A Mock Meeting with Income Lab: Advisor Panel Discussion - July 2023

thank you Taylor uh and welcome everybody I want to thank our panelists

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today two advisors Eric urbanian and Beth Ann Johnson for uh joining us and

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and being really um willing to to share some of their experiences with income lab and how they

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have presented different different uh plans they've created there this is one

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of the uh the webinars that we get the most requests for and uh so I'm really

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excited to do this um my goal here is that we can provide some

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really real world examples of client presentations so hopefully we'll kind of Hit the right mix of high level but also

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you know these are real situations where you know they've been anonymized but um they will have their quirks as every

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situation does but the goal is that other uh advisors who use income lab and

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those who are considering income lab can see how to talk about retirement income planning with their clients in sort of

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the the framing that income lab gives you around adjustment based planning and tax smart distribution planning and

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income adjustments and income risk and and and so on so that you know hopefully there are some some nuggets uh some

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Concepts or options um that you can that you can pull from this for your clients

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um we'll try to make this relatively conversational uh you know sometimes when we're mocking a meeting it can it

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can seem a little bit uh you know contrived but I think we'll we'll hit it right today

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um so introductions um we have Eric urbanion from rubenian financial planning

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um and Eric I thought I'd start out for both of you um just by asking kind of what your experience has been with income lab how

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long have you been using the software what what kinds of clients have you found it uh helpful for

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so I've been using the software for a couple of years but a good portion of that is has been me you know kicking the

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tires and getting really comfortable with it and in that process I've gotten

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really excited about what I think it represents in terms of what I can bring to clients uh

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the uh it's been most useful with what I'll

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call simpler cases for me so far but that's because I'm you know still

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writing the learning curve I actually feel like I'm beginning to to land in that uh and one of those is the case

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that I presented uh just a couple of weeks ago to a client that I'm going to illustrate here

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and Beth Ann uh how about you how long have you been using income lab and I guess what what kinds of uh sorry bethan

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Johnson from worth Asset Management um thank you for for joining us really appreciate it

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um how long have you been using income lab and what is the breadth of cases where you've where you found it useful

2:50

well I had background and had great uh financial

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planning tools and when I left to go independent on my own and started searching for software I've identified

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income lab and I was a very early adopter and it I saw a lot of of great

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things in it and it's actually matured so well and I've enjoyed using it very

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much so thank you all for all that you're doing with it and I

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one of the in the period of time and the very early I was able to actually win a

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very significant large client from one of the big firms that I previously been with uh that was a strong relationship

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because I was able to pull everything together all in one place and Simply

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Having a report tools such as as basic as the balance sheet going to that and

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him realizing that I could be you know the quarterback for every pretty much everything that he had going on in

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coordinating it so that was a really big win and I attributed that to the

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software tool that um and I've since used it you know for just some very basic

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Elemental cases of of why do you want to invest a little bit more aggressively

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when you're kind of behind the curve on your um asset level and and and your spending

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level is not something you want to adjust and uh things like that but this

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this case that we're doing today I'm excited about because it is you know one that's very significant I've got a

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client anyway that we'll get into but early on early adopter and a little over

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three years I guess so right right and yeah I think we've got a good mix today because Eric is going to go over a case

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a little more focused on the retirement income planning side adjustment based planning and so on and

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looking at some of the the tools in the software there and how he uh has presented them and then bethan will

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focus on a case involving tax smart distribution so it's a really nice uh nice mix

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um so with that um Eric would you mind kind of setting up the the situation and then we can you

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know go into how you um have presented the the case to the client yeah definitely hey um before I

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do that I want to add um a little something uh Beth's response to your last question made me think to your

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question of uh whom is or what kind of client is this best uh

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uh applicable for and it's really any client that you want to answer the question of how much could I spend

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because income lab provides a mechanism that allows you to answer that question

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more specifically with more actionable items so I'm looking forward to using it for all my clients then you know I'm on

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a roadmap to do that so this particular client uh is Linda he

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is 80 years old recently divorced like just a few years ago

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um fastidious a little bit intimidated about Investments she has a conservative

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nature and is extremely charitably inclined um in fact she's been very clear that

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she's willing to reduce her spending she doesn't want to reduce her commitment to

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charity which has stayed even at three thousand dollars a month among three

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charities so uh so that's the intro and I'll try to

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present this uh as if I was talking to her with occasionally the idea of um

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breaking the wall if I've got something worth sharing so uh

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so Linda I'm really excited to um look at your plan again uh

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particularly because uh you've heard me talk about some new software that I've been using that I'm really excited about

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using it's called income lab and I really think it is it represents an

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evolutionary advancement in retirement planning and the reason I say that is because

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historically we used um something you may have heard me call it Monte Carlo analysis and that was

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really great for showing this variability of returns what your Investments could get and how that um

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can impact us but um one of the drawbacks to it is

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these projections usually assume a fixed spending level uh and they run all these projections

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looking at okay if you continue to spend at that rate adjusting it for inflation

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what would happen to your portfolio and what they don't reflect is the real

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life reality which is that you're likely to adjust your spending most of my

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clients do based on what's happening if the market does really well and your portfolio is up there's a tendency to

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spend a little more and to want to spend a little more and to be able to and on the flip side if the portfolio comes way

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down there's a tendency to tighten that spending a little bit and what the software allows us to do is

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reflect that by saying okay what would I in that situation recommend spending

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wise and if you were willing to make those adjustments what would that mean over for spending over the life of your

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plan so it effectively models reality better we're really doing that on a

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year-to-year basis or whenever we meet but now we get to project it better and

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part of the reason we're able to do that is simply advancements in technology and Computing path

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so let me share my screen with you and I in that process I want to kind of

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go over a few of our inputs um so I've already put in all of your

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assets that you have the accounts that I manage and um

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also uh your income coming in from uh Social Security your Percy pension

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um made all the updates from what we've already talked about we've put in the charity as a set aside expense so we

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know we've got that covered as well as your Medicare expenses and there are a couple of areas where we

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get some flexibility in the inputs and I just want to make note of those right now the first is for your

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um initial spending level that we're going to list is desired I'm using the number that we used last year and we'll

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see um what the projections suggest um

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okay quickly breaking the ball for advisors here I've got her on a flat income path because of her age

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um if I had a longer plan I would probably have a discussion about the retirement smile spending you know the

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the idea of go go years the slogo years the no-go years in retirement in this

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case I'm I won't address that or wouldn't address that here although I

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have looked at it myself the uh other two settings so that I want

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you to be aware of is longevity and I'm assuming that you're going to outlive 80

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of your peers so we're taking a conservative approach in that regard and then this last one is income setting

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and what we're saying there to the program and you'll see I've got this set on conservative is hey let's plan for

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the idea that we are never going to have to reduce income or the amount that you're able to spend

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and let's see where it takes us and so when we do that we get an output

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that looks like this uh the first thing is here we've gathered all your assets and illustrate

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that for you here's all the assets that Schwab and the held away assets that make up part of this projection

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and then the screen I really or part I really want to focus on is the spending

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capacity this is telling us what the projections suggest under all these

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assumptions that you could spend and if we click into a little more detail

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it's suggesting that you could spend about fifty eight

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hundred dollars in addition to the set aside for Medicare

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and then increase that with inflation making adjustments if needed and so what

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would that look like um well

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for that purpose I want to flip to this screen so here we are this is with the

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amount that you pay for Medicare and so it's suggesting you could spend in total about 5900

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and that's with your asset base at 1.7 million

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if that asset base were to go up and if we were doing the projection today and asking hey has it gone up

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enough to get a to spend even more what I would tell you is it would need to increase 10 or up to 1.9 million and

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if that happened I would come to you and say hey you can actually get an increase instead of spending 59 180 for starters

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let's let's bring that up to 6600 a month on the flip side

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because we've taken this conservative approach um your assets would have to drop

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746 000 or 43 percent before I would come to you and say

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a spending adjustment is recommended of 290 dollars

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and so part of the reason it's such a small spending adjustment is we've set ourselves up for this more conservative

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approach that I referenced before and the idea is over time we will look

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at how the portfolio is doing um we'll and ask ourselves have we hit

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this ceiling or upper guard rail which would suggest time for a raise in spending or have we hit a floor and

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otherwise we're just going to keep on going with an inflationary adjustment so that's the protocol and the idea

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behind it and there's a couple of ways we could look at testing this and one is how

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would this plan have done in Prior Market environments particularly in really poor ones and we call this the

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retirement stress test okay

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and so this outlines five particular Market environments that

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over the years were really challenging for investors one is the Great Depression we've got the stagflation era

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of the 70s the global financial crisis and so on

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and so for example in this plan if we started with that 5800 or so in planned

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spending we see that represented by this light blue area

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this is our plan spending over the years increasing with inflation

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and if we had actually started in April of 1929 before the Great Depression and

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you know we don't know that that's what we're headed for but if that's what had happened then we would see that your

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income actually a few months in

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gets a bump up and I would come to you and say you could actually spend 6500

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80. and that would go carry it forward for a few years before it would actually

