Retirement Financial Planning Software for Consumers

Video Overview — Making Inputs to the VeriPlan Personal and Retirement Planning Software for Consumers

There are two parts to the VeriPlan overview video: 1) inputs and 2) graphical and data outputs. This video is the first part and it focuses on how a user makes inputs and sets parameters within the VeriPlan personal and retirement financial planning software for consumers. This article is a transcript of this first video.

Both of these overview videos have the same 90 second introduction. After this short introduction they focus on inputs and outputs, respectively. The second overview video focuses on VeriPlan’s output graphics and data and explains why VeriPlan is the best personal financial planning program and the best retirement software for consumers.

VeriPlan is a comprehensive home do-it-yourself (DIY) financial planning program for individuals and consumers. VeriPlan enables sophisticated, low cost, family financial planning. With VeriPlan you can build your own lifetime projections for personal financial decisions. VeriPlan runs on any Windows PC or Macintosh with Microsoft Excel. VeriPlan’s functionality has been stable and robust since 2006. Annual enhancements and updates have been made since then up to the present.

This video is a functional overview of VeriPlan through the live development of a sample lifetime financial projection plan. Larry Russell is the video narrator, and he is also the architect and developer of VeriPlan. Larry holds a BS from MIT, MA from Brandeis, and MBA from Stanford.

This is a video overviews VeriPlan, financial modeling software that can help you with anything from retirement planning, to tax planning so that you can make sound financial plans for your near and long term future.

This first video will focus on the different entries that you need to put in to the software. Proper inputs allow for accurate calculations and graphics rendered to your unique financial situation.

VeriPlan’s “Start Here” and “How to Use” Worksheets

Diving in, we are going to start with the left most red tab on the worksheet, labeled START HERE. Make sure to Open the applicant in full screen mode on your desktop for maximum visibility. This worksheet it informational only and you do not need to make any inputs.

VeriPlan’s lifetime and retirement cash flow projections for financial decision-making use real dollars with constant purchasing power over time. VeriPlan’s documentation is embedded where it is needed in the layout of the worksheets, graphics and data. Therefore, you do not need to refer to a separate manual when using this personal and retirement financial planning software for consumers.

This worksheet also discusses backups to protect your work. It is best to save VeriPlan to your computer hard disk file system using different names and progressive dates. Then, you can more easily find the most up to date version, and have extra backups.

VeriPlan’s “How to Use” worksheet overviews how to create a personalized financial plan. You start with developing a 15 minute starter plan. Then, this initial plan can then be refined to help develop a much more sophisticated baseline model. Later, your baseline plan be extrapolated on to develop alternative variation plans for different circumstances.

Income Inputs for the VeriPlan Lifetime and Retirement Income Planning Software

First choose whether the plan is for a single person or married couple. To begin the inputs, set a 1 or 2, respectively. This input sets your tax status as single or married filing jointly for this lifetime and retirement tax planning software.

Please note that all data entry boxes have a “Moveable Data Entry” box with guidance on allowable entries. You can move it out of the way. The box will stay in that same relative position on any particular worksheet. Later, you choose to move it elsewhere.

For this example, we will set an initial age of 32 for User #1. We will use 30 for User #2, with a planned retirement age for both of them to be 67. Note that in the comment lines to the right, is where you can take notes about entries for future reference.

Now we will enter annual income of $75,000 of wage and salary income for user #1. And, $50,000 in self-employment earnings for user #2. The total is $125,000 of annual income.

Note these links to Sections 3 to 6 below on this lifetime and retirement modeling software worksheet. In Section 3, you can adjust real dollar lifetime growth rates. Next, in Section 4, you can make year-by-year income adjustments. Section 5, lets you enter year-by-year values for other ordinary income. The, in Section 6, you can enter anticipated future inheritances and gifts including inherited IRAs.

Next we will click and go on to the yellow-tabbed Expenses Worksheet

Expense Inputs Worksheet — Financial Planning Software for Consumers

First, we will set this couple’s ordinary annual living expenses at $75,000. These are their normal living expenses, such as food, clothing, rent, etc. This annual expense number does not taxes or savings. VeriPlan will project all taxes and savings automatically across your lifetime. The best working-years and retirement financial planning software will automate as much of the calculations as possible, so that you can focus on decision-making.

