PRC2015/Silver User`s Manual - Pralana Retirement Calculator
Contents
1. PRC2015 Silver User s Manual handled via withdrawals from tax deferred savings until they too are depleted At that time any subsequent negative cash flows will be covered via withdrawals from Roth savings The converse will occur if you specify that PRC is to take Roth savings before tax deferred savings Other Buttons on the Home Page Change Currency Units PRC allows you to view its outputs in terms of either today s dollars or future dollars Located just above the graph each click of this button alternates the currency units from Today s to Future S and then back again Change Withdrawal Order Located just beneath the Savings Assumptions table each click of this button alternates the preferred withdrawal order from Tax Deferred Before Roth to Roth Before Tax Deferred and then back again The current setting is displayed just to the right side of the button The remaining four buttons are located along the bottom of the Home page Hide Excel Menus You can click this button to eliminate the MS Excel menus that will otherwise occupy the top portion of every screen and thereby devote the entire screen to PRC displays None of the Excel menus are needed to operate PRC however if and when you should desire to see those menus just press the Escape button on your computer Zoom You can use this button to increase or decrease the magnification level on all PRC pages at the same time When you click the button you ll see a2. 114 645 32400 69 8976 15 000 2 58 324 321161 879 485 2018 48 48 135 000 15 000 3 365 89 082 32 400 808 16 076 15 000 72 156 342 337 414 493 2019 49 49 135000 15 000 4 163 88 540 32400 999 17224 15 000 3 86 604 363 921 450525 2020 50 50 135 000 15 000 4 996 63 019 532400 1199 43 378 15 000 126651 385219 512571 2021 51 51 135 000 15 000 7 307 62 519 32400 1 754 45 635 15 000 z 167 415 408 341 575 756 2022 52 52 135 000 15 000 9 659 62037 32 400 2 38 47 903 15 000 2 208879 431 194 640073 2023 53 53 135 000 15 000 12 051 e 61 574 32 400 2 892 50 184 15 000 251 030 454 486 705 516 2024 54 54 135000 15000 14482 50 000 532400 3476 63 607 15 000 5 5 304981 478226 783207 2025 55 55 135 000 15000 17 595 50 000 532400 4223 65 972 15 000 E 359224 502 422 861646 2026 56 56 135 000 15000 20724 50000 532400 4974 68 351 15 000 413 758 527 084 940842 The information contained in this view corresponds exactly to the graphical view presented on the Home page but the tabular form enables you to see exactly what s going on year by year It clearly shows the following key information e your income separate into taxable and non taxable categories e income from the growth of regular savings 13 PRC2015 Silver User s Manual e Required Minimum Distributions e the profile created from the expense page e taxes on income e t
3. 60 000 3774 861 38 129 33 044 775175 48 127 856 946 2029 69 18870 3 330 1941 60 000 3774 388 40 021 7 672 7900082 41 381 831 468 2030 70 18 870 3 30 27726 60 000 9319 9393 19 393 777550 22 84 800 334 2031 71 18870 3 30 28213 60000 3 908 13 495 13 495 764290 9 727 774017 2032 72 18 870 3 30 28707 60 000 3 949 13 042 3 128 9 914 747158 747158 2033 73 68 18870 3 330 29 086 60000 4230 12 944 12 944 719491 719491 2034 74 69 18870 3 330 29068 60 000 5012 13 744 13744 690516 690516 ane 3E 7 40037n 2220 aonana ennan Enn 142 omei 42 076 cenne cenne You can see that this example above is illustrating a negative cash flow situation where the regular savings account is depleted in the year 2029 At that time PRC starts making withdrawals from the Roth account until it becomes depleted in the year 2032 at which time it starts making additional withdrawals from tax deferred savings to cover the negative cash flow Here s another shot showing the strategy set to Tax Deferred Before Roth 14 PRC2015 Silver User s Manual Change Currency Units Change Withdrawal Order 2023 63 58 67 00 7 500 119 50000 13 500 24 345 7 500 3 750 2 320 690 175 36466 728 962 2024 64 59 67 500 7 500 134 50 000 13 500 27 357 7 500 3 750 2 588 710 948 40 917 754 453 2025 65 60 67 500 7 500 149 50 000 15 500 30
4. Last Year x Inflation kid 1 college kid 2 college kid 2 high school house pymt 15 840 other expenses 50 000 other expenses early ret 54 000 other expenses late ret 45 000 purchase down sized home 200 000 EJ E EJ ST EST EST IST oO IT SC S As you can see this table contains only five columns of data Each of the 30 rows in this table can be associated with a specific expense item and can apply to a single year to the rest of your life or to any span of years in between and can be adjusted for inflation or not Description This is simply a field where you can enter a brief description of each expense 12 PRC2015 Silver User s Manual Amount The amount of the expense in terms of today s dollars First Year The expense will begin in the year specified in this column If it has already started you ll need to enter the starting year specified on the Home page Last Year The expense will continue through the year specified in this column For single year expenses the first and last year should be the same If the expense lasts indefinitely you can leave this field blank Adjust for Inflation Check this box if you expect this expense to increase at the rate of inflation If it s a constant expense such as a fixed rate home mortgage leave the box unchecked TABULAR PROJECTION PRC Silver generates a fixed rate projection based on all of your input data