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drop and I would suggest a spending down to 6070 still above our initial planned

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amount and so you can see there's many years where you wherever you see a green line

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that's a bump up and a red line is a bump down

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over the whole breadth of this experience the whole life of the plan even with these bumps down in later

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years we are above the amount we planned and what's happening with each of those

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adjustments is we're hitting a guardrail so down below

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here under balance and guardrails this blue line represents

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in this experience what's your portfolio would have done over that time and the green line represents that

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stealing or upper guard rail at each one of these points in time and the red line is the lower one and

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remember we started off conservatively so we're up around here initially and so it's not until those

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few months in that we hit that upper guard rail which you can see right here that you got that increase

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so this illustrates over time and one of the worst investment environments that an investor

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could have experienced that we would have been just fine with this kind of spending and that gives me a lot of

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comfort in fact it's not just true for the Great Depression we could also look at that

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collation time of high inflation malaise in the country you may remember the gas lines

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and we see the same thing you got actual increases because we

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started off conservatively and so even when there were drops you were above what we had planned

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okay so that's if we look at how the portfolio would have done over time

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in over specifically challenging Market environments but we could also ask what

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would it look like over um the market is all over the history as a

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whole and so I thought I'd already run this but sometimes it uh brings me back to

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what's called test this plan and so this is where it takes a little bit of time and what it's

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what income lab is doing right here is it solving one of these it's running through lots of projections taking each

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point in history starting back in the 1870s and saying if this was our plan starting in retirement of this month

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and we ran along this protocol over the life of the plan and then it

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says let's do it again with the next one and it's looking at every plan period over going back to the 1870s for this

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length of a plan that's available and we see that 97 of the time

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you would have gotten to spend at least what we initially planned and three percent of the time it would have been a

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little less and when it came to the types of adjustments experienced

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you'd see that we had a on average a six percent bump every six years

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and you only had to take a cut in your spending capacity uh every 15 years

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and then we could also ask okay what kind of spending did you really get to do over

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the life of the plan and so I like looking at this screen because you know we could say from this

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that this plan historically would have provided you the opportunity to spend

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not just the 5800 or so that we saw but over time eight thousand four hundred dollars that

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that would have been the median outcome the average outcome and even if you look at some of the weaker outcomes

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we see that your average spending was above our plan now

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there were some years and some of these worst case scenarios where the spending is below what we had planned you know in

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the bottom ten percent it is below so it's not without some risk but that's

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true for any plan foreign the other thing

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that I know you have expressed as important to you is leaving some kind of Legacy even though we haven't really

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defined that we've left that a little bit open-ended and we'll see on average in this plan

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in today's dollars you would leave a legacy of five hundred thousand dollars

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and even in the lower um performing outcomes it would have been

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three hundred thousand or so so it gives me a lot of confidence in

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this plan based on the goals that we've we've talked about um but I do want to give you

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uh something else to consider here and that is coming back to this idea

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of the The Stance we take on how conservative we are we started off very

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conservative uh this is an example of where your

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power here is your flexibility in spending if you tell me Eric I'm willing

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to reduce my spending or take the a slightly higher risk that I would have

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to reduce my spending then I would say that's great that flexibility is your power and it gives you the chance to

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spend a little more on the front end and what that would look like

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is this is that range of outcomes of how conservative on the left to how

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aggressive a stance we could take if we just slid this over a little bit not

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even halfway this is what the spending and guard

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rails would look like and instead of including the Medicare spending instead

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of spending 5900 a month the projection would allow you to spend

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7 300 a month about a 24 increase in spending and notice you're still closer

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to this upper guard rail than this lower guardrail

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so let's take a look at what that would look like and I'll bring us back to

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let me share my screen so we can compare these

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so on the right here is that plan with the higher spending

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foreign look at the there's two ways to test this one way we

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could look at it in how does it look in tougher Market environments like we did before

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like the Great Depression

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so originally we were talking about spending about 5 800 and we saw

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increases along the way decreases but always staying above the blue with this one

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we start off at a higher amount and then because it is the Depression era we

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excuse me let me get into Great Depression we do see a few years in

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instead of a bumps up we see bumps down but even when we bump down here

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we're at a higher amount the 6080 that would have occurred few years in we're

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at a higher amount of spending than you would have been on this point

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we could also compare so quick aside advisors I'm ripping

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through this from time but I would probably look go through this a little bit more with the client uh okay we could also compare how this

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would look testing the plan

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so let me put both of those together here and remember in this original plan with

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a very conservative bent uh we were like very likely to be able to spend a bus

