Income and expenses Preview

Income is money coming in from work or a pension; expenses are what you spend to live. Enter both as yearly amounts in today's dollars. Social Security, RMDs, taxes and Medicare premiums are calculated for you - don't enter them here.

Screen in progress The picture is a mockup of the planned screen. The fields, choices and rules below are already used by the planner's calculations.

Income

Field	Meaning
Category	Groups your income (Wages and Pensions to start). Categories are only for organizing; they don't change the calculation.
Description	A name such as "Jordan salary". It appears in the results.
Start, End	The first and last year the income is paid (both included). Pick a calendar year or a plan milestone. New rows start at `SOP` (start of plan) and end at `YODALL` (last life expectancy year).
From	Who earns it. Choose a tax payer for wages, or a tax payer's Pension for a pension.
To	The account the money is paid into. It must hold at least one investment; the money is split between its investments by their Mix.
Amount	Yearly amount in today's dollars, before taxes.
Inflation rate	How much the amount grows each year. It defaults to the plan's general inflation rate. Use 0% for a pension without cost-of-living raises.

Wages and pensions follow the retirement age

Wages are paid only in the years before the tax payer's retirement year, and only between Start and End. They are reported on Form 1040 line 1a.
Pensions are paid from the retirement year on, between Start and End. They are reported on line 5a and taxed as ordinary income.
Both stop after the tax payer's life expectancy year.

Because wages already stop at retirement, a salary can simply run from SOP to YORTP1. When the optimizer tries a later retirement age, the salary automatically runs longer.

No tax withholding Income is paid in full. The planner works out each year's federal and state tax at the end of the year and pays it from your accounts with Auto.

Expenses

Field	Meaning
Category	Groups your expenses (Essential and Discretionary to start).
Description	A name such as "Groceries" or "Travel".
Start, End	The first and last year of the expense (both included); a calendar year or a milestone.
From	Auto (recommended) or a specific account. If that account runs short, Auto pays the rest.
To	Always Living Expenses.
Amount	Yearly amount in today's dollars.
Inflation rate	Defaults to the general inflation rate. Healthcare often inflates faster.

Paying an expense is a withdrawal. Selling from a brokerage account can create a capital gain, and taking money from an IRA or 401(k) is taxable income. The planner adds these to the year's taxes. See withdrawals and Auto.

Choosing start and end years

The start and end year picker: plan milestones on top, calendar years with ages and events below — The start / end year picker. Milestones (top) move with the scenario; calendar years (bottom) are fixed.

Click the button in a Start or End cell to open the picker. The top list has the plan milestones with the year each falls in and each tax payer's age; the bottom list has every plan year with the ages and what happens that year (retirement, Social Security, RMDs, life expectancy). Read more in plan milestones.

Checks before a run

When you run the plan, it stops with a message if:

an income's From is not a current tax payer or pension;
an income's To is not an account with at least one investment;
an expense's From is neither Auto nor an existing account;
a Start or End is not a valid year or milestone.