While we will not make further changes to this worksheet, note that in Section 2 you can adjust expense growth rates. In Section 3, you can make year-by-year expense adjustments, such as the purchase of a car at some interval of years; Section 4 provides an optional 24-month expense tracking and budgeting tool. If you do not already have some way to track expenses such as mint.com, you can use this tool to figure your month by month annual expenses.

Next we will click and go on to the yellow-tabbed Financial Assets Worksheet.

Financial Assets Worksheet Inputs — Investment Software for Financial Planning

VeriPlan, as a retirement tax planning software, provides sophisticated portfolio projection tools. There are two methods provided. 1) the quick and dirty account totals method versus 2) the preferred individual holding method.

VeriPlan allows detailed analytical inputs for up to:

• 24 cash positions,
• 24 bond positions, and
• 99 stock or equity positions.

Assume this couple has saved $100,000, and hold the classical 10% cash, 30% bonds, and 60% portfolio holdings asset allocation. All assets are held in taxable accounts.

• Enter $10,000 in cash with 1% cash investment expenses;
• Enter $30,000 in bonds with 1% bond investment expenses; and
• Enter $60,000 in stocks with 1% stock investment expenses.

on this date entry box of the VeriPlan lifetime and retirement software for financial planning.

Next we will click and go on to the yellow-tabbed Property+Debt Worksheet.

The Property and Debt Worksheet Inputs — Real Estate Software for Financial Planning

For this quick plan, we will assume that this couple will rent throughout their lives. Therefore, the only entry we will make is educational debt that they still have as they enter their 30s.

As we move down, note that this worksheet provides sophisticated real estate, debt, and property projection tools. In Section 1, you can own, buy, and sell up to five residences, VeriPlan, as a software financial planning program, will

• project real estate values,
• manage to pay down of mortgage and home equity line of credit debts,
• project real estate taxes and maintenance expenses, and
• automatically model future planned purchases and sales of residential properties including all associated taxation, expenses, and cash flow.

In Section 2, you can enter up to 10 non-real estate debts. Entering their 30s, assume that this couple still has $50,000 of educational debt, we will enter $50,000 of principal owed, and we will enter an interest rate of 5%. We will enter a minimum monthly payment of $1,000/month This would pay off their educational debt by age 3.

In Section 3, you can own up to ten rental real estate properties, in addition to all the features mentioned before about residential real estate. For rental real estate VeriPlan, as a software for financial planning also automatically:

• project rental income, taxes, and operating expenses,
• project taxes net of depreciation, and
• blend positive and negative net cash flow into your overall model.

In Section 4, you can own up to ten other properties, such as: businesses, valuable collections, and illiquid investments.

Next we will click and go on to the yellow-tabbed Taxes Worksheet

Taxes Worksheet Inputs — Lifetime and Retirement Tax Planning Software

On this Taxes spreadsheet the only entry your need to make is to select your state income tax rates. Just select this box at the top and use the pull-down menu arrow, just to the right of the box. In this case we will select California, you do not need to make any other changes on this worksheet.

However, you should note VeriPlan as retirement software for financial planning is designed without any built-in obsolescence. So, it you use VeriPlan over the years you can update its tax rates — should you need to do so.

Without scrolling down now, note that VeriPlan includes state income tax rates for the 50 US states and the District of Columbia.

Next we will click and go on to the yellow-tabbed Retirement Worksheet.

Inputs on the Retirement Planning Worksheet — Software for Consumers

On this Retirement worksheet, the only entries we will make now are for expected Social Security retirement payments for this couple. Before we do that you should note that on this spreadsheet within this retirement modeling software, you can:

• select simultaneous retirement ages for a couple,
• enter Social Security retirement payments,
• vary ages for starting Social Security payments to help you understand the long-term impact of choices, and
• enter up to 10 pensions and annuities that you might be entitled to receive.

The other sections on the Retirement worksheet:

• explain where you can get your Social Security statements;
• provide information about choosing your initial age(s) to start Social Security retirement income payments;
• enable you to adjust expected Social Security payments; and
• discuss the interaction between Social Security and investment tax optimization.

You can also:

• adjust your living expense assumptions for retirement;
• change the growth rate of ordinary living expenses in retirement; and
• change your post-65 earnings assumptions, if you were to continue to work.

Now, lets make Social Security retirement payment entries, within the VeriPlan retirement income planning software for consumers. For this couple, they would simply look on their printed “Your Social Security Statement” that they receive in the mail from the Social Security Administration. Otherwise, they could download their personal accounts at https://www.ssa.gov/myaccount/ . VeriPlan is set up so you just need to copy some key numbers for personal Social Security retirement statement.

Lets assume that the Earner #1 would be entitled to approximately:

• $2000 monthly if payments started at age 62,
• $2600 monthly if payments started at full retirement age of 67, and
• $3100 monthly if payments started at age 70.

Earner #2 has had lower lifetime earnings, so we will enter somewhat lower numbers of:

• $1500 at age 62,
• $2000 at full retirement age of 67, and
• $2500 at age 70.

Next we will click and go on to the yellow-tabbed Tax-Advantaged Plans spreadsheet.

User Inputs to VeriPlan’s Tax-Advantaged Retirement Plans Worksheet

This Tax-Advantaged Plans spreadsheet is where you indicate the type of employer retirement plan available to you within the VeriPlan retirement financial planning software for consumers. For this couple, Earner #1 is covered by a 401k plan. To indicate this, simply select this box and use the pull-down menu to the right to pick the plan type between 401k, 403b, 457, Federal thrift savings, and other plan types. We will choose a 401k for Earner #1. Earner #2 is self-employed and does not have an employer plan, so no entry is required.

US retirement plan rules and tax incentives are incredibly complex. VeriPlan automatically integrates these retirement savings rules and tax incentives into your lifetime financial projections, which makes it one of the best retirement financial planning software for consumers. Section 1, summarizes employer plan contribution rules. In Section 2, you can enter employer matching contributions. The tool in Section 3, allows you to limit future contributions to traditional retirement plans. The tool in Section 4, allows you to limit future contributions to Roth retirement plans.

Note that individuals can make direct contributions to IRAs – in addition to making contributions to employer plans VeriPlan automatically integrates IRA rules into your lifetime financial projections. If necessary, in the future, Sections 5 to 9 allow you to:

• change annual contribution limits for traditional IRAs and Roth IRAs,
• adjust tax deduction limits for traditional IRAs,
• change age limits for retirement plans, and
• adjust withdrawal penalties.

Next we will click and go on to the yellow-tabbed Asset Allocation spreadsheet.

VeriPlan’s Asset Allocation Worksheet — Investment Software for Financial Planning

This is the Asset Allocation tools worksheet, which will be a pertinent part of VeriPlan as a retirement modeling software. For this couple, we will not need to make any changes. We will leave the default asset allocation method selector as a 1 here.

In effect, VeriPlan’s Asset Allocation Method #1 assumes that a user already has the portfolio asset allocation that they want. For this couple, we already entered $10,000 cash $30,000 bonds and $60,000 stocks on the Financial Assets worksheet. Therefore, VeriPlan has automatically extracted their current asset allocation percentages as 10% cash 30% bonds and 60% stocks.

However, if a VeriPlan user wishes to do so they can select any of the 5 asset allocation models to understand the lifetime impact of different investment asset allocation strategies. For any selected Asset Allocation method, VeriPlan, in it’s capacity as lifetime and retirement income planning software for consumers, will automatically rebalance projected investment portfolios at the end of the first projection year and for every projection year after that through age 100.

Asset Allocation Method #2 implements the constant percentage asset allocation of the average investor. With Method #3, the user can select any lifetime percentages for cash, bonds, and stocks that total 100%. Methods #4 and #5 provide two different approaches to implement stock percentages that decline with age.

Note that the bottom half of this Asset Allocation worksheet provides a current portfolio rebalancing tool. You can use it now and in the future to aid in your portfolio rebalancing decisions. This portfolio rebalancing tool helps you to optimize your portfolio with respect to taxation, which is called asset tax location.

This portfolio rebalancing tool takes into account:

The portfolio rebalancing tool helps you to understand your current portfolio and your rebalanced portfolio. It also calculates the overall changes needed within the various parts of your portfolio.

Next we will click and go on to the yellow-tabbed Risk and Returns spreadsheet.

“What If” Lifetime and Retirement Modeling Software — Inputs to VeriPlan’s Risk and Returns Worksheet

No entries are required on this Risk and Returns Tools spreadsheet. Use of any of these investment variability tools is optional — whether used singly or in combinations.