5. PRC2015 Silver Application There are various ways to initiate the PRC application however even though it is Excel dependent it cannot be opened from the Excel File menu Instead you can open it from Windows Explorer locate the PRC application in your library then double click it create a shortcut and move it to your desktop from Windows Explorer locate the application right click it and select Create Shortcut or pin it to the Taskbar from Windows Explorer locate the application right click it and select Pin to Taskbar and start it like any other application Your individually saved versions will not be visible until the PRC application comes up When it does you will then have the option of bringing up the original workbook that you downloaded the last version edited or a specific previously saved version When the selected version comes up you can then operate it like any other Excel file but with certain limitations File Menu options are restricted the Control S shortcut is disabled right click functions are disabled and VBA is not accessible You can save multiple versions of PRC but you will need to begin that process by simply clicking the Save icon and the application will give you various save options To close the version you re working with just click the Exit icon To open another version just bring up a new instance of the PRC application either via the Taskbar the desktop shortcut or Windows Explorer How
6. and presents it in a single tabular projection page As with the INCOME and EXPENSE pages the page title identifies which of the three scenarios this data is associated with TABULAR PROJECTION Scenario 3 in the screenshot below This will always correspond to the most recent scenario selection made on the Home page As you can see the columns are organized into the following categories e Income e Expenses including taxes e Savings Contributions e Withdrawals e Savings Expense Definition Tabular Projections Change Currency Units Change Withdrawal Order 7 7 VINCOME I S EXPENSES SAVINGS CONTRIBUTIONS WITHDRAWALS SAVINGS OO Required Income dA Personal Company Other N f Minan ect on Contributions Contributi Personal withdrawals Withdrawek T Taxable Non rom Distributions Specified Taxeson Growth of ETE cont EE CORATIDUHORN eee ae rawals Regular ial Roth z Taxable Growth of Cash Flow to Tax to Tax from Tax from Roth s Deferred Total Savings Income fromTax Expenses Income Regular to Roth i Savings Savings Income Regular Deferred Deferred 5 Deferred Savings Savings Fem Deferred Savings see Bs Savings S LL Savings Ivings IVIngs VINE 75 000 250 000 325 000 2015 45 45 135 000 15 000 4 500 98840 32400 1080 7 180 15 000 2 82180 280 000 362 180 2016 46 46 135 000 15 000 4 741 115231 532 00 1138 9 027 15 000 69592 3005385 870376 2017 47 47 135 000 15 000 4 038
7. automatically filled in by PRC Silver Fields with a small red triangle in the upper right corner contain hidden comments that will appear when you place the cursor over that field There are many of these throughout the various pages to provide guidance regarding the specific meaning of a field or to clarify potential user questions regarding that field PRC Silver tries to call you and your spouse by name everywhere possible so it starts by asking for your names on the Home page Thereafter when you see input data that is unique to either you or your spouse it will refer to the corresponding person by name Many pages contain buttons that you can click to invoke some PRC Silver operation All of these buttons have a similar appearance with 3 D effects and the function they perform written on them in bold white font All pages are organized in a table format where you simply type in the data requested and PRC Silver validates your inputs as you provide them to ensure the data you enter is in a proper range In numeric data entry fields such as years ages and dollar amounts a blank is treated as a zero or not applicable however please understand that a blank is created via the DELETE key not via spaces Buttons are provided to help you clear the tables Conditional formatting is employed to alert you to certain situations where some inputs fields are mutually exclusive you can enter data in either one but not both or where an entry in
8. pop up display that asks what zoom level you want When you enter that do not enter a sign PRC will assume the value you enter is a percentage value User Support You can click this to go to a User Support page where you can view guidance on configuring your system to run with PRC access the PRC User s Manual and submit a question or report a problem View License This button takes you to a page where you can view the PRC License that describes your rights and restrictions as a PRC user INCOME The Income page is a simple table that allows you to define a detailed income profile with up to 10 sources of income for each scenario With this information PRC will create an income profile that represents your annual income level for every year for the rest of your life and that profile is represented by one of the lines on the graph on the Home page Be aware that the page title identifies which of the three scenarios this data is associated with INCOME STREAM DEFINITION Scenario 2 in the screenshot below This will always correspond to the most recent scenario selection made on the Home page PRC2015 Silver User s Manual Income Definition Expense Definition Tabular Projections Clear Income Table Personal Company Annual A TNS ies Fixed Contribution Contribution Personal Stop Amountin Increase Contribution Converted Income Streams E Annual to Tax to Tax Taxable Future s Age Today s Relative to to Roth to Today
9. s Increase Deferred Deferred Inflation Savings Savings Savings Employment income 5 0 5 0 30 Joe s Social Security 8596 Barb s Social Security 8596 The following is a line by line description of the fields in the Income table above Income Streams This is simply a description field where you can enter a brief description of each of the income sources Whose This field contains a pull down menu containing your name and your spouse s name if applicable Since the start and stop times for each income source are specified in ages rather than being tied to certain years PRC needs to know whose age is being specified Start Age and Stop Age This is the age of the person selected in the Whose field in the year the income source is expected to begin and end respectively Amount in Today s S Use this field to specify the income amount in today s dollars and it will be adjusted over time in accordance with one of the next two fields Note on annual income adjustments PRC Silver allows you to specify income sources with annual adjustments based on inflation or based on fixed rates independent of inflation If the income is a function of inflation you should use the Annual Increase Relative to Inflation field if it is not a function of inflation you should use the Fixed Annual Increase field You need to be aware that only one of these fields can be chose
10. 369 7 500 3750 2 858 732 120 45 454 780 432 2026 66 61 12 750 152250 165 50 000 2550 33 112 582 115 330 746 199 46 328 907857 2027 67 62 18870 3 330 6 654 60 000 3774 1 331 36 251 74 643 760 549 47219 882 412 2028 68 63 18870 3 330 4 306 560000 3 774 861 38 129 33 644 775 175 48 127 856946 2029 69 64 18870 3 330 1 941 60 000 3 774 388 40 021 7 672 782 410 49 053 831 463 2030 70 65 18870 3 330 27 457 60000 10 741 21 084 21 084 748916 49 996 798 912 2031 71 66 18870 3 330 27 174 60000 5504 16 130 16130 720014 50958 770 972 2032 72 67 18870 3 330 27044 60000 5098 15 854 15 854 690 962 51938 742 900 2033 73 68 18870 3 330 26898 60000 5064 15 966 15 966 661386 52936 714322 2034 74 69 18870 3 330 26 721 60000 5 058 16 138 16 138 631247 53 954 685 201 nas 75 7i IRRIA a333n 2R SNS amp nnn SASA EEFC z 16342 RANS 54022 RSS 524 You can see that the example just above is illustrating the same cash flow situation but in this case PRC covers the negative cash flow with additional withdrawals from tax deferred savings starting in the year 2029 NUANCES ASSOCIATED WITH THE WINDOWS VERSION OF PRC PRC2015 Silver for Windows is Self Registering PRC2015 Silver for Windows self registers itself to the computer it is first downloaded to It cannot be copied to another computer Operating the
11. Contributions to Tax Deferred Retirement Savings 96 If the income source is employment income and your company is contributing a percentage of your income to tax deferred savings you can enter the percentage value in this field Otherwise just leave it blank Personal Contributions to Roth Savings If the income source is employment income and you are contributing a percentage of it to Roth savings you can enter the percentage value in this field Otherwise just leave it blank Note All of the previous three fields can be used on the same income source Taxable With this field you can tell PRC the percentage of the income source that is taxable Examples For each of these examples you can refer to the screenshot below e Employment income is generally 100 taxable however if you are contributing 1096 of that income to tax deferred savings then it is only 9096 taxable In this case you d enter 9096 in this field e Social Security benefits are taxable if your benefits exceed certain thresholds depending upon your filing status A maximum of 8596 of your benefits are taxable worst case In this case you d enter 85 in this field e inheritances are exempt from income taxes unless they exceed a multi million dollar threshold so if you re modeling inheritance enter 096 in this field e f you re modeling the sale of your home and your profit falls beneath the capital gains exemption level you won t have to pay any capital gai
12. PRC2015 Silver User s Manual Table of Contents INTRODUCTION c 2 PRG SILVER DESIGN PHILOSOPHY iiec rone oreet erp een en eee RR Re ee eR VERRE een Ka Tee in ur eee nae Na weh Ra 2 OVERVIEW 3 STRUCTURE ep EE 4 MORE ON SCENARIOS c n 4 COMMON FEATURES OF ALL PAGES cesseessceseeeseeeeeeeeneeeeeeeneeeaeecaaecaaecaaeceaecaaecaeeaeeseeseeeseaeeeaeesaeesaeeaaes 5 PAGE BY PAGE DISCUSSION akaa aani 6 Qs 6 dcdit e e eee 6 Scenario Sel ction and Copy iiti eee base teta eee ea baci e eee eee aac ee ua ere e eade i Tea RERO 6 Demograbphits sse iet ten desiit eniti Ee item e E Ei II 7 Inflation ASSUMP ONS eeann nenea uae ees eco eae ei sedge Rae a a aAa Qon dc pese deger QUE Er ve INT 7 M giri det 8 SaViNBS ASSUIM PUlONS REC DEL DL C T DLL LLL 8 Growth and Decline of Savings Categories sesssssssssesesesee ennemis nnne n neris ansias 8 Other Buttons on the Home P gen nessieira enee niea ea eae anaE E andea Easa Canaan aa an ERa 9 INCOME 9 EXPENSES meren H E 12 Uim adeldenep m 13 NUANCES ASSOCIATED WITH THE WINDOWS VERSION OF PRC scceseeeseceeceeeeeseeeeeeeee
13. axes on the growth of regular savings e cash flow which is simply the annual difference between total income and total expenses e personal and company contributions to tax deferred savings and personal contributions to Roth savings e withdrawals from tax deferred and Roth savings that are associated with covering negative cash flow situations e annual balances on regular tax deferred and Roth savings as well as the grand total amount in overall savings If you have money invested in tax deferred as well as Roth accounts and want to investigate the optimum withdrawal strategy the Tabular Projection page has a feature to make it easy it contains a button that changes the withdrawal strategy with each click so you can immediately observe the effects of one strategy versus the other Here s a screenshot showing this button with the withdrawal strategy set to Roth Before Tax Deferred Change Currency Units Change Withdrawal Order 2023 63 58 67 500 7 500 119 50000 13 500 24 345 7 500 3 750 2 320 6904175 36 466 728962 2024 64 59 67 00 7 500 134 50000 13500 27 357 7 500 3 750 2 588 710 948 40 917 754 453 2025 65 60 67 500 7 500 149 50 000 13500 30 369 7 500 3 750 2 858 732 120 45 454 780 432 2026 66 61 12 750 152250 165 50 000 2550 33 112 582 115330 746199 46 328 907 857 2027 67 62 18870 3 330 6 654 560000 3 774 1 331 36251 74 643 760 549 47219 882 412 2028 68 18 870 3 330 4 306
14. d also supports three mostly independent scenarios but it goes further by presenting side by side and overlaid comparisons of scenario analysis results OVERVIEW PRC Silver is the result of an engineering design process to provide a high fidelity calculator in an extremely easy to understand and easy to use package Like any calculator what it does is just math It collects certain information from you does the math and then presents the results What makes it unique is e The depth of user control it provides coupled with a user friendly interface o Expected best and worst case inflation rates o Expected best and worst case rates of return for each of three savings categories tax deferred Roth and regular o Annualadjustment of up to 10 income stream can be dependent on or independent of inflation Taxability of each income stream can vary from 0 to 100 Separate effective income tax rates for each of two user selected time periods with separate rates for earned income and investment returns Accommodates up to 30 fixed or inflation adjusted expenses Withdrawal priority Tax Deferred before Roth or Roth before Tax Deferred is under user control and can be toggled back and forth from either the graphical display or the tabular display to enable immediate assessment of the associated effects o Currency units today s dollars or future dollars are user selectable e Contributions to and withdrawals from savings are always accumulation
15. eeeeeeeaeeeaeeeaaeeaaes 15 PRC2015 Silver for Windows is Self Registering c cccssccesssccssscecssececsceceseecsseeecsaecesseeceseeeeaeeecaaecesees 15 Operating the PRC2015 Silver Application 15 How to know whether you have the 32 bit or 64 bit version of EXCEl ccccccccccecessesssseeeeeeseessessnaeens 15 NUANCES ASSOCIATED WITH THE MAC VERSION OF PRC isses enne nnne nnn nennt nnne 16 PRC2015 Silver for Macs is Self Registering c cccssccccsscceescecsssceessececseecesseecsaeeecsaececseeesseeeesaeeseaaeceseees 16 Operating the PRC2015 Silver Application nnne enne ern nnn ens 16 GETTING UPDATES ciiise 16 PRC2015 Silver User s Manual INTRODUCTION Pralana Retirement Calculator PRC Silver Edition is designed to occupy the space between free low end on line calculators and Pralana s high end PRC Gold calculator It offers much more than the quick and dirty assessments available with the on line calculators but lacks the robustness of PRC Gold PRC Silver is a high fidelity tool designed to model your financial future with rich details and then provide useful outputs that will provide insight into the possible range of outcomes to help you make decisions This manual is intended to help you get to know PRC Silver and learn how to get the most out of its capabilities We ll begin by sharing with you the design philosophy of PRC Silver then provide an overvi
16. enable you on the Income page to specify income start and stop based on your age rather than by year If you don t have a spouse just enter a blank with the DELETE key Spouse Age This is your spouse s age as of Jan 1 of the specified starting year All computed PRC outputs are as of year end but the age column will reflect your spouse s age at the start of the associated year If you don t have a spouse just enter a blank with the DELETE key Life Expectancy Enter the maximum ages to which you and your spouse expect to live PRC models a death occurring on Jan 1 of the year in which the specified Life Expectancy is reached Recall that PRC advances age on Jan 1 refer to Your Age description Inflation Assumptions Nominal This is average general inflation rate that PRC will use to generate the Income Expenses and Savings Average lines on the graph as well as the data shown on the Tabular Projections page Best This is the best case general inflation rate that PRC will use to generate the Savings Best Case line on the graph Worst This is the worst case general inflation rate that PRC will use to generate the Savings Worst Case line on the graph PRC2015 Silver User s Manual Tax Assumptions Notice that PRC allows you to specify your tax assumptions for two separate time periods referred to as Period 1 and Period 2 These periods are defined based on their starting years Period 1 begins in the Starting Year as previousl
17. ew of its operation then explain how it s structured and then address the details PRC SILVER DESIGN PHILOSOPHY Most of us understand that the future is inherently unpredictable yet many of us still desire an effective tool to assist us in making key financial and lifestyle decisions that will shape our future despite the uncertainties PRC meets that desire with this design philosophy e Effective financial and retirement planning is not a one time endeavor so make the planning and analysis process as painless as possible for the user Have the tool save the user s data from one planning session to the next make it easy to understand and use and make it fast and interactive t is very similar to PRC Gold in this respect but considerably easier to understand and use e There is high value in basing projections on detailed inputs rather than rough estimates despite uncertainties in future rates of inflation rates of return life expectancies and so on Enable the user to define key assumptions income streams and expenses in as much or as little detail as desired Further never ask the user to specify how much he she plans to save or how much he she will need to live on Rather apply this simple concept for every year in the projection assume that income minus expenses determines contributions to or withdrawals from savings and then grow or shrink the savings balances in accordance with this and the user s inflation and investment assumpt
18. ions It is virtually identical to PRC Gold in this respect e Taxes need special treatment since they are a big lifetime expense and are commonly not a consistent percentage of a person s income over time Provide the user with the ability to specify the taxable percentage of each income stream and separate tax rates for each of two selectable periods of time with separate tax rates for earned income and interest income In contrast PRC Gold contains tax tables and performs detailed tax calculations users do not specify effective tax rates e Since the future is inherently unpredictable an effective mechanism needs to be provided to enable the user to quickly and easily investigate the sensitivity of the plan to the major PRC2015 Silver User s Manual unknowable variables Allow the user to specify a confidence interval using nominal best and worst case values for inflation and rates of return and then generate separate projection for each set of values To simplify analysis simultaneously present all results on the same graph In contrast PRC Gold uses three different analysis methods to generate a range of likely outcomes fixed rate Monte Carlo and historical analyses e To facilitate a decision making process and sensitivity analyses the tool should make it easy for the user to define and compare major alternatives as well as small variations Support the detailed definition of three independent sets of inputs scenarios PRC Gol
19. n for a given income source and as a result both fields will be highlighted with a red background if they both contain non blank inputs On the other hand if both contain blanks the income level will remain at a constant level in terms of future dollars over the entire span of that income source Annual Increase Relative to Inflation Enter a zero if the income is adjusted at the same rate as inflation Enter a positive value if it gets adjusted faster than inflation or a negative value if it falls behind inflation Fixed Annual Increase Enter the specific percentage value by which the income is to be adjusted each year Here are some examples and you can reference the screenshots above and or below 10 PRC2015 Silver User s Manual e Example 1 To model employment or Social Security income that exactly tracks inflation just enter a zero in the Annual 96 Increase Relative to Inflation field e Example 2 To model pension income with a specified COLA level such as 2 just enter 2 in the Fixed Annual 96 Increase field e Example 3 To model fixed annuity income that remains at a constant level forever just enter a zero in the Fixed Annual Increase field Personal Contributions to Tax Deferred Retirement Savings If the income source is employment income and you are contributing a percentage of it to tax deferred savings you can enter the percentage value in this field Otherwise just leave it blank Company
20. narios PRC2015 Silver User s Manual You can use PRC Silver and never give any thought to scenarios and never once click any of the six buttons associated with them When you receive PRC Silver the multiple scenario mode will be disabled and Scenario 1 will be active and is truly all you need to establish and evaluate your financial plan and then do all sorts of what if s with it In fact this is the very reason we made the scenario related buttons appear as they do to almost make them invisible for users who didn t want to bother with the additional complexity Further all of these buttons will be disabled when the multiple scenario mode is disabled to prevent you from accidentally switching scenarios With that said the multiple scenario mode can be enabled by clicking the toggle button labeled Enable Multiple Scenarios on the lower right edge of the Home page As you click this button multiple times you should notice that the indicator just above the button alternates between Enabled and Disabled When it is enabled the six scenario related buttons in the upper left side of the Home page will be functional Please see the description of the Home page for the use of these buttons COMMON FEATURES OF ALL PAGES All PRC pages are color coded in a similar manner fields with a white background and dark blue font are your data entry fields fields with a dark blue background and either white or yellow fonts are descriptions or fields
21. ne expeditiously and you will be notified via an e mail when the download is available for you At that time you will be given a link through which you can initiate the download 16
22. ns taxes Therefore enter 096 in this field 11 PRC2015 Silver User s Manual empl inc ss ss inheritance downsize home pension S CONVERTER PRC Silver expects your income amounts to be specified in terms of today s dollars however there may be cases where you know the amount in terms of future dollars and need some help in converting it to today s dollars for example pensions are commonly defined in future dollars Therefore in conjunction with every row in the Income table PRC Silver provides a convenient dollar converter to help you with this conversion To use it just enter your Future value and PRC will convert it to today s based on the current age and future age of the associated person Then you ll just need to note the amount in the Converted to Today s S field and enter it into the Amount in Today s S field EXPENSES The Expenses page is another simple table that allows you to define a detailed expense profile with up to 30 separate expense items for each scenario As with the INCOME page the page title identifies which of the three scenarios this data is associated with EXPENSE STREAM DEFINITION Scenario 3 in the screenshot below This will always correspond to the most recent scenario selection made on the Home page F ES Income Definition Expense Definition Tabular Projections Clear Expense Table i Adjust for Description Amount First Year
23. one field demands a corresponding entry in another field Considerable care has been taken to minimize the keystrokes and clicks required to get your data entered so you won t find many pull down menus and you ll find check boxes for yes no types of inputs and toggle buttons for selecting mutually exclusive functions such as whether to display results in today s dollars or future dollars PRC2015 Silver User s Manual The clock for PRC ticks once per year So all income and expenses for a year should be entered as Jan 1 values Alternatively if it is nearer to the following year you can enter the starting year equal to the following year on the Home page and enter current savings figures which may be nearer to the following year s starting values PAGE BY PAGE DISCUSSION HOME As stated above the Home page is where you define your age and the major variables typically associated with what if exercises life expectancy inflation and rates of return It also contains a graphical projection of its output to enable you to easily make changes to these key variables and instantly observe the effect on the projections Here s a screenshot Income Definition Expense Definition Tabular Projections Modeling period begins in year 7 Change Currency Units d Select Scenario 1 Select Scenario 2 Select Scenario 3 Copy Active to Scenario 1 Copy Active to Scenario 2 Copy Active to Scenario 3 Demographics Joe Barb Current Age 50 Life Ex
24. pectancy Period Start Years Tax Rate on Earned Income 20 0 Tax Rate on Regular Savings 20 0 8 3 Income Expenses Savings Expected Savings Assumptions Starting Balance Expected ROR Best Worst Savings Best Case Savings Worst Case Tax Deferred Accounts Roth Accounts Regular Accounts Change Withdrawal Order Hide Excel Menus User Support View License The following is a field by field discussion of the data entry fields on the Home page shown above Starting Year Modeling Period Begins in Year This field tells PRC the year you wish the modeling to begin and it assumes January 1 of the specified year This year will be the basis for determining today s dollars Scenario Selection and Copy PRC Silver allows you to define and analyze three completely independent scenarios however it only does one scenario at a time The currently active scenario number is displayed above the graph in the screenshot above note that the title over the graph is GRAPHICAL PROJECTION Scenario 3 The first row of buttons just beneath the starting year field allows you to select the scenario you wish to define and or analyze Anytime you click one of these buttons you ll notice that the scenario indicator above the graph changes to correspond to the scenario you just selected All data displayed on the Home page PRC2015 Silver User s Manual is associa
25. phase as well as distribution phase a function of annual cash flow e Synchronization is maintained between three interdependent savings account categories tax deferred Roth and regular despite long term negative cash flow situations and withdrawal priorities e Extensive output displays in both graphical and tabular form and the transparent manner in which it generates outputs from the user s inputs e Simultaneous generation and display of projections based on expected best and worst case values of the major unknowable parameters of inflation and rates of return e Ability to create and analyze three completely independent scenarios 3 PRC2015 Silver User s Manual e Ability to save your data from one planning session to the next STRUCTURE PRC Silver is partitioned into four pages e Home e Income e Expenses e Tabular Projections The Home page is where you define your age and the major variables typically associated with what if exercises life expectancy inflation and rates of return It also contains a graphical projection of its output to enable you to make changes to these key variables and instantly observe the effect on the projections The Income page allows you to define a detailed income profile with up to 10 sources of income for each scenario The Expenses page allows you to define a detailed expense profile with up to 30 separate expenses for each scenario The Tabular Projections page contains a tabula
26. r view of PRC Silver s output projection for the active scenario including income expenses taxes cash flow and year by year savings balances Navigation between these pages is done via the blue buttons at the top of the screen The current page is indicated by the bright blue button You ll also notice two icons on every page one at the upper left and one toward the upper right The one on the upper left is the Save icon Just click it anytime you wish to save your work The x icon toward the upper right is the Exit icon Click that whenever you re ready to quit working on your file PRC Silver will always do a Save before it exits to be sure your work isn t lost MORE ON SCENARIOS A scenario is defined to be the complete set of user input fields on the Home page the Income page and the Expenses page and the corresponding projections created by PRC in response to those inputs The concept of multiple scenarios simply means that there can be multiple different versions of the data on these pages and that the tool is capable of managing and working with these different sets of data The purpose of multiple scenarios is to enable you to create and evaluate different versions of your plan and maintain them over time within a single copy of the PRC Silver file The alternative is to make a separate copy of the PRC file for each version of your plan Both methods work fine but your file management chore is easier when the tool handles multiple sce
27. t all ROR fields are for nominal not inflation adjusted values Tax Deferred Accounts Use these fields to enter the starting balance expected best and worst case ROR for your tax deferred 401k and traditional IRA accounts Roth Accounts Use these fields to enter the starting balance expected best and worst case ROR for your Roth 401k and IRA accounts Regular Accounts Use these fields to enter the starting balance expected best and worst case ROR for your regular normally taxable accounts Growth and Decline of Savings Categories For every year in the projection PRC determines your overall cash flow by subtracting total expenses from total income Positive differences result in contributions to regular savings and negative difference result in withdrawals from regular savings Therefore the growth or decline of regular savings is a function of the rate of return specified for regular savings and your annual cash flow If and when the balance of regular savings goes to zero PRC will attempt to make up any residual negative cash flow by making withdrawals from tax deferred or Roth savings accounts That s why we said above that the three savings categories are interdependent PRC provides you with a control to specify your preferred order of withdrawals from tax deferred and Roth accounts when regular savings is depleted If you specify that PRC is to take tax deferred savings before taking Roth savings negative cash flows will be
28. ted with the selected scenario and it will be automatically saved within the PRC file anytime you select a different scenario to view Note at any single point in time all four pages of PRC Silver are associated with the same scenario and the number of that scenario is identified on each of those pages When you elect to change the scenario which you do from the Home page all four PRC pages will reflect the corresponding component of the selected scenario The next row of buttons allows you to copy the active scenario into either Scenario 1 2 or 3 With this feature you can establish your basic scenario Home Income and Expense pages copy it into the other scenarios and then edit the other scenarios rather than having to enter all the data manually into all three scenarios Demographics Your Name Entering your name here will enable you on the Income page to specify income start and stop based on your age rather than by year This design choice was made because you probably have a particular retirement age in mind and you probably have a good idea of the age at which you plan to start Social Security benefits but you may not know the year in which those events will occur Your Age This is your age as of Jan 1 of the specified starting year All PRC computed outputs are as of year end but the age column will reflect your age at the start of the associated year Spouse Name As with your name entering your spouse s name here will
29. to know whether you have the 32 bit or 64 bit version of Excel When purchasing a Windows version of PRC it s important for you to know whether you need a 32 bit or a 64 bit version and it s dependent upon the version of Excel you re running To determine this bring up your version of Excel and click on the Help menu On that screen you should see a block of text 15 PRC2015 Silver User s Manual entitled About Microsoft Excel Under that heading you should see the Excel version and it ll read something like 14 0 7158 5000 32 bit or 14 0 7158 5000 64 bit This 32 bit or 64 bit designator is what you re looking for and you should get a corresponding version of PRC NUANCES ASSOCIATED WITH THE MAC VERSION OF PRC PRC2015 Silver for Macs is Self Registering PRC2015 Gold for Macs is a normal Excel file that self registers itself to the computer it is first downloaded to It cannot be copied to another computer Operating the PRC2015 Silver Application PRC2015 for Macs operates just like a normal Excel file except that Excel menus are not required and are normally hidden PRC icons are provided for Saving and Exiting GETTING UPDATES When you want to download the latest version of PRC just visit the User Support page on the pralanaretirementcalculator com website and submit the update request form At this time our updates involve manual intervention and consequently are not provided instantaneously however they will be do
30. y defined and Period 2 begins in the year you specify on the row labeled Period Start Year For each period PRC allows you to specify separate tax rates for earned income and for interest on regular savings Tax Rate on Earned Income This is the effective tax rate on your earned income such as your salary pension and Social Security income Effective tax rate is determined by dividing your total federal state and local income taxes and your FICA taxes by your Adjusted Gross Income Tax Rate on Regular Savings This is the effective tax rate on the earnings from your regular savings which may differ from that on your earned income if you have tax free investments or investments taxed as capital gains If the earnings on your savings is taxed as regular income just enter the same value you used for Tax Rate on Earned Income however do not leave this field blank if you have specified a non blank Period Start Year If you do enter a blank in this field it will be highlighted in yellow to warn you that you ve told PRC not to tax the earnings on your regular savings Savings Assumptions Notice that PRC allows you to define your assumptions for three interdependent savings categories tax deferred accounts Roth accounts and regular accounts For each account category data fields are provided through which you can specify the starting balance and the expected rates of return ROR along with best and worst case ROR alternates Please note tha
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