Is Caution Warrante...
Clear all

Is Caution Warranted When Entering Discretionary Expenses?


NC Cpl
Eminent Member Customer
Joined: 2 months ago
Posts: 26
Topic starter  
  • Wondering if there could be a potential problem if one isn't careful about their approach to expenses that are anticipated to change. Example: If one is using the "three timeframe period" approach, its reasonable to expect some expenses to stay the same over time, some to go down and others to disappear. This could be an argument for entering expenses in a "line item" fashion rather than a big single number - so each can be adjusted individually.
  • But a problem seems to surface if you then use employ the "Reduction to ALL expenses when a spouse dies" option. Any expense reductions already factored into the list will be reduced again, thus providing an annual expense level that is too low. The "percent reduction when a spouse dies" option functions like a big hammer - it reduces everything, and should probably be avoided IF one chooses to factor in lower expenses using the timeframe approach. I see the value of it as the death of a spouse will undoubtedly have an impact on some expenses, but not all, so it one should be careful with the approach to expenses.
If I'm off base on this assessment I'd welcome feedback from the forum.
This topic was modified 1 month ago 2 times by NC Cpl

Bill Hines, Retirement Planner
Trusted Member Customer
Joined: 8 months ago
Posts: 60

Hi @nc-cpl! I'm back, now that I have my investment advisory up and running. You're correct - you should use the advice in the second bullet you posted and make sure to factor things correctly.

I always recommend browsing the input and output reports to ensure everything looks sane and reasonable. Problems like this will jump out, so it's a good sanity check.

Bill Hines
Investment Advisor/Financial Counselor/Retirement Planner
Emancipare Investment Advisors LLC