As sophisticated lifetime and retirement planning software for consumers, VeriPlan already comes pre-configured with compounded annual cash, bond, and stock investment rates of return.

VeriPlan’s asset class returns are based upon the over 90+ year history of US investment returns. These compounded returns go back to just before the stock market Crash of 1929, and thus these return incorporate the downward impact of that Crash and the subsequent Great Depression.

VeriPlan, as a retirement modeling software, automatically develops projections based upon these long-term, compounded, asset class rates of return. If you wish to stress test your projection models with future returns that might differ from the long-term historical record, then this Risk and Returns worksheet provides a variety of tools to do this.

Section 1, allows you to vary asset class returns in proportion to the historical risk of asset classes. With Section 2, you can change cash, bond, and stock return assumptions individually. Section 3, allows you to model the long-term impact of higher or lower current portfolio asset values. In Section 4, you can set parameters to project how long you could live on just your cash and bond assets without any other income or stocks.

Section 5, explains risk free rates of return. Next, Section 6, provides information on historical asset class rates of return. Then, Section 7, explains how VeriPlan, as a retirement modeling software, uses historical price volatility or risk information. Finally, Section 8 discusses returns for real estate and other property assets.

Next we will click and go on to the yellow-tabbed Investment Costs spreadsheet.

Inputs to the Investment Costs Worksheet — Investment Software Modeling of Long-term Portfolio Cost Erosion

As lifetime and retirement modeling software, VeriPlan provides sophisticated tools to help you understand the lifetime impact of excessive investment costs. For this couple, we will NOT make any changes on this spreadsheet. They have not yet decided to minimize their investment costs. Therefore, this couple’s projected investment portfolio could be smaller that it otherwise might have been. VeriPlan’s total asset and investment efficiency graphics will indicate how excessive costs could dramatically impair their portfolio.

A VeriPlan user can understand the lifetime investment costs associated their current portfolio holdings. The user enters cost information associated with their holdings on the Financial Assets worksheet. Then VeriPlan as one of the best retirement software programs, will automatically project the lifetime impact of those investment costs.

In Section 1 of this Investment Costs worksheet, you can enter the percentage investment costs that you believe are reasonable and justified for each asset class.

As lifetime and retirement planning software for consumers, VeriPlan will then automatically project the investment costs from your current portfolio which exceed the costs that you believe are reasonable and justified.

VeriPlan sets aside these excessive costs and accumulates them over your lifetime using the same asset allocation method that you have chosen for your own portfolio.

In effect, as some of the best retirement financial planning software for consumers, VeriPlan projects the lifetime value of the financial assets that you would give away over time to the financial industry by paying unnecessarily high investment costs. Particularly when excessive costs have decades to accumulate, it is astonishing how much they can undermine your portfolio.

Section 2 discusses the implications of committing to a low cost investment strategy. If you decide to adopt a low cost strategy, you simply need to enter a 1 in the gray box at the top of this spreadsheet, and from that point VeriPlan will develop projections that assume you will adopt a low cost portfolio strategy. To assist you in adopting a low cost investment portfolio, note that the VeriPlan download package also includes my detailed ebook on The lowest cost index funds available for direct investment by individual investors.

Finally, Section 3 discusses returns lost to excessive sales loads, and Section 4 helps you to understand where you can find information about the investment costs associated with your current investment holdings.

Next, we will click and go on to the purple-tabbed Summary of Inputs spreadsheet.

VeriPlan’s Summary of Inputs Worksheet — Lifetime and Retirement Planning Software for Consumers

This purple-tabbed Summary of Inputs worksheet in the middle of VeriPlan, which summarizes the settings that were made on the various yellow-tabbed input worksheets. I will briefly scroll down and jump back up so that you can get a sense of this worksheet.

All the informational boxes have a yellow background indicating that user changes cannot be made directly in those boxes. However, you will note that next to all of these yellow boxes is a descriptive blue link. Just click on any of these blue links, such as its retirement modeling software inputs, and the VeriPlan retirement software programs will automatically take to the section of the appropriate yellow-tabbed worksheet, where you can make changes directly.

Next, we will click and go on to the blue-tabbed Graphics and Data spreadsheet.

This concludes the VeriPlan Input Overview Video. There is a separate VeriPlan Overview video that discusses VeriPlan’s graphical and data output that you would use to make important decisions with this lifetime and retirement financial planning software for consumers.