Income & Expenses - Pralana Retirement Calculator

High-fidelity income and expense definition is key to high-fidelity projections. It may take some extra effort to specify your inputs, but once it’s done it’s just a matter of keeping it up to date and the benefits are forever.

Pralana can model numerous income and expense streams along with the typical nuances that tend to correspond to the various types of income and expenses. Here are some examples:

Employment income streams can include personal and company-matching contributions to tax-deferred, Roth and Health Savings accounts. Further, they can optionally include Social Security taxes and self-employment taxes.

Pension income streams can include rollovers to traditional and Roth IRA’s and non-taxable amounts and can model survivor options.

You specify your benefit at Full Retirement Age and the tools will calculate your actual benefit as a function of your actual start age. Spousal benefits will also be calculated for both partners. Restricted Applications are also fully modeled.

Taxable and non-taxable windfalls for both husband and wife can be modeled.

Other Income for both husband and wife can be modeled, and each of these streams can be treated as ordinary income, long-term capital gains or non-taxable income. Survivor options can also be modeled.

The purchase and pay-out of annuities for both husband and wife can be modeled, and this includes survivor options.

A reverse mortgage can be modeled on one property, and payout options include lump sum, tenure and term.

Purchase, ownership and sale expