@smatthews51 Stuart: Would you consider having a user option in the upcoming browser version of PRC to allow MRDs to be included in the calculation of cash flow in the tabular views, and in the depictions in the graphical projections? I understand that there are pros and cons of counting this internal transfer of monies as "in-coming" cash flow. To me, it should be handled in the same way as "other income taxed as regular income." Everything else I get a 1099-R for is entered into my cash flow. The way it is handled now, not being part of cash flow, the app doesn't use MRDs to off-set annual expenses. That doesn't make sense to me. (And makes it really challenging trying to explain to my wife that annual expenses in retirement really aren't higher than cash flow!)
@yankeelaker Brad, the upcoming Pralana Online tool currently works the same as the Excel version in this regard, but we'll consider your suggestion (actually, we already have but we'll keep considering it going forward). One correction, though, in your post: PRC most definitely DOES use your MRDs (RMDs in PRC) to offset annual expenses. Please refer to the user manual section entitled Modeling of Accounts and Cash Flow which starts on page 10 for a more detailed explanation than I can provide here. Basically, positive cash flows and MRDs result in deposits to the cash account and negative cash flows can result in withdrawals from the cash account and can be propagated on to other downstream accounts if these withdrawals would tend to take the cash account balance beneath the specified floor. Either way, the cash flow value always includes your annual expenses and they are reconciled with all forms of income as the tool models the cash account. You can see the details of this on the Reports > Show Me a Summary Report page which shows all the puts and takes for each account for the next five years.
Stuart
@smatthews51 Stuart: I have attached a document to try to illustrate my frustration. The first page is the part of the tabular view showing the transition to MRDs between 2030 and 2031. In my plan, I had deliberately timed my “Other Income Taxed as Regular Income” to wind down in 2030, to be compensated by MRDs starting in 2031. In my mind, the injection of MRDs in 2031 will offset expenses, with a net positive cash flow. (I do know that in reality the MRDs are a withdrawal from an account, and not income from an external source. But in fact RMDs are money that is going to show up in my bank account for me to be able to spend against expenses.) But the table does not show that the MRDs are covering expenses. Instead, it shows that they are being moved out of the cash account to keep that account under the ceiling, while at the same time I am experiencing a negative cash flow.
And the graphical view (page 2 of my attachment) just reinforces the negative cash flow story line: The blue line (total income) slips under the red line (total expenses) at this transition to RMDs point in the plan. Indeed, the graph continues to show this flip to red-line-on-top until end of life. But, the reality is that if MRDs were treated like I will treat them in real life, to cover expenses, then my total inflows are greater than outflows every year. This is why it doesn’t make sense to me, and why I have difficulty explaining this to my wife. To her, it looks like I am trying to “explain away” something that the numbers and graphs show in living color. Hence my frustration with this….
(The Reports > Show Me a Summary Report page doesn’t help in this instance, since this part of our plan is more than five years into the future.)
@yankeelaker OK, Brad, I get it. Thanks for elaborating your issue. This is actually a very simple change and I just made a quick prototype to Pralana Gold to check it out. As expected, it works nicely. So, let me think about it a little more and discuss it with my partner and we'll make a decision about incorporating this approach into Pralana Online. Incidentally, the Summary Report showing the puts and takes from each account is not limited to the next five years in Pralana Online.
Stuart