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plan here there's a slightly greater likelihood but still ninety percent of the time we're able to spend

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um more than we expected the adjustments would be a little more frequent on the

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downside but still a six percent adjustment on average every seven years

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and then if we look at the overall life of the plan

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we see in the median example you get to spend over the course of your life

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9437 a month in today's dollars versus 8 400. about a 12 increase

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an experience of what you're spending and this is true in

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or similar in the 25th percentile case but the worst cases are a little bit

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worse which is what we could expect

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similarly with Legacy the legacy is a little bit less in this scenario which is what you would

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expect because you're getting the use of more of your assets over time and

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through your life so there's a trade-off here and I'm actually comfortable with both

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of these plans if you're comfortable with them I'd like us to probably stay

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on the left side of that range that we looked at

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over here and so

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I will stop there because I threw a lot of information at you and I bet you have a lot of questions some of which you

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probably would have asked along the way Eric thank you this was this was awesome

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and uh that what you were doing there with the comparison side by side I thought was

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really powerful um there actually is a new feature that launched today that will allow you to do

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it uh on one screen in the stress test so that'll be cool um what did your I know this was a real

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client what what did the client uh decide to do from these options what sorts of questions did she ask you

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yeah so what uh so in terms of questions she asked she did ask about Legacy

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and uh so I Illustrated that here um and then she also made the comment

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when we talked about the opportunity for more income under the moderately conservative case of God that you know I

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want to do some more things with my family with my children and it's nice for me to be able to have the the money

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to be able to spend on that so this idea of getting to enjoy the money that would

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otherwise be their legacy or some of it with them uh while she is alive seemed

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to resonate for her uh I expected her to go a little bit more towards the space

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plan but in the end uh she went about 25 percent of the way there so instead of a

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24 percent bump in spending it was more like a five percent bump

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and that came because she pulled a round figure of in the end she gets this the

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money to spend this through um cash that we have her sent from her blob account and she picked a nice round

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number for that the um the other thing that was telling

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is she uh you know she's is this idea of what I think this

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Illustrated was well let me back up do I actually asked her for feedback and what she liked the most what was what made an

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impression and she said for her it was the retirement stress test for me it's this test plan more

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generally because I like to think probabilistically or try to but for her it was

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um looking at how it would have done in really poor environments and then uh lastly what she offered I

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didn't prompt her on this was this I can't thank you enough

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how happy I am you are here looking at these things and then going over it with me

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and I'm trying to understand it as best I can but I know you do and that's just client glue

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um and it also you know I had a little lift in my step for the rest of the day because I had a client selling

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appreciation over something like this and um I know it sounded like an income lab

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commercial at the beginning of my discussion of the income lab being an

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evolutionary advancement um but that's that is how I honestly

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feel and so my geeking out about this um comes naturally through to my clients

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I think and they like it at least that's my impression

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um I'm looking through some of the uh advisor questions here just

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um sure we'll pick one or two and then uh give bethan a chance to

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uh go through her scenario and we could always take some more of these um later

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um I did think it was interesting and maybe worth commenting on that you know the plan

28:45

didn't have a legacy goal but you mentioned that she did you know kind of have a undefined yeah I'd like some

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money to be left uh over at the end and I like how you you noticed even when we didn't specify

28:59

we put it at zero on those scenarios it actually you did have money left at the end

29:04

um so somebody was asking about it this is a spend down plan are we trying to conserve principle

29:11

um from a just technical standpoint I can say that's generally how these works

29:17

even though you have a zero Legacy goal at the end of the plan the software is not assuming that the person has passed

29:23

away or or that we know exactly when they'll die right if we did then of course it could land on zero right so

29:29

it's trying to represent like hey you know if you're 10 years into this plan uh you know we're pushing it out

29:36

right I mean she if she's 95 it's not it's going to continue going for for a while there so that's that's why

29:43

um there still is a balance in all those scenarios um

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that's one of the things I think that's been challenging for some of my clients to to get is this idea of okay if we say

29:55

for example here with the initial outlive 80 of repairs it takes her out to a 17-year life expectancy Ten Years

30:02

Later your life expectancy is not seven because at 90

30:09

your the possibility about living 80 percent of your peers takes you past 97.

30:15

and you don't want to run out of assets yeah

30:20

that's great there's there's some other questions um that I think I'll try to hold them to

30:26

the end I don't want to take take all the time away from that band so but we may return to some of this so thank you

30:32

Eric that was that was really great and also I thought is interesting because I

30:38

don't think there's enough out there in terms of examples of plans and planning for you know people other

30:45

than sort of this prototypical we always use this person in their you know 60s or something

30:51

um you know if you read articles including mine you know they often are 30-year plans and so on I think some

30:58

points you made there about some little differences right like maybe you're less likely to use the smile at that point the page base because I mean hey that

31:05

probably wouldn't see a huge difference but you know that the whole story is a little different than when you're in

31:10

your 50s or 60s so I thought those were nice little points okay

31:16

um Beth Ann I know you have a a very different plan and one you're actually working on right now that keys in a

31:24

little bit more to um to the uh to the tax smart distribution

31:31

planning side of things and I think um you'll have to unmute let me see if I can do that

31:39

oh there we go yeah so yeah if you want to set up kind of what the situation is

31:45

and then maybe run us through a little bit of how you think you may present this okay

31:51

um the situation on this client is as a couple and they have taken early retirement they have

31:58

um nice means from an asset based standpoint and their

32:05

very they have never used an advisor so they're test driving me so to speak uh

32:11

they're anti-fee and anti-taxes so that's just net Nets and being able to

32:18

do this to me is ought to pay for the fees for the next

32:24

20 years is the way I look at it so that should hopefully alleviate some

32:31

of their angst in in multiple different ways and so they were aggressively

32:37

because of seminars that they've been to hearing about Roth conversions and uh

32:43

having to pay tax on you know all the higher Medicare cost um tax on social security Etc they are

32:52

very intent on aggressively converting

32:57

all of their 401 and IRAs into Roth

33:02

so much so that they were actually they've got um close to a million dollars

33:09

and so much so that they were thinking about telling me just the most recent time on uh on the phone last week that

33:17

they were going to do it the reason they had so much cash in the bank when we reviewed assets here was to pay the

33:23

taxes for the conversions that they're going to do in two years and that just was such a gut to me of is

33:32

that really necessary you know that I asked him if they would want to explore

33:37

you know Optimum options for that transfer that could accomplish their

33:43

reducing taxes but not overdo it and for

33:50

them to see it you know rather than me give them a suggestion let's see what the software will support in giving them

33:57

quantitative data that they can work with before they get that aggressive and

34:04

so that's the setup for doing this and um I'm actually seeing them this evening

34:10

for and showing them this so this was a great exercise and and practice from my

34:16

standpoint so thanks for the opportunity um and one of the things that I will

34:22

typically do first of all just caveat in before and I'm using this to start with

34:28

the client is just to kind of review and I like all of the assets and things it's

34:34

you know are we is this still all accurate such when I I meet with them is and and show the life Hub uh I think

34:43

that is a picture's worth a thousand words and that really does it so I'll go

34:48

into the life Hub is my screen being able to be seen at this point that no in

34:54

full no I'm not we're not seeing a shared screen yet so okay share screen

35:04

is it there there we go yep okay good uh is going into life of and just reminding

35:11

them that we've got you know the income side here and showing you know they're

35:17

not taking social security yet uh they were talking about doing a you know

35:22

portfolio withdrawal originally of that then overall their assets you know and

35:28

the investment accounts Banking and other assets I go to the investment accounts and I review you know in your

35:34

IRAs that you've got this amount you know as

35:41

all of that look accurate as we had discussed before and I gained their agreement that all of

35:47

this is so we want to look at you know what you've told me is that you want to

35:52

be a very aggressive in converting your IRAs to Roth

35:58

so that you're not paying as much tax later and it's going to save you money

36:06

on your Medicare cost in when you're going on Medicare and four years so I gain agreement there and

36:15

so then I'll say and given that what we really want to look at is some of the

36:21

scenarios and not let me determine it or or someone

36:26

else tell us what we need to do but let's let the computer go through all of

36:32

the data points to be able to pull this together based on where the taxes are

36:37

today we can't project anything for the future but it statistically will give

36:42

you some very good evidence on what works best given the information that we have today

36:49

and so on an income scenario we're looking at uh the other thing too we're

36:56

we're looking at you're spending desired spending level is only right now it's

37:03

eight thousand dollars but one of the things I wanted to represent is for you to have a comfort level that

37:10

you can't you have the capacity to spend more so that's all that you know I'm

37:17

sharing here but you know and your proposed income is 8103

37:24

um or your 8 000 and so what we're really going to look at is from uh

37:30

income scenario we go to the uh different plans and you

37:37

wanted to aggressively do three hundred thousand on

37:43

this year and next year on your Ross conversions so what we'll do is we'll

37:49

look at the tax Center and in that Tax Center we'll select that

37:54

that in the next two years you convert 300 000 a year of Roth and we look at that and what

38:03

that shows us is a tax strategy of

38:08

your spending on taxes total because you're wanting to pay the least

38:14

taxes you can of 562 670.

