How baseline expenses work in Income Lab

You can think of total baseline expenses in a plan as a single block. That block could be steady through the months and years (a "flat", inflation-adjusted expense plan) or it could be an expense plan that follows an Age-Based ("Retirement Smile") pattern. But either way, it is one large block. You can arrive at that by stating a total expense goal ...

What sorts of Other / Variable Expenses should I enter in a plan?

Planners typically use the Other / Variable Expenses tab for scenario testing or A/B testing. Scenario testing and exploration involves creating multiple plans that differ only along one (or a very few) dimensions. For example, a household may wonder what the effect would be of buying a vacation home or of funding a grandchild's wedding. To begin th...

What is the difference between baseline and other/variable expenses?

Income Lab plans don't require expenses, but a fully built-out plan will typically have expenses in it. There are two types of expenses you can include in a plan: Baseline Expenses: Ongoing monthly expenses that are part of the normal day-to-day costs of living. Examples are food, transportation, utilities, and certain kinds of insurance. In a 'How ...

How do I include Medicare in a plan?

Income Lab divides Medicare Part B and D premiums into two parts: Base premiums: Can be included or excluded as line-items in the plan. If included, can be treated as baseline or other/variable expenses. Income-related monthly adjustment amount (IRMAA): Calculated automatically based on a two-year lookback on Medicare modified adjusted gross income ...

Modeling a future long-term care expense

Income Lab can help you answer questions like, "How much should I reduce my spending today if I want to plan for future long-term care expenses?" The video and screenshots below walk you through this process, which is very similar for other questions about specific planned cash flows.   Video: Modeling a future long-term care expense Video Transcrip...

How to Fund an Expense from a Portfolio

Learn how to specify where ongoing and one-time expenses are funded in your plan. This feature lets you customize beyond default settings for more precise pre-retirement planning.   Video: Fund an Expense from a Portfolio Video Transcript Hello everyone. This is an introduction 0:02 to some new features that allow you to 0:05 pinpoint where things a...

Why don't baseline expenses grow at the rate of inflation

The following is a not uncommon, and possibly confusing, situation you may encounter in an Income Lab plan: You are using a Monte Carlo analysis method (for example, Traditional Monte Carlo) and have set the average expected inflation to 3%. However, you notice that a baseline expense of, say, $10,000/year is not growing at 3% (to $10,300, $10,609, ...

How other/variable expenses work and how they can add risk

An Income Lab plan does not require any expenses. (Instead, it can just build a plan using the household's resources to figure out how much they can spend.) However, most complete plans will include at least some baseline and/or other/variable expenses. While baseline expenses do not affect the plan's retirement paycheck or spending capacity, other/...