If your currently selected proposal is utilizing this strategy, you'll find an additional chart called Floor and Ceiling in the Retirement > Analysis > Retirement Details tab. This chart helps to visualize a client's annual retirement expenses in relation to the floor and ceiling values.
Example Scenario:
A client has 1M of invested assets and a retirement expense goal of $30,000/year. They also use a floor and ceiling spending strategy with a ceiling rate of 20% and a floor rate of 15%.
Next year the invested assets will grow by 7% (to $1,070,000), and the expenses are increased by the same amount until they are capped at the ceiling rate of 20% (expenses grow to $36,000).
The following year, invested assets drop by 2% (to $1,0486,000), and the expenses are decreased by the same amount and are not capped since they do not drop below the spending floor of 15% (expenses drop to $30,600).
By default, the Floor and Ceiling strategy in RightCapital will set the Floor to limit the spending reduction to 15% below the initial retirement expense amount (inflation adjusted). The Ceiling is set to 20% above the initial retirement expense amount (inflation adjusted). However, the Floor and Ceiling parameters can be adjusted to your preferences in the Advisor Portal > Models > Retirement Spending tab.
