Lifetime Planner - taxable withdrawals

createplayact

Just downloaded Quicken and playing around with the Lifetime Planner tool. I'm confused because this Quicken tool is projecting far less of a return over 10, 15, and 20 years than my own projections. I believe it is because of the line item "Withdrawals - Taxable" in Quicken. Namely, why is it reflecting any number in this field before retirement? The model is projecting a not-insignificant Taxable withdrawals number every year. Where is this number coming from?

Thanks for any assistance.

mshiggins

If your annual expenses exceed your annual income, the Lifetime Planner will withdraw funds to cover the shortfall for that year. 

Chris_QPW

Withdraws is the "shortfall" in what you have predicted for your income vs expenses (Total Income (not including Withdraws) - Total Expenses = Withdraws)
.
Withdraws - Taxable opposed to your/spouse tax-deferred withdraws says that it is taking the money out accounts that you have already paid tax on like you checking/savings accounts oppose to your retirement accounts (which it won't touch until the date you set for retirement)

Scooterlam

You can evaluate the cause of this shortfall by drilling down from the plan results graph, for a given year, to see your income and expenses.  Double click on a bar to show the Plan Summary for that year. See image.  Perhaps by inspecting the Plan Summary tables, you can see where your expenses are exceeding income and causing this unexpected taxable withdrawal.   Could you be excluding income or perhaps double dipping on expenses?



If you haven already found Quicken's help topic on LTP, have a look.   Its a good starting point.  In LTP, click on Planning Assumptions and in the new window, click on "How Do I".

createplayact

Ah, thank you. I see it now. It appears that my "savings" category is classified as an expense and so was driving my expenses higher than I anticipated. Also, we are in a much lower effective tax rate than the estimate used because of child tax exemptions, etc.

Thanks for all the help!

Chris_QPW

Thanks @Scooterlam I mistakenly thought that @createplayact was already looking in the "drill down" table and as such didn't provide that detail.

Scooterlam

@Chris_QPW I think you're right given the reference "Withdrawals-taxable".   Looks like there was an expense issue with OP.  While there's a lot to unpack in that Plan Summary table, it's pretty useful at finding strange-ness.  I just wish Quicken could produce a more comprehensive, tabular report that shows all years together for income, expense, accounts, taxes et al!

createplayact

I do like the model, for the most part. Simple but enough key details to make it usable. It would be nice to be able to set different growth rates for different retirement accounts. Having fun playing with different variables.

Scooterlam

createplayact said:

I do like the model, for the most part. Simple but enough key details to make it usable. It would be nice to be able to set different growth rates for different retirement accounts. Having fun playing with different variables.

In terms of growth rates for differing accounts, I am afraid that Lifetime Planner only allows you to distinguish pre vs post retirement and taxable vs. non-taxable (both yours and spouses) rate of returns.   Maybe helpful given your situation.




If you haven't already found this thread and want to improve LTP, have a look and vote!    Note that some of the links have been lost due to Quicken's migration to new community software....Perhaps the posts will be useful to you as you get to know LTP.

https://community.quicken.com/discussion/7713110/lifetime-planner-bug-and-idea-list-make-yourself-heard