38:19

now in addition to that there's I have put another option in here and so what

38:27

we'll do is look at the income plan of

38:34

or the income scenario where we have a five-year conversion so rather

38:39

than in two years we're taking the entire amount the 955

38:44

and we're breaking that into 191 000 a year to get all of it done and so

38:52

we go to that plan and then look at the taxes here

38:59

uh what does that tell us this five-year conversion on the tax plan

39:04

and over that five years we've gone from the previous uh 5 62 670 to 495 and so we'll just go

39:16

ahead and hit you know the comparison of that on strategy one we had the two-year

39:23

conversion and we're using the optimal which it

39:29

shows us what to do where we're taking the least amount of

39:35

taxes pardon are you trying to find where to put that second one in there I

39:40

am right I'm gonna so hit edit edit your strategy too and

39:48

I'm using now this second strategy of the five-year conversion

39:55

and right now the optimal it tells me is this bracket

40:01

and I save that so here we can see the differences of

40:08

the total taxes of taking your two-year 300 000

40:15

immediately over the next two years so what this allows you to do

40:21

is save taxes by using a longer term conversion and in the end you're still

40:30

gonna it doesn't affect your spending level it allows you to have a greater net

40:36

income so I mean you'll have a little bit less

40:44

originally but again over time it's gonna I mean you don't have any Legacy goals so that's kind of a point that

40:52

does that help you in seeing that you don't have to be quite as aggressive on

40:59

your Roth conversion strategy and you can still save money on taxes

41:08

okay it's pretty pretty evident there is that

41:15

any thoughts on that well I since you are presenting this this evening my uh my normal questions

41:22

of what sorts of questions did they ask you and what what options yeah Jake I think uh maybe we'll just think about it

41:29

um uh I haven't asked the questions yet so I

41:35

really you know they're but they're excited to come in and I rarely get this is only the second time I've had them in

41:40

the office so yeah they wanted to see this I'm also curious

41:46

um what a okay so I know you created these specifically to allow you know two years

41:52

abroad conversions and five years I'm curious and maybe they won't like

41:57

the option because they are so um so interested in Rapid Roth conversions but I'm curious at what if

42:03

you take all the handcuffs off just kind of uh let the Roth convergence happen in

42:08

any year um you know if there's another strategy that's even more optimal yeah

42:16

I did try a 10-year and I went to um

42:21

the explore and

42:27

or not Nazi Explorer the um in the tax

42:33

I went to Advanced edit and tried 10 years last night yesterday and

42:43

try to remember how I got there well let's go over that because I think some of the folks on the call may not know

42:48

that this is it's possible yes so um yeah if you go back to really any

42:54

plan and I'll tell you where the advanced settings are um

43:00

well one not the implemented one that's the implemented one okay

43:06

um so if you go to the one two years of 300 000 I think okay that's the setting

43:12

and then I go I come in here to the three dots and I will do advanced

43:17

settings right yep and then intact then I'm going to go to the taxes

43:23

and I'm going to specify yours and I am

43:28

taking out enforcing but I'm customizing here and I'm doing

43:37

one two three four five six seven eight nine ten is what I did gotcha so this is

43:45

where just for for that uh audience this is where you can get fancy like this and

43:51

kind of say okay which particular years will I allow Roth conversions and you know bethan had

43:57

the 300 000 case there as well if there is a number that clients are focused on

44:04

as a as a maximum um whereas if neither of these boxes are

44:11

checked and the software just allows Roth conversions in any year where there's available

44:16

um space in the bracket and also where there are where there's funds they could be so I guess we'll have to to be continued

44:24

on um questions and the response yeah but no I this is fabulous this is really great

44:32

um and it it didn't I saw you know in the Medicare it did give an estimate on it

44:38

um yeah if and you can change the variable expense so that that's one of their

44:44

concerns they're paying I mean it's not going to be any different they're spending 8 000 a month now and they're

44:50

paying for health insurance which would not be any more than Part B and D at the

44:56

highest level on Medicare so the fan yes do you think once you

45:03

present this to the clients there's a possibility that uh they will

45:10

see the opportunity to enjoy more of their money and spend I hope so yeah I

45:15

mean they they are very um I mean they do a lot but they also have

45:22

some expected long-term

45:28

um inflow so I don't know whether what they're gonna I think what it could also show

45:35

them that they could spend more money or they could do some uh they're gonna have

