Goals

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 Age

If you 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 before or after their birthday when they turn retirement age.

Retirement Expense

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.

You can see the total expenses at the bottom of the card, and the total will also be displayed as the 'Monthly Expenses' number. If you have already filled out a detailed expense worksheet in either Profile > Expenses or Dashboard > Budget, you can choose to copy the values into the Retirement Expense card via the "Copy From" button:

Retirement Health Care Costs

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

Long Term Care Costs

The Retirement LTC Cost card allows you to factor current or expected LTC costs into your client plans:

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 your 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.

Education goals

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".

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.

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.

Note on Other Family Members

To select Other Family Members as the student for education goals, navigate to the Profile > Family tab (or Step 1 of the initial six steps of data entry). Open the 'Other Family Member' card, and check the "Include for Education planning" box:

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.

Pro Tip

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.

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 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.

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.

Car goals

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.

Vacation goals

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.

Wedding goals

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.

Legacy goals

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.

Additional goals

Use each of these to set up future financial goals.

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.