Lab Talk Tuesday - Income Lab User Webinar January 2025 - YouTube

Transcripts:
(00:02) just Justin I don't know about you but it is chilly here today well yeah this entire weekend here was uh in the probably single digits negative occasionally and then uh this morning they did a 2hour school delay and it's 28 degrees so I don't know it was cold yesterday but somebody didn't check the the weather yeah single digits here so colder than us though I can only imagine what it's like where you live here is maybe I don't know yeah it's a we're we're down it's particularly cold today but it's actually not as bad here in the coastal area as some people think get into Central Maine then it's really
(00:53) cold but right ocean helps us out a little little bit what is it then what's the temperature like uh I'd say usually 20s 30s 20 to 40 is a pretty common range um today we're down in the it was like single digits but that's kind of unusual I want to know how many Ohio State fans are there that are on the uh on the webinar today congratulations to you it's a heck of a game didn't ever seem like it was in doubt but uh Justin can you you uh take care of the panel bring okay so we'll get going here um as usual we'll start with
(01:40) um how many Ryan Day fans I um as usual start with new um new features and actually last month's uh lab talk Tuesday um which we have a recording of um I think we spent like 60% of it on on new Fe features and things so I'm not going to reash all of that but please do you know go back and and um and check that out and just for the Q&A please if you have questions please make sure you pop it in the Q&A rather than the chat that we can't uh it's very challenging to find the questions in the chat as everyone's chatting so please if you have a question pop it in the Q&A and um
(02:24) and if you want to hear the question answered please like it and that will'll upvote it and we will if you know if time we get into crunch time we'll uh tackle the ones that have the most likes first right thank you for for keeping on track there a couple other housekeeping items um we normally have retirement income Intel next week the week after this one but because of some scheduling issues we're having it the following week so it's uh February 4th and that one is going to be on Capital Market assumptions and kind of around how wrong
(02:56) can your Capital Market assumptions be and still give good advice uh it's B based on an article that I wrote um for the the Kit's blog um I think that one came out in December maybe um so yeah please check that out and that is uh that'll be C Credit Justin your audio just got really faint can you test it and see let's try that again is that better yes okay yeah something I'll say that again then so uh instead of next week we won't be having the retirement income Intel next week which we normally do the the the following the week after lab talk Tuesday we're having it February 4th so
(03:43) two weeks from now um and that one will be about Capital Market assumptions and how wrong you can be and still have good advice so definitely a worry that many financial advisers have is well you know my assumptions matter a lot um you know and and they're not going to be right so you know how how wrong can I be and and still and still give good advice so that one's based on a kitus article that um I put out in I think December so um anything else uh Taylor or Ashley before I get onto the the main agenda no okay so I'm G to hit a couple of um little
(04:23) new features and then have Malley speak about um a really exciting uh announcement that we have here today so um and if you're interested in other new things that have been happening at income lab in the software new features and things also go back and check out December's lab talk Tuesday we spend a lot of time on new features there um so first of all just kind of a fun one um I'm G to share my screen here [Music] all right so um a few months ago we added a a lot of display settings um in your your um your account itself so if up up here this is sort of your personal
(05:21) account settings you know it's things like Integrations and password and and all that stuff um and at the time you probably noticed there was a themes section at the top but there wasn't anything in it um well we have our first new theme which is uh you can now go to dark mode on income lab um and then you know everything looks nice and easy on the eyes um so it's it is still in beta in case we miss any you know places where maybe the contrast is a little off or you're having trouble reading things if you do use dark mode and you see something that
(06:01) like hey that's now hard to see please let us know cuz we can we can get that get that fixed so that's uh that's kind of a fun one um the other new um I'm going to turn it back to light mode here just so we don't see any of those issues um the other cool new feature which is part of um kind of an ongoing revamp of tax lab um you you've already seen lots of the revamp that we've been doing you know this new kind of uh card um setup uh in the strategies table so if I'm in in um the new tax lab there's a
(06:42) couple ways to view the strategies um you can just view them in these dropdown menus but that that doesn't give you any information about the strategy itself the Taxation and so on if you hit view strategies that's that's the place where you can find you know kind of the the full list with all the stats um these columns are now sortable so if you click on them um it's a three click kind of thing so the first click we go from um we're going low to high the next one is high to low and um the last one turns it back off so if you click it
(07:24) to three um and so now like if you're most interested in Legacy for example um you'll just want to go there and say oh okay interesting and you can kind of look through and see how the Legacy um how the scenarios sort by Legacy um soon I think in the next couple weeks we're also going to going to include some uh like a heat map um in this table so you'll kind of be able to have your eye drawn toward the numbers that are quote unquote best in that category so for net Legacy and net income it'll be highest for taxes
(08:03) and tax rate it'll be lowest will be and that way you'll sort of be able to see the zone of these strategies that is best for for this plan um the reason we're doing that is we've talked about this a lot before um the differences between strategies are sometimes not huge uh this is actually a pretty decent example um you know the 24% bracket the 32% bracket and keeping things just below Irma bracket 5 are all within you know 20 basis points 25 basis points of each other and this is over you know maybe a 30-year plan these just are not
(08:42) differences that are massive or um you know worth really you know putting money down on that they'll they'll definitely come out this way and so we want to be able to help you draw attention to kind of the zone of where things are more optimal without implying that there's one one right answer for tax lab and Tax Strategies and no other answer could possibly be good um so this will really help kind of draw your eyes and if you use it with clients draw client's eyes to kind of the Zone where the numbers are are best so you'll see that coming out in uh like I said in the in the next
(09:16) couple weeks um so those are the two um little new new features that I wanted to to share like I said check out last month's uh lab talk Tuesday for a whole bunch of other stuff that just came out um but I will turn it over to Malley yua now if you don't know Malley he is our cxo and um just like you know one of the best things going at income lab so uh turn over to Malley for a for an announcement perfect thanks Justin and yeah welcome everybody it's excited to be back on lap talk Tuesday um and to share some of our
(09:55) um big announcements that we have coming up so I'm actually going to share my screen so I can show this live for everybody um there's two things I want to talk about I think uh we may have teased it again on some of the previous uh lapt talk Tuesdays but I want to share again our new resource Hub so when you're in the app you'll see the question mark in the bottom right of our screen here and this was really just for our new users who a wanted an easy way to kind of have a checklist for their onboarding or do some self-guided training so our team has built in some
(10:25) self-guided tours that if you're a new user or maybe just just haven't been in the app in a while and want to quickly see hey you know how do I add an integration how do I maybe talk to a client about the plan dashboard or howwi review life Hub we built these guided tours that you can follow in app and as a new user it will also track how your percentage of your onboarding that you've completed if you're wanting to just make sure that you've gotten the foundation of the software and you've covered all your basis um then we've also just added different sections in here so that way you can stay up to date
(10:58) on our announcements so as Justin mentioned the announcement for the dark mode is here as well and these will link you to our community that I'll show you next um you can also stay up to date on any upcoming events here access our help center um reaching out to our support T so I know sometimes folks want an easy way to schedule a training submit a support ticket so you can do all that here and then the last one is submitting a feature request we always get users with great feature requests um who want to share that with our team have other users share and and see um things
(11:29) working on so if you want to send us a feature request you can go to this button leave some feedback there but that actually takes me to um the big announcement which is our new income lab community so in the app you will see now we've replaced the health center icon with our new community icon and you can quickly click that to get to our community page um so this came from a lot of our users last year who um have been asking for ways to connect with other income lab users really hear from advisers and again share uh feature
(12:00) requests and even upvote on feature requests so we've built the community platform to enable you all to have that space where you can connect take part in discussions connect with other users and have that transparency on the product road map so I want to quickly just show you all what you can do in here uh before I turn it back to Justin so from this homepage here um you can quickly see those updates that we talked about take part in some of the discussions and uh sign up for our upcoming events in the community section here we have an introduction section so for our users
(12:35) who want to connect with other income lab uh advisers want to uh engage with those folks you can introduce yourself to the community you've seen that we've already have several of our users who've been with us for a while whove gotten in here and already introduced themselves and who are open to connecting with other advisor so please introduce yourself and engage with those folks here we also have users who similar to our laptop us who want to ask questions where uh they're looking for other advisors to answer or even maybe our
(13:04) team to help out and so here's where you can ask the community and engage and help uh other advisers learn income lab and maybe learn how to discuss income lab with their clients which comes up a lot for our users which leads us to our discussion section here where our team has pre-built a few discussions but as a member of the community you can start your own discussions your own topics here and really engage with the users this way as well but here we put in some uh discussion topics for you um again for you to share best tips on presenting income lab to clients again that's one
(13:36) that a lot of our users ask uh you can also share future webinar topics we're always interested to hear what you'd like us to cover on future webinars so you can engage in that discussion here and then we also love just sharing with users how income lab has helped improve a client experience or your client's experience so uh we'd love to have that discussion here so other users can engage with you there as you know we're always scheduling uh events coming up so here you can St up to date on our upcoming events uh if you haven't engaged with
(14:04) any of our master classes yet you can get to those on demand master classes here in the community and as well get to any of our past events and view those recording links from those past events and then below we've got our feature request section which I'm super excited about because I know we constantly especially working with users get really great ideas and really great feature requests and we are always sharing that with our team but sometimes we don't have a easy way for other users to upo and and really help us prioritize
(14:33) certain feature requests based on user feedback so here's where in this space you can see in our road map here you can submit your feature request see what new requests we have what's currently planned what's in progress that our team is working on if there's any new uh requests that are in beta you can see that as well and then you can see what's delivered but the most exciting piece here is that you can quickly uplo on any feature request here and so this will really help our team to gauge you know what's really going to have the biggest impact for our users what do you all
(15:04) care the most about and seeing us change or update in the software so we'd love to see those uh upvotes come in and then if you do want to uh reply or add a comment to a future request you can quickly click the reply button here and this will also help us to uh really kind of flesh out the ideas and hear all the different perspectives to a feature requests and then last here is the release announcements as we're making these updates um we have users who want an easy way to just see hey you know what have you guys done uh the past few months or you know since I last logged
(15:35) in and this is a great place to see all those release announcements and get the quick uh breakdown of all the changes and updates we've made to the software um I do just want to point out our community guidelines just because as we're building this platform we do again just want to keep um these guidelines in perspective to make sure that we are operating with kindness and respect that we are not spamming the community and that we just participate and and you engage with the community as we did create this for our users who are really
(16:04) looking forward to engaging with us in come month um you'll notice that when you do get in here first that you can see everything in here but if you do want to submit a request engaged uh you do have to sign up which we can do quickly with any of your social media LinkedIn uh Facebook accounts um or an email if you don't have social media but uh once you are signed up then you can engage and other folks can uh comment and um see your post uh that is it Justin again just want to remind folks to get to the community you're just going to see this button in the app and
(16:36) then that'll take you right to the page um we've already got several users in here but we're looking forward to having everyone join engage with other folks and uh start connecting Maly a couple things about the communities so the you showed them where to find the Community page um they one asked what is the login for the community um so they clicked over software and it's asking them to sign in yep yeah so let's just say I'm logged out here so when you go you'll see the sign up here um you will create an either an email or password but we did include at the bottom here just you can
(17:10) quickly sign up with either your LinkedIn Facebook or Google which it seems like a lot of our users are doing that just because that's easy for them to set up within a few seconds but if not you can quickly put in an email and a creative password yeah and I think the key point is your income lab um account is not it's not the same thing as this community this is a separate site um if you set up an email and password it would be a separate password maybe it's the same email um and things like that so you won't automatically be logged in if you click on that which actually I mean that does mean people maybe who are
(17:47) curious about income lab who maybe aren't yet signed up they may join the community and start asking questions and things so this is not kind of a um only if you're a subscriber to income lab um is it only accessible through our software um it is only accessible well to our software as then we only have the link but you know you could send the URL community incom laap doio and just get through it just through that link right yeah so you can you can bookmark this and yeah you get there directly Maly can
(18:18) you show one more time where to find the community yeah so in the app here you'll just see it in the top right of your screen here and then just click the button and then that'll take you right to the home and then one more suggestion uh add job posting SL hiring discussions to the community that's a great idea that is a great that is a great idea we did um we have a draft for that because we thought about that but we weren't sure how users would want to engage so I love that feedback and so that is something that
(18:49) um you may see us create to allow um you to post your own job hosting um I think what's exciting is we do work with a lot of universities who have um potential students coming in uh getting Financial plane degrees that may be looking to connect with advisors or for potential jobs and internships I can imagine that being a good um Avenue to connect uh you with some of those folks so maybe next last talk Tuesday we can share that if we get that set up for you all okay perfect well thank you all um yeah I'll be here so if there's any other questions I'll be in the chat or in the Q&A and and respond if there's any other questions on the community
(19:29) right thank you mackley and yeah mackley and his team have been working really hard on setting this up I think it looks awesome I'm really excited for um for everybody to jump in I know that you know our our team works amazingly hard on you know answering questions getting you know getting people what they need we also though have this amazing resource which is all of you um helping each other talking about you know use cases hey I did this this is how I like to do that and so our vision here is that people really can benefit from their peers um as well as from the
(20:05) income lab team um it's just such a great kind of way to kind of crowdsource you know answers and um and everything so yeah well you'll see things in email as well about the community if you forget any of this you you'll have more all right so getting on to questions um let's back to the app here so um didn't have a ton of pres submitted questions this time so there there's a couple that I'll I'll address and then I want to um hit some of the uh some of the submitted questions today so if you have questions um please do submit them in in the
(20:50) Q&A um so the first one um really had to do with the way that income lab um kind of by default builds a retirement plan um and you know maybe I'll ask Derek kind of how he approaches this too so the question was basically when you create an income lab plan it by default is giving you this what's called here retirement paycheck or you can call it spending capacity um that's you can change that in the uh in those display settings um and the question was well where do I see um whether this is more than I need less than I need or write on what I need
(21:30) and and maybe I'm going to just in in add to this um how do I deal with situations where maybe there's a surplus between what what somebody can actually quote unquote afford to spend and what they actually um want to or need to spend um just to answer the the first question where do I see it um there's two spots um one is you can click on the that card itself and then click on income goals and you'll immediately see your desired and essential income um and compared to the proposed and you can see here we have a surplus
(22:07) of $4,600 a month um that's just for the first you know month uh in this case there's another place where you can see all of the years which is you go to life Hub and go to this uh finf flow or this um this you know flowchart they're called Sand Key diagrams and there you'll see also an income Surplus or shortfall uh in in any given year um this is only if you have a plan that is asking the question how much can I spend which like I said that's the default if you had a plan that was um targeting a particular net income level um you wouldn't see that because it's going to back into exactly the kind of plan that
(22:51) will produce these expenses the problem is if you're backing into a net income level you don't actually know you may not know whether actually a good idea or not so it's usually the best idea to start with well how much can I spend make sure you actually can afford to spend that kind of thing but Derek if you wouldn't mind talking us through in your workflow or in talking with clients where kind of the Surplus shortfall um fits yeah so for me it's a big part of that initial kind of plan review and discussion and if somebody I I do try to get a number from everybody what their desired spending level is before the
(23:25) plan even though you don't really need that to do the plan I like to know what they feel like would be a comfortable income for them and then you know if I if this particular individual told me oh they needed 15,000 a month and we go in here and um actually I'm not sure if this is showing net or gross but um you know I usually tend to talk in net terms in term um so yeah if they said 15,000 and now we're seeing the 166 um in terms of net that'd be an opportunity for discussion around okay well you can really spend more than and you're
(23:55) telling me you want are there things you would like to do um or there ways you could you know ramp that spending up uh then also maybe going into like the um the stress test and looking at okay you know do we have the right set of guard rails here should we maybe bump this more conservative um if somebody really would like to avoid uh as much as they can the risk of a reduction in spending um or if it's somebody with more of a Dio zero type mentality maybe we do want to be increasing giving um whatever it might be that somebody wants to do to get that
(24:26) number up but that's where I like to start the conversation and really just have that sometimes you have a very large discrepancy I mean it uh I've had cases where um you know somebody's spending less than half of their potential spending and so really just trying to make that point clear but then if somebody says you know what for now I really don't have anything else I want to spend on isn't anything else you know I think that's the right number the 15,000 or whatever number we want to use then I would go into the plan like Justin was talking about and set it as a solve for that spending level once I
(24:59) know that okay 166 was fine for this particular individual so 15,000 is going to be fine too uh so I'm comfortable uh doing that and then just asking the software to solve for that yeah so just to go over where to do that um there's a couple places but probably the easiest is just go to the edit um pencil and then expenses and if you don't have an expenses um icon here it's because you you haven't put any in the plan yet I this plan is very um complete so it has all of the categories but if you didn't
(25:36) have this one you would see a little plus Circle here hit that plus and click expenses and then you'll see here um I have the you know 12,000 in living expenses I think that may be the only thing I have in this plan uh no there's a there's a little vacation thing going on as well um but for Baseline expenses that's all I have and it's it's telling me right now this plan's primary question is how much can I spend so it's saying based on all my resources what can I afford to spend uh if I want to change that I click change this and I can change it to how can I
(26:12) spend $122,000 um that'll be net of tax um it will also be targeting any other expenses that you have in the plan those other variable expenses um when you click that but that's true also in know what can I spend plan um so that's how you you make that change um and yeah that's a very typical workflow is to kind of start with what can I spend get a feel for the range of spending that's possible and then you know in special circumstances switch it over to a reasonable net spending Target so like Derek was saying it might be because
(26:48) actually they just don't need that low of or that high of income and we're going to build a plan that has lower income it might it might even be the reverse and you want to show somebody how dangerous it is to spend more more um and then the other places where it's really commonly um needed is when you have lumpy taxes in the plan particularly with Roth conversions or any kind of large event so business sales uh real estate sales things like that um especially early in the plan are really um a place where you're going to find yourself using that particular
(27:20) feature and maybe add to that Justin real quick one one of the things you'll see if you're running into that situation Justin was talking about was like you go in there and now all of a sudden you put in Roth conversions or something and the income went from 166 down to like 4,000 or something it's like wait what's going on you get really it looks really weird um and that's just because the way the Roth conversion is kind of crowding out the income in a sense but um yeah setting the show me how I can spend this will fix that problem for you yep yep um I think we
(27:54) had a quick question about um you you will have noticed probably I don't remember if I went to this graph but um that this has the retirement smile built in so this is in showing the planned spending in today's dollars um and so you can see that's going down over time if I switch it to Future dollars so if I include inflation in it um you'll see that it's more of a flat sort of you know just uh like a very slight dip and then I a raise at the end um someone was asking um you know how can I get rid of
(28:29) that um that's just in the advanced settings which is this three dot menu Advanced plan settings then you just go to the income path and you change it from age-based which is that retirement smile so it's saying hey I'm going to spend more when I'm young and healthy but I'm going to slow down and spend less over time you just switch it to Flat which is I'm going to spend the same amount adjusted for inflation um every month every year in the plan and I know Derek you actually have some uh kind of practices that you do there um I think it's
(29:05) probably been a while since you talked about them so you know how what's your attitude toward kind of the retirement smile versus flat for me and I really like the smile I love that we can easily build it in for a first discussion of a plan A lot of times I will start with more of a just flat um spending just to keep things simple and keep the conversation because I I do think sometimes I like to show charts like the kind of hatchet type chart that might show where the cash flow is coming from and then when they see that smile sometimes that just causes more questions and then wait is this adjusted
(29:38) for inflation what's going on with inflation like I just find that in an initial discussion sometimes it's complicating things a little bit too much um but as you start to work through a plan and say you know especially if it's a case where the numbers aren't quite there but we know that yeah they probably will realistically follow a smile then maybe saying okay well you know one adjustment we can make to your plan is that a lot of people do decrease their spending as they're going through retirement that's actually the more consistent thing that we see so let's try and turn that on for your plan and
(30:07) see if that changes how much you could take from like that's kind of the conversation flow that I would have um to get there and for whatever reason many of my clients really are in the situation where even with the flat spending they're still they have Surplus available and it's really more of a an effort to try and get them to spend so for me it just isn't a planning point that comes up as much uh but definitely those retirees that are more on the bubble um of when they can retire and how sustainable
(30:37) that's going to be that's where I definitely see those cases come up and uh that's kind of how I would work it into my discussion yeah I like that a lot especially like you say if you know your client hey I work with a a population that just they tend to have plenty of resources I you could start with flat and then yeah adding the retirement smile tends to add um it's about 15% on average from what I've seen um sometimes a little more um income or potential spending capacity early in the plan because you're essentially saying well I'm going to
(31:12) kind of spend more now in exchange for spending less later um if this is how people typically spend which it is you're you're really saying hey I'm going to spend more now knowing that I actually won't spend so much later um so it's not so much you're stealing from future consumption it's that you're you're recognizing there won't be that future consumption um so that's I think a nice way to to go also yeah as Derek said showing this graph to people which by the way can be super useful for helping them understand how they're going to fund their lifestyle but if
(31:42) they see this you know slope they might say well what what's that right so if you plan with flat to begin with then you can avoid that conversation and then add it in when you want to um but I know we do sometimes get another question and we've gotten it several times in the last month um that has to do with um withdrawal rate and this is another great place to kind of explain that to clients or you know to yourself if you're wondering so for example here you might see well wait a second we're taking you know almost $21,000 in monthly portfolio withdrawals early on
(32:16) in this plan how could that possibly be sustainable um out of a let's see you know not quite $3 million um portfolio well the answer is what Dereck alluded to which is we're not um in this case you're you're taking it for you know looks like not even a year and then it's going down a little bit and then it's going down even more as Social Security comes in then it's going down even more as more Social Security comes down in and at the same time in real terms we're actually spending less so you know years into the plan I'm taking 6,800 out of out of the uh portfolio not
(32:59) 21,000 um and so they really in plans like this and I'd say in realistic plans of any sort where there's any kind of delay of certain resources hitting the plan uh there just is no such thing as a withdrawal rate for the plan there's a withdrawal rate at any given point but there's not a continuous one and Dereck and I called this the retirement distribution Hatchet uh this is not maybe the clearest example of that but um you know if you kind of squint at it you can see there's more of a blade of the hatchet here early on and then a handle so higher withdrawals early on so um one of the
(33:37) cool things about income lab is that it's really trying to solve for how to um layer in the withdrawals um across the plan um instead of trying to find some sustainable withdrawal rate um but I don't know dererk if you get that question much people having Googled it and said well hey I thought 4% is the thing I'm supposed to do but and I'm ass this is helpful no I do I do actually get that question a fair amount especially when it's not so much a retiree who's kind of like you know I'm looking for an advisor I don't want
(34:08) to deal with any of this this is all above my head those people don't tend to get as much in the weeds but if it's somebody who you know is more the maybe bobbleheads type they they've got some experience they've been reading that I get that question a lot from those types of clients and I've actually to the point where I've started to be proactive about it because I've had clients that just kind of they didn't say anything but the whole meeting they were just scratching their head like I read about 4% rule you were talking about me taking
(34:33) 8% this doesn't make any sense so I I do try to be proactive and I come exactly to this cash flows chart and say you know some people have heard about things like the 4% Rule and it says you can only take initial 4% and adjust that for inflation especially with a flat plan it's a little bit easier to kind of you know talk through that but to show I think okay well you know your Social Security kicks in your pension kicks in what other income sources it might be and you don't have a flat constant distribution so that's why you might be able to take more today assuming that
(35:05) these income sources are going to uh displace some of that you're going to take out less in the future so it's something I've actually become more proactive because I think I've had some cases where somebody was just skeptical of the results because it didn't make sense to them how they could possibly take 8% initially from their portfolio not realizing that they might drop to 2% later down the road right right um and I I've seen some some questions in the Q&A about um you know kind of watching someone
(35:35) walk through building a plan and and how to present it I mean I think Derek just just gave you a couple pieces in his flow right we talked about uh what can I spend the spending capacity and then shifting to um to targeting a particular level um Ryan Townsley also in his um master class that we went through and I think it was in the last session which was session four he does a walkthrough of building a plan and he talks quite a bit about how to present it but we do have plans to do more of that um this
(36:07) year and maybe at some point we'll actually have Derek do it because it's also kind of nice to see people have different styles right different groups of uh of clients right uh Ryan deals exclusively with nuclear Engineers uh Derek uh probably with more Lumberjacks um up in Maine there um so yeah that's a that's a great um a great suggestion and you will find things in our back catalog but we'll do them again too because it's really nice to be able to ask questions and so so on about it um Derek here's another one that I know youve you've
(36:40) you've probably touched on before but um uh John and Mary in the Q&A were discussing kind of using income lab and what phase of life um it works for um John was saying hey I don't see any problem with using it um long before uh retirement starts um Mary this was a really interesting saying the the regret Zone starts today so we've talked before I think about how some of this what can I spend and you mentioned about your clients trying to help them actually live a little spend a little bit more um we talk about you know avoiding regret
