I'm working on my inputs, now trying to understand how PRC manages "cash flow", "expenses", and "consumption". I started with large Miscellaneous Expense, moved everything into the breakouts (Property, Healthcare, Phased). I generally go back to Dashboard and see what the effect is of each my changes.
Got it all working with "expenses" and cool - financial assets increase - yeah - now I can spend. Moving to Spend Strategies and discovered Smoothing - I'm not sure I understand exactly what's happening there, but have noticed that toggling between "Specified Expenses Only" and "Consumption Smoothing hugely affects the Dashboard. So now trying to understand the top and bottom panels of the Cash Flow dashboard and I'm stumped - they don't match - put everything into a spreadsheet and found bottom was 51% higher...and FINALLY I noticed on the far right "Future $". That solved almost all of the difference - maybe it's a me thing but that was not obvious. Perhaps update the header for the lower section to "Money Flow: Net Cash Flow (Future)".
However...the one thing I'm left with is that the top appears to bundle "Consumption Smoothed Spending" into "Expenses Before Taxes" - but it is called out separately in the lower panel. Back to the spreadsheet and yes - that's the delta (future-adjusted) So I would assert that "Spending" is not the same as "Expenses" and there should be distinct band (and column in the table) in the top section for "Consumption Smoothed Spending".
However...the one thing I'm left with is that the top appears to bundle "Consumption Smoothed Spending" into "Expenses Before Taxes" - but it is called out separately in the lower panel. Back to the spreadsheet and yes - that's the delta (future-adjusted) So I would assert that "Spending" is not the same as "Expenses" and there should be distinct band (and column in the table) in the top section for "Consumption Smoothed Spending".
Not sure I get the spending vs. expenses distinction, as they both involve money leaving the portfolio. In any case, if you set the top panel (on the Dashboard) to display Expenses, everything is separated out. I'm guessing the Cash Flow view doesn't do this because the display would be too complicated (and the details are already available in the Expenses view).
Btw, consumption smoothing calculates the amount of additional annual spending (on top of all your specified expenses) during retirement that will result in the specified balance (or success criteria) at the end of the plan, and then applies this spending as a separate "expense" (sorry!).
@plaut - thank you for engaging with my issue!
Not sure I get the spending vs. expenses distinction, as they both involve money leaving the portfolio.
Right. The bottom panel makes it clear: money leaving the portfolio is "Total Cash Outflows" = "Things named Expense" + "Smoothing" + "Taxes" + "Healthcare"
(Nit: If you look at the Build | Expenses menu you see "Healthcare" so I would think that should be "Healthcare Expenses". What is not on that Build | Expenses menu? "Taxes" - and "Smoothing.")
Your point that the Dashboard | Expenses display shows everything as "Expenses" is important - the Dashboard | Cashflow uses "Expenses before taxes" and it's not clear (to me) that includes "Smoothing"
My challenge was that the of money left over that smoothing reveals did not seem (to me) to be to be an "Expense". It isn't listed on the "Build | Expenses" menu for example, though in practice you might get an equivalent result if you put that Smoothing amount in "Miscellaneous".
I think my net point is that some outflows have "Expense" in their name AND are on the Build | Expenses menu. But PRC considers "Taxes" and "Smoothing" to be also be "Expenses" even though that is not in their name. And "Total Cash Outflow" == "Expenses" which doesn't feel right to me.
In summary - in PRC some expenses are "Expenses", and some are not - and that lack of consistency in the naming confused me. But maybe I'm a snowflake 🙂
