Lifetime Planner Plan Summary

Bob1728

I want to make sure I am reading the lifetime planner plan summary report correctly, specifically for the first year of the plan. It looks like the income and expense summary sections are annual numbers rather than remainder of the year numbers. In other words, as long as I don't change assumptions these numbers will be the same whenever I run the report this year. But the Portfolio Value section of the report starts with the portfolio value as of the day the report is run, so the ending portfolio value will change every time the report is run if the actual portfolio value is updated. This does not seem right to me. If the income and expenses are on an annual basis I would expect the starting portfolio value would be the value as of the end of the prior year. If you start with the value of the portfolio as of the day the report is run, and add to it a full year's worth of deposits and gains aren't you adding in deposits and gains already reflected in that starting value? What am I missing in my interpretation of this report. I'm using Windows Classic version RS4.9, Build 27.1.54.9. Thanks!

Scooterlam

LTP starts off using your current portfolio value, for a particular account type, to calculate various annual incomes and expenses for the entirety of the plan.

Deposits are prorated by month in the current year

Gains (or rate of return) are also prorated by month in the current year.

Income and Expenses are prorated similarly.

For January 2024, the prorated amount is 12/12 or 1. Since it is currently January, you will see the entire expected gain and deposit.

For February 2024, the prorated amount is 11/12. In February, you will see 11/12 the expected annual gain and deposit.

This proration continues until December of the current plan year, where you will see 1/12 the expected annual gain and deposit.

So, in essence, for the current year, gains and deposits are prorated, based on a fluctuating investment balance.

You can see this by adjusting your windows system date for future months in 2024 and re-inspecting the plan summary table for 2024.

The only wrinkle that I just discovered is that in the current year only, LTP appears to prorate inflation by month of the year even though the Plan Summary table indicates inflation is $0! Still looking into this.

I have illustrated the math in a past post but will update and share this "wrinkle", if there is interest.

Just FYI, many planners, consumer and professional, work this way. That is use the daily portfolio balance as a starting point for the rest of the plan and prorate various input for the first year.