The Retirement Expense goal card allows you to capture a household's monthly retirement expenses within the projections. You can find this card within the Goals section of the Profile, which is where a client's financial goals are entered. By default, Goals is also the 6th step of the initial data entry process for newly created clients:
If this card has been deleted, it can be re-added by clicking Add Goal > Retirement > Retirement Expense. Please be aware that there is a separate card in the Profile > Expenses section for Pre-retirement Living Expenses.
Important Note on Living Expenses
When entering living expenses, please be mindful that this number should not include taxes or expenses that you have already captured in the Net Worth section. This includes mortgage and other loan payments, insurance premiums, and property taxes and maintenance fees.
Retirement Expense Data Entry
Click on this card to open a data entry drawer on the right side of your screen, allowing you to input the details. There are two options when it comes to inputting living expenses- the quick and easy Simple Approach, and a more granular Detailed Worksheet:
- The Simple Approach will ask you for a single amount, representing the sum total of the client's average monthly spending.
- The Detailed Worksheet allows you to break out expenses into more specific expense categories, the sum of which will make up a client's monthly living expenses.
When using the Detailed worksheet, the expense categories are shared between the pre-retirement and retirement living expense cards, as well as the Budget module. If you've already filled out a detailed expense worksheet in either of these other locations, you can choose to copy the values into the retirement living expense card via the "Copy From" button:
Customze your expense categories!
Budget / expense categories can be customized on a per client basis within the Gear Icon > Settings > Budget Categories tab. This can only be done after completing the initial data entry process.
To learn more about custom expense categories in RightCapital, click here.
Additional Information
Retirement Living Expenses can be tracked within the projections by navigating to the Cash Flows module in the Retirement section. Within the Cash Flows > Summary, click into the Expenses > Living Expense column:
Like pre-retirement living expenses, retirement expenses will increase based on your general inflation rate by default. However, the retirement expense card provides the flexibility to utilize a number of retirement spending strategies, in addition to the default 'Inflation Adjusted' strategy:
RightCapital provides four additional dynamic spending strategies, incorporating behavioral conditions and market performance when projecting expenses into the future. You can even create your own custom retirement spending strategies within the Models > Retirement Spending tab of the Advisor Portal.
Learn more about Retirement Spending Strategies...
To learn more about creating and implementing retirement spending strategies in RightCapital, please feel free to utilize the resources below:
