Why do mortgage payments decrease in quicken lifetime planner

The Quicken Lifetime Planner provides good guidance for my retirement planning, but I have a question regarding Quicken income and expense as it relates to inflation.

I noticed Other *Income* can be adjusted for inflation and the Plan Summaries for each year will track these decreasing amounts. Social Security *income* is not adjusted for inflation and the Plan Summaries for each year will track this static amount (there is an option to lower these payments by an flat percentage rate, but the amounts still remains the same each year).

Living *Expenses* are not adjusted for inflation and the Plan Summaries for each year will track this static amount. My question is specifically related to mortgages that are tracked in the Lifetime Planner. The mortgage *expense* is handled outside of the Living Expenses and clearly called out by Quicken as not included in the Living Expense bucket. But the amounts associated with the mortgage continually decrease each year in the Plan Summaries.

Mortgage Payments Actual Excel Quicken Average Delta Total Delta
2021: Mortgage A ($23,174) ($22,499) $675 $675
2021: Mortgage B ($15,703) ($15,246) $457 $457
2022-2024: Mortgage A ($23,174) ($21,214) $1,960 $5,881
2022-2024: Mortgage B ($15,703) ($14,375) $1,328 $3,985
2025-2027: Mortgage A ($23,174) ($19,414) $3,761 $11,282
2025-2027: Mortgage B ($15,703) ($13,155) $2,548 $7,645
2028-2033: Mortgage A ($23,174) ($17,013) $6,162 $36,970
2028-2033: Mortgage B ($15,703) ($11,499) $4,204 $25,223
2034-2042: Mortgage A ($23,174) ($13,652) $9,522 $85,701
Grand Total $177,818

I just want to confirm this is the intended way to track this, since I also use Excel to plan a more detailed budget (breaking out the Living Expenses), and the delta between the Lifetime Planner and my Excel calculations is significant, and related specifically to only this issue. I can align all other data, other than the mortgages. If I should adjust my annual mortgage amounts in Excel (and not Living Expenses), I'd like to know why. Appreciate your feedback!

Comments

  • markus1957
    markus1957 SuperUser, Windows Beta Beta
    The default mode for LTP displays results in today's dollars.  In that mode living expenses and income tied to inflation don't change year to year; inflation is shown as a line item that decreases the value of your assets.  It's the "Will I really be better off in the future than I am today?" mode.

    If you set LTP to show in future dollars (gear icon in upper right corner), then you will see living expenses and income increase.  For me, future dollars is easier to wrap my feeble brain around, but I understand the logic for today's dollars.  An increased net worth of $100K in 50 years just might also be the poverty line.


  • djack43
    djack43 Member ✭✭
    Thanks Marcus, for your response including your tip about the different types of inflation using the gear icon in upper right corner.

    Specifically, I'm wondering why some expenses like *Mortgage Payments* are adjusted for inflation while *Living Expenses* are not adjusted:

    Income Expense
    Adjusted Other Income Mortgage Payments
    Not Adjusted SSI Living Expenses

    I think I understand why *Other Income* is decreased annually, since the annual increase that I entered for this income is less than the estimated inflation rate of 3% that I entered in the planner. And Quicken is probably making an assumption that the government will adjust SSI to keep up with inflation (pretty big assumption). I'm hung up on why expenses aren't treated the same in the planner. If I need to adjust the annual mortgage payments for inflation in my Excel model (and not Living Expenses), I'd like to know why. Appreciate your feedback!
  • markus1957
    markus1957 SuperUser, Windows Beta Beta
    If you could post a couple of screen shots of consecutive yearly detail from LTP, it might help.  I'm an old guy no longer carrying a mortgage, but I don't recall it as an issue when I had it.
  • djack43
    djack43 Member ✭✭
    Thanks for your continued responses Markus. A screenshot that includes the mortgages for 2027 is below. I've transcribed the annual Quicken Summaries into Excel and included a portion below for review:

    2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
    Mortgage loan for 7397 Prindiville Drive $21,243 $22,499 $21,844 $21,208 $20,590 $19,990 $19,408 $18,843 $18,294 $17,761 $17,244 $16,742 $16,254 $15,781
    First loan for 7399 Prindiville Drive $14,395 $15,246 $14,802 $14,371 $13,952 $13,546 $13,151 $12,768 $12,396 $12,035 $11,685 $11,344 $11,014 $10,522
  • markus1957
    markus1957 SuperUser, Windows Beta Beta
    Looks like a combination of inflation and possibly the offset of principal reporting to the value of the asset.  Enter a sale date before you die and see if the combination of worth at the sale year and the payoff of interest make sense.
  • djack43
    djack43 Member ✭✭
    Thanks for this suggestion Markus. I thought about the 3% expected growth rate for my properties affecting the mortgage calculation, but this growth rate only affects the property tax (which WILL continue to rise so I need to keep it at 3%). I'll play around with the sale dates this weekend and let you know if the combination of worth at the sale year and the payoff of interest align. The sale is going to blowup my income/savings, so any further guidance on where exactly to look for these figures in the Annual Summary categories (after the sale) would be appreciated. Not sure I fully understand the principle here.
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