(37:13) um what are your thoughts on I guess I guess both of those things if you wouldn't mind when when to start using income laab and this concept of sort of helping people avoid regret I'd say for for most of my accumulators the way I do use income lab is more the life Hub kind of mapping of all their assets tracking things making sure we have everything kind accurate in one place that's probably where uh again a lot of my accumulators just maybe aren't even retirement is so far away that it's not a concrete thing they're they even have a number or a timeline or anything that they're thinking about yet if
(37:48) somebody fits in that bucket um you know I'm not really running as much of the retirement projections I could see cases where you know at least helping somebody understand broadly what trajectory they're on wouldn't be a bad thing to do uh but for many of those clients I just find that they're too far removed from it for it to really be a super productive conversation in most cases um but for anybody who is so maybe it's somebody who's younger they're more of a fire type client they're wanting to retire early at that point I think it it can be perfectly fine um and actually
(38:17) that's one real big advantage of risk-based guard rails like you're getting an income lab is that you can actually start the retirement at whatever age and it's going to take that into consideration unlike 4% Rule and all these other withdrawal driven methodologies where you know it's all the research is all based off of a you know 30 or some defined uh time frame retirement period and here you're getting truly what whatever you want to model for somebody so if that is the case if it's more of a fire type
(38:45) situation and somebody's saying okay I'm I want to retire early uh then I think it can be perfectly fine to start mapping out what does that look like um and having that conversation um and then certainly you know anybody who's just approaching retirement I'd say you know the 10 years before retirement and Beyond um very common time that I'm using at least some guard rails projections to start to say okay here's you know broadly where we're at should we be talking about retiring early should we be talking about needing to work longer whatever it might be um
(39:17) usually about 10 years before is where I start start that yeah a CLE a couple really good points there you said Derek you can actually start the income plan whenever you want to um that might actually help answer Mary's question as well this question of like well you know what should I be spending even today right I'm working maybe I'm planning on working 15 more years um we actually we're kind of um there's this uh there's this section in the plan so this is just the first tab of of the income lab plan you can also get here from this little Center Circle of of Life Hub um and I have it
(39:55) set to start um well at this point in the past but um if this were somebody in their 40s or 50s you could set the income plan so it says when do I want to start the income plan and all that means is when do I want the software to run all its algorithms and figure out well given my resources what what could I spend today and if that number is less than I make today by the way it'll also be telling you how much to save right so maybe you're making you know $150,000 a year today and that So the plan will just
(40:27) include that for you know whatever it is 15 years and then if you say Well it ends then and technically I'm quote unquote retiring then but my income plan begins today you will be able to answer that question of well what should I be saving what should what what could I be spending I wouldn't say that's typically how people are using the software because often people really clients really view life in this you know one phase and the next phase but you can absolutely use the software to do that um to answer that question and you know to get at that whole well you know how
(40:57) do I kind of avoid regret and and live the the best life I can so that can all be done here just by you know setting them as you know technically currently retired or or setting the date as as today and um and then you'll get a plan that that is beginning today um so that'll that'll work well um and I I don't know if does someone if you can drop the um the link for the the uh the last m class into the the chat or the Q&A I think um folks who want to see those kind of case studies um somebody was asking for kind of a you know $5 million
(41:39) client 2 million liquid I think that is exactly the kind of um client that that we have some examples of there so you'll be able to find thank you and then also pop in the new user video that goes through how to build a plan from start to finish as well I'll put those in the chat right um okay somebody was asking this is I guess based off the example we were just showing where you see the uh inflation adjustments um so for the retirement smile everywhere in the app almost everywhere where you have options for how to view the plan so this is not making a change in the plan it's just
(42:20) saying how do I want to view this particular visual there's this little equalizer um button and on different Pages you'll have different options but typically you'll at least have do I want the numbers to be rounded or not and real or nominal real being today's dollars strip inflation out completely don't show it to me uh and nominal being include projected inflation the inflation assumption itself will depend on what what analysis method you're using and your assumptions um so if you're using you know historical analysis you're typically going to see
(42:53) around like a 2 and 1 half% average inflation applied here but um you know it'll if you're using money Carlo you can set your own assumptions and that that'll be the Assumption that's applying to this kind of straight line you know regular uh view in the actual plan analysis when we're looking at you know things like how much inflation risk does this plan have we're actually varying inflation I think income lab may be the only software I'm not aware of others that use uh varying inflation meaning there's a standard deviation of inflation inflation's not the same every sing single month in the plan um and we're looking at well how bad would
(43:30) things get if inflation was high or how good would they get if inflation was low so we do do that behind the behind the scenes and there's actually a another Kit's article and a webinar we did on that topic on inflation risk that you might be interested in um okay had a couple of um really good ones about um implemented plan so Jim was asking um maybe actually before I ask this question maybe I should review what this even means so if any of you are kind of new to income lab you'll you'll have seen the income
(44:08) guard rails which are saying okay well here's what I can spend but of course if things get better than expected I'll be able to spend more if things get really bad I'll I'll I'll have to spend less or make some other change to the plan um by the way just to for a bunch of background the way that we get to these numbers is um we're saying okay given your resources I don't want to overspend and I don't I also don't really want to underspend right so we're trying to find that kind of happy medium also it KS this article on that that that's uh worth reading but you'll
(44:43) see over here this plan is targeting an income that has a 20% risk of overspending and an 80% risk of under spending so it's reasonably conservative but it's not sort of saying you know let's let's plan for the absolute worst sort of saying well you know I can take a little bit of risk of overspending um when would I hit a guard rail well I'll hit the upper guard rail if my risk of UND spending becomes just ridiculously too high right my that's the risk of regret the risk of underspending is the risk of regret when would I hit the lower
(45:15) guardrail I'll hit it if my risk of overspending gets too high and we're not talking about 50/50 here we have to be fairly sure we're overspending for for it to be worth making an adjustment so Jim was asking well once I make this adjustment um what what would my kind of risk be at that point um and this is a great question you'll see often when you look at um the retirement stress test for example that the adjustments when I hit a lower guard rail are not typically huge um this is a fairly conservative plan it's got a lot of stuff in it Social Security pensions and so on so it
(45:54) doesn't have a lot of downward adjustments but if I go to stag I'll see a few and you may you may look at this and say wow I mean that is that's nothing you know I mean even here in the early 80s right when inflation was um really roaring when you know my parents had a probably a 16% mortgage or something um they were really only $500 below plan after uh after all their adjustments and you think well why are they making such small adjustments the reason reason is um that there's sort of when you're when you're making adjustments you're faced with a decision
(46:32) should I completely revert all the way back to the risk profile I had at the beginning in this case it was you know 2080 right 80% risk of under spending should I reduce my income so far back that I now have an 80% risk I'm under spending or should I just make a small adjustment and see if that was enough and then if I need if it wasn't enough I'll make another one well you actually see exactly that happened here so um this plan in the retirement stress test in stagflation um it it happened to get a couple raises because you know this this period wasn't entirely terrible um
(47:09) and so it ended up spending more uh in the through the 70s um the mid 70s than it originally planned about $1,000 more but sure enough finally by 1980 it got a pay cut and it made a small adjustment but it wasn't enough it did another one in 1983 um sometimes I've seen more aggressive plans in the global financial crisis get a couple of pay cuts within a few months of each other um so this one it's a little more spread out but um that is possible and the reason is the defaults for the how do I okay I've hit
(47:46) a guard rail what adjustment should I make our defaults are make a relatively small adjustment see if it's enough you could change that um but it does does tend to be both what people would prefer and it it tends to test very well when you look at um actual sequences of returns and inflation so the answer to Jim's question is no you're not in in these examples you're not ripping the Band-Aid off you're not you know putting it all the way back to where we started again you're making a small adjustment they tend to be kind of 5 to 10%
(48:20) adjustments um and then seeing if that's enough and then seeing if it'll recover and in this case two small adjustments were enough uh it took a really long time but by the 90s um they actually got another pay raise and um and so that was all he needed um another way to look at it is if you were to make a huge adjustment all the way back to where you started you would be saying yes things are bad but I think that they could again be just as bad again like they could get doubly bad from where they are um in order if if you kind of
(48:57) reduced your income so severely that's what you would be saying which you know in you you could have that opinion certainly um historically it hasn't been necessary to make giant um changes in order to to kind of keep things on track um so uh great great question there um Derek have you ever had questions I more often I think you would see it on this graph um to say well wait a second if I hit that lower guard rail um you know I'm I'm I'm going to make a 5% adjustment even though things are down 24% why why is that um have people asked you that and how do you react to it it's
(49:36) not a question that I get too much in terms of like really questioning the numbers there now again you know uh if I worked with more nuclear Engineers that'd probably be a more common question that I would get um so for me not too much there I do think um a lot of people do find like the stress test view when we go in and walk through some scenarios of what those cuts would have looked like you not just the one cut but you going through a really tough period of time helpful to really make it concrete because I do think you know
(50:05) like the view here if if I wasn't adding anything to that is is pretty abstract some people just trust it and go along with it but I think it can give it's not doing as much to give kind of the Peace of Mind around like okay this guard rail strategy really is kind of calibrated to meet your own goals and Views when it comes to how much uh you know risk of downward adjustment you want to have have in your spending plan and so I I do find the stress test really helpful for that but it's not a question that I personally get that often okay great um I'll just hit a quick one here
(50:39) somebody was asking long-term net worth um you can see that in life Hub as well so assets and liabilities you actually can put depreciation into certain assets if you want to you just put a negative uh growth rate into them you know maybe it's you've got a vehicle or something in here um but you can see that here or back in finlow if you look at assets and liabilities um you'll see the the net worth called out Justin since you're there can you show how to print that one oh great idea yeah so there is another uh great feature this I forget if we covered this in December as well for for tax lab but
(51:16) you'll see it in both tax lab and in life Hub if you again click on the the little tool menu you'll have a generate report option um again this is also available in tax lab and the idea is that you'll have created now I didn't do anything special here but maybe I actually want to see your net worth in uh you know 2029 um choose the view you want right uh maybe it's a with things rounded or maybe it's nominal um and then hit generate report and choose um whether you want it to be a comprehensive report which is a full listing it's not necessarily going to look like the the the screen here
