in a DAF must be used for charitable donations, clients receive a tax deduction for the entire contribution to the DAF in the year it is made, even if the funds are donated to charity in future years.

  • Investment accounts that are set up as ‘donor advised accounts’ in the Net Worth are not considered part of the client’s invested assets but will still be tracked as part of their net worth.
  • Donor advised fund balances are tracked in the ‘Other asset’ category on the Net Worth cash flow page.
  • IRA (Qualified charitable distribution): This allows individuals over 72 to donate funds from an IRA directly to a charity tax-free. QCD's will also count towards their required minimum distribution for that year. When selected users will see a Planned Distribution in the Retirement > Cash Flows as well as a goal to reflect the contribution to charity.
  • Inherited IRA (Qualified charitable distribution): This allows individuals over 72 to donate funds from an Inherited IRA directly to a charity tax-free. QCD's will also count towards their required minimum distribution for that year. When selected users will see a Planned Distribution in the Retirement > Cash Flows as well as a goal to reflect the contribution to charity.
  • IRA annuity (Qualified charitable distribution): This allows individuals over 72 to donate funds from a qualified annuity to a charity tax-free QCD's will also count towards their required minimum distribution for that year. This is only available if the distribution setting for the annuity is ‘Regular withdrawals’. When selected users will see a Planned Distribution in the Retirement > Cash Flows as well as a goal to reflect the contribution to charity.

Pro Tip: To offset scheduled RMD's with QCD's in the cash flow projection, select the "Greater of RMD's and Manual Distributions" setting in the Advisor Portal > Client Settings tab.

Additional goals

Add additional goals by clicking  Add Goal:

Use each of these to set up future financial goals.

Mouse over Property to enter property-related goals: Primary Home Relocation, Investment Property Purchase, Vacation Home Purchase, Land Purchase, or Home Improvement.  For more information, see our page on Property Goals.

Mouse over Asset Purchase to enter goals to purchase a business or other asset.

Click here for additional information about the Cash Reserve goal.

There is a lot of flexibility in the timing of goals — use the Goal start and Goal end dates to indicate the period during which the goals will take place, and the frequency to determine when they occur. Users can set annual increases on vacation goals, car goals, and other goal cards.

A couple of tips

  • To set a one-time goal, set the start year and end year to the year you want the goal to be funded, and the frequency to “One time”.
  • To set an annual goal, set the start date to the first year you want the goal to be funded, the end date to the last year you want the goal to be funded, and the frequency to “Every 1 Year”.
  • Inflation on goals can begin as of today or the start year. This can be adjusted globally in the Advisor Portal / Assumptions / Inflation area.