45:40

you know in in 15 20 years they're going to have some serious tax planning

45:46

complications you know challenges so yeah great

45:53

yeah I have that reality so that they are feeling free to spend more than do

45:58

more I know it showed with no Roth conversions and and so on just kind of

46:04

that core plan I think was you know quite a bit more than 8 000 a month so it was yeah somewhere around uh 12 14

46:11

000 a month so with without any Ross conversions yeah

46:17

that said I have noticed also you know when somebody when there is a big gap between what someone could spend so

46:23

they're spending capacity and what they are spending and maybe you can't get them too excited about spending more

46:30

that actually is a decent opportunity for Roth conversion conversation because sort of like well how are we going to

46:36

spend that Surplus well you could spend it on Roth conversions yeah I mean Now's the Time spending on

46:43

Ross conversions and then you're accomplishing your goal of paying a lot less taxes and hopefully by me sharing

46:50

this with you you'll have a little bit more comfort that know that you know uh some Professional Services is

46:58

at least worth sixty six thousand dollars over the next 10 over the next five years

47:05

mm-hmm all right I have the Roth

47:13

I have and so all that other stuff is elsewhere so they're

47:18

um anyway and they're the ones that want to convert to Roth so and just to ask one of the questions

47:24

from the field um is this uh this is a a prospect there

47:30

like you said they're kind of you know shopping would this be a long-term client or is this a one-time project

47:35

that you do no this is they're a current client at a small capacity yeah at a

47:42

small level which has much greater capacity so my goal in doing this for them is to build uh value overall so

47:53

that they don't feel so bad about paying a one percent fee on when they thought they could do

47:59

everything themselves right

48:04

um I'll hit a few of the questions really quick uh somebody asked about Irma which it sounds like they were

48:11

concerned about that higher Medicare cost um and someone was asking whether the

48:16

software takes into account the two-year look back it does in years one and two it uses year one because you know we

48:24

don't ask what things were two years ago but otherwise it is in there and

48:29

um we could probably find a place to show where that is true um

48:35

let's see here the one with the most upvotes I guess this is for everybody including Derek um it was about entering expenses

48:43

um what they're entering of expenses is

48:49

if you went in here is this what they did is they looked at their credit card bills for

48:56

12 months and divided it by I mean and added it all up and averaged

49:02

it out so that's how we did on on the expenses side and the Baseline was that was what their

49:09

Baseline spending was made up of um so we did try to you know I pushed

49:16

them to add some other expenses like an extra 5 000 a year on something with the

49:22

house on an average and then you know Baseline

49:27

taxes right here I like that credit card approach especially if they're almost all their

49:33

spending is that way Eric and Derek this was Ryan was asking kind of how do you

49:39

approach entering expenses and I think this is also also a place where this could trip people up with it

49:45

has the first you know we actually don't require you to put in any expenses so have you run into issues there what's

49:52

your approach well so for me I try to keep it uh Broad

49:58

and avoid getting into too much detail and expenses except for Planned set

50:04

asides so like with the client with Linda there was the charity seeing you that's high priority and

50:11

um one of the nice things about income lab is I can label that as a variable set aside expense so it's taken out of

50:19

the the equation you saw on how much income she could spend but it also treats it as Charity and so the idea of

50:26

a qualified charitable distribution because she has an IRA she's more than 70 and a half is automatically uh

50:33

factored in um beyond that I just let them know hey

50:39

here's the total amount you could spend and it's up to you where where you're

50:44

going to to spend that or if we know spending is going to be a certain level like this client

50:50

ultimately said hey I want to spend that much we can do a solve for

50:55

yeah uh and I'm still not going in and specifying hey this is how much you spend at the store or utilities that

51:01

kind of thing that's sort of a separate okay this is how much you want to spend let's look at

51:07

where you spend a different cash flow exercise let's say the full range of that from

51:14

spending I have a client that's the highest high net worth client and he

51:22

has is categorized in an Excel spreadsheet he gave it to me and I inputted it for

51:27

him I mean I inputted it into the plan in full detail that he had his house

51:34

taxes his Landscaping his Etc I mean it's and he spends a lot of money but he has

51:42

a lot so it's it's all factored in there that under the Baseline and then the variable is

51:49

you know over the next 20 years how many times do you think you'll buy a car or how many times you say you can set aside

51:56

those large amounts in there on every you know on one of

52:02

them I'll have a car every 10 years we've got 50 000 in here for every 10

52:08

years as a variable I would say My Philosophy is pretty similar in that I'm usually trying to

52:16

keep my plants pretty simple on the expense side you know as much as just kind of core expenses going in as the

52:22

Baseline but then any you know somebody knows they're gonna fund a wedding or something like that that's a unique goal

52:28

and a cash flow that's going to come up I definitely do want to build that in um I do have some clients that I kind of

52:35

trying to let them build out the plan a little bit more on their end and that is one area where

52:42

um it's probably just I need to sharpen some of my own skills on the expenses and how to put things in and all that but I would say that if you're doing

52:49

that with clients just make sure you know you feel comfortable with it because I have run into just different times when it's like oh wait you know

52:55

tracing all those expenses through different uh parts of the plan and you know how does this impact here and there

53:02

um it can make the plan presentation a little bit more complex than at times

53:07

I've just felt like they've kind of lost they're spending all the time trying to track down this one detail that really

53:13

in the grand scheme of things is not that significant and it kind of Drew attention away from just the high level guard rails

53:20

um or overall approach so yeah that's just one caution if you do get too deep

53:25

but uh certain I probably need to get better at that area um myself yeah yeah and other software

53:32

that I've used it was you know the core expenses average what what's the net number you need to

53:38

pay or for living expenses and uh well you know in this case we're only

53:44

spending 8 000 a month okay we'll use that 8 000 as a net number is there any big expenses so I kind of do keep it in

53:51

a broader sense and so that people don't get into the weeds but I do challenge them to Think Through what uh is the

53:59

reasonable spending levels that they need to maintain um to have the same without having to

54:06

change in lifestyle this has been great we have tons more

54:11

questions unfortunately we won't be able to get to them for those who uh submitted questions and we have your

54:17

your um you know if you set your sign up email and so on we will respond over

54:22

email to those um One Thing Justin if I may just want

54:27

to let Eric and bethian know that we did see receive a lot of feedback in this chat and Q a about how wonderful of a

54:35

job you did and they thought you did fantastic so um our so our community is supporting

54:41

you and telling you how wonderful you did uh presenting so nice thanks Taylor that's appreciated hey Justin that's a

54:49

value yeah same here um I am happy to chat with anyone um like I'm happy to share my email

54:55

because I love the idea of being part of the income lab Community that's you know

55:01

supports one another so if there's other users out there that want to share how they do something or want to ask me how

55:06

I did something um you know I think that just makes the soft where all the better so then I'm

55:14

just I'm the same Eric so I've I would like to have an a new uh a new

55:20

collaborator on occasion so well we will get those shared uh Justin we did have one thing that Eric did the

55:27

side by side comparison and we did have a new release today Justin you want to touch on that just for a brief minute

55:33

yeah so this was um last uh last week we did a um

55:42

we did our our lab talk Tuesday um where I went over this and uh it

55:49

didn't get in the software in time for Eric's presentation well technically I suppose it did but it's certainly not in

55:54

time for Eric to get used to it um so um within the

56:01

uh the stress test the retirement stress test you can now find a um

56:09

a a comparison option it's in the upper right I'm trying to pull up uh example

56:15

of this right now that I can share with everybody

56:21

bear with us and for those folks who stayed on they get a sneak peek so I'll share this right now

56:28

real quick don't tell anyone's double top secret so it's in this upper

56:35

um the upper right here which you just see that you know one box versus side by side and then what you'll

56:43

get is if you have more than one plan now I just created this really quick no idea whether it's any different okay

56:49

very slightly um you'll get

56:55

um this is maybe a little better I I just made a copy of the plan and I had it be more aggressive

57:01

um maybe the Great Depression will show a difference you know not a lot to write home about on this one but I I have

57:08

created ones that differ a lot more so Eric what you were doing with those lines you would be able to see them all on one screen and it will show you know

57:16

the the current plan will still be that light blue and dark blue and then you know the the mustard I guess here uh

57:25

is the uh the the other option and so you'll be able to see side by side uh the differences uh in plants so I think

57:33

that's gonna be I'm really looking forward to some of the comparisons out there and people playing with different portfolios or different income settings

57:40

or you know things like that and I think your example was perfect Eric of just hey here's the trade-off right you could

57:46

spend less and have a very smooth probably very few down you know reductions in spending unless you've

57:52

already gone up and you're just pulling back versus ones where hey you know you're spending more but there are situations

57:58

where you'd end up a little lower so hopefully that'll be helpful for everybody

58:05

um well yeah just to Echo Taylor amazing feedback I don't know if you've had a chance to look at the chatter the Q a

58:10

really appreciate it I know this this really is a you know it's a it's a big deal to to spend so much time preparing

58:17

and presenting um so the community I'm sure really appreciates that and we'll we'll share

58:22

this out with everybody thanks Justin and Eric Eric and Taylor

58:27

for organizing yeah and your feedback Derek thanks everyone