(51:57) custom onepage report is probably what you want if you're trying to essentially print the screen um and so and then you can choose whether you're going to include you know any other materials a cover page and so on um in the report and it'll create a uh a PDF of this and just a friendly reminder we are creeping up of the last 10 minutes of session here if you would like to hear a question answered please upvote it um Justin we have a couple or one that has some have a couple votes so I don't know if you want to tackle those yeah this
(52:29) the next one the one with with three votes I was going to hit so this is a great question um which is if you're using any other software um doing tax uh planning um you may see really really different values if you're trying to kind of compare Them Apples to Apples why is that um the main reason is it's extremely hard to actually do apples to apples comparisons between any sort of software but um putting that aside imagining that you actually could have exactly the same Capital Market assumptions and so on which you know with enough care you probably could get
(53:06) close the biggest reason is that other software doesn't do the what can I spend calculation so if you want to do apples to apples comparisons you're going to have to um do a um a a plan that is targeting a specific net income level so for for example here I have a plan that's targeting $112,000 net of taxes this one's actually following the retirement smile so it's $112,000 for now but it's going down over time again I don't know of any other software that actually does that exactly using the retirement smile formula so going to
(53:45) be extremely hard to do apples to apples but you could make it flat right and so you could eventually get to to pretty close so again to repeat the main reason that you'll see huge differences between an income lab plan and you know some tax calculations you've done is that you'll you'll need to do a um how can I spend in this case $12,000 net of tax plan in order to even start to do that comparison um and then otherwise you're you're going to be looking into every single little assumption um about you know dividend rates uh
(54:23) realization of capital gains uh returns inflation um all of that and trying to make sure that they are really nailed down exactly right um which can be I mean practically it's impossible but you can get close and I've definitely seen people do it and in that case the numbers are going to be uh extremely close because we're all using the same tax uh the same tax code so that would be my advice on that um it's uh it's not a fun process to try to do Apple samples comparisons um because of all the the the assumptions that go into
(54:58) things um let's see here um if if Mike is still on and wants to you're asking about what the difference between what if and compared to is I wasn't entirely sure what that refers to so if you wouldn't mind giving me a little bit more on that um Alex was asking you're a VI how I'm assuming you're asking about the retirement smile how much is the retirement smile Chang changing on a percentage basis um so going back here uh it's it's different in every year but oh I'm at a different different plan we'll go back to the other one um typically what I've seen is it's kind of between 1 and 2% uh in reduced spending
(55:46) during the reduction period um which is early in the plan so I'll go back to today's dollars here um that obviously slows down when you're getting you know toward the bottom here um but it's sort of a decelerating decreases um from about you know maybe a maximum of 2% a year more often around 1% a year um is what you're looking at but then at slowing to essentially zero and there are plans where you actually will see it come back up so it's actually an increase um if you wanted to do some kind of special um uh customized setting you go to the
(56:27) advanced settings go to income path and change it to custom and then you can actually specify the rate of real reductions you can say when they're going to begin so maybe you actually want to say hey for now we're not going to reduce but in five years we'll start reducing um and then you can actually in set a an increase to start you know for some number of years at the end of the plan so this will be a little it won't be S quite a smooth um graph right it'll be uh flat and more sharp decreases and increases but this is a really nice way if you want to specify what the
(57:03) percentages are it won't be using kind of that uh the actual retirement smile research which looked into how people change their spending across their lifetimes but it it can be a nice way if you're looking to have kind of control over that uh Justin quick question how would you show a future inheritance um so yeah that one not not hard let me see if I can put that in quick here so if I wanted to add an inheritance I can do it in life Hub or I can do it in the in the stepper since I'm here I'll just click on the pencil
(57:45) icon go to income go to other [Music] income inheritance you know maybe it's uh $200,000 um maybe it's John it's going to be not taxable and I'll make it one time and I'll put it you know somewhere in the plan crucial to make it one time otherwise you're going to have maybe a monthly $200,000 which is probably going to affect the plan a lot and then this should increase the spending capacity it did right it used to be in the 19,000 range now it's in the 20s and I will see it in the cash flow um now I have a broken y AIS here because you know that's a that's a
(58:49) that's a big number compared to everything else monthly I'll also see it if I go to uh the tax lab um so you'll see um a large non- taxable um chunk this is also a good time to point out that tax lab actually will include all of the cash flows um in it including non-t taxable ones and that can be a little bit confusing um if you're used to dealing with tax software that focuses on um on things like AGI or especially taxable income because there are actually cash flows that are not included in and certainly that are not
(59:27) included in uh in taxable income but you'll still see it in um in the uh in in here um so if I go down to I forget what year I put that in but I would see it in the tax bracket graph I would just see a large 0% bracket for that year because it's just it's building the 0% bracket to include all my non- taxable income Plus plus deductions and so on all right I think we're uh we're out of time do have a few questions which we'll we'll try to um we'll try to hit these uh in emails to you um or continue them um in on next month's uh next
(1:00:14) month's uh lab talk Tuesday so hope to see everybody in two weeks and on the community I'll be on there and uh interacting with everybody so hope to see you then um thank you Derek thank you Taylor thank you Ashley and Malley we'll see you again soon