Minimum Income Change

Most people prefer to keep their income steady unless a change would be large enough to make a difference. Usually, income changes of a few dollars or a few cents just aren’t worth the administrative effort.

The Minimum Income Change setting specifies how big an income change must be, as a percentage of current nominal income (i.e., actual future dollars), for a household to make a change in their income.

For example, the purchasing power of money changes every month with inflation, but these changes may only be fractions of a percent from one month to the next. A Minimum Income Change setting of 5% would mean that the household would hold off on inflation adjustments until the combined effect of inflation has cut into purchasing power enough to warrant an increase of 5% or more. Similarly, a small change in investment balances might justify a small change in monthly income, but a 5% Minimum Income Change setting will hold off on such adjustments until the change is 5% or more.