Identifying a client's goals is the last step of the initial data entry process. RightCapital pre-populates a number of cards in step six of the data entry.
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.
You can enter a 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 allow you 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.
- Retirement spending strategies can be adjusted for proposed plans within the Retirement > Analysis > Action Items.
Total retirement expenses can be seen within the Retirement > Analysis > Retirement Details > Retirement Spending graph.
Retirement Health Care Costs
Please review our separate article on how to reflect retirement health care costs.
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- $59,488
Assisted living national average- $54,000
Nursing home national average- $108,405
We plan to review the data on an annual basis.
Health and Long-term care costs 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.
If a child is 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 "Education" > "College".
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.
You will also see the option to add a "Pre-College Education" Goal - this card indicates tuition paid for pre-college education. Here you can input the tuition costs and any scholarships/grants the student will receive.
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:
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.
The personal and Charitable giving goals will allow for values of up to $100,000,000
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.
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 70.5 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 70.5 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 70.5 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.
Users can model different scenarios for acquiring cars in their financial plans.
When modeling the acquisition of a vehicle, the user will indicate the purchase year, frequency (ex: one time, every 2 years, etc..), and owner. You can also indicate whether the client is buying or leasing the car and the inflation rate associated with the purchase.
Users can model different scenarios for future vacations:
When modeling a vacation goal, you will input the annual amount, the start and end date, the frequency (ex: one-time, every 3 years, etc...), and the annual increase associated with the vacation goal.
If a client would like to model covering the cost of a child's wedding. You will add a "Wedding" goal. Within the wedding card, you will specify the cost of the wedding and the anticipated year of the wedding.
If a client wants to model a specified amount they would like to pass to heirs at the end of the plan, add a "Legacy" goal.
In this goal, you will enter the amount, specify when you would like this to occur at the end of the "Client's plan" or the end of the "Co-Client's plan, and you can specify any annual increase.
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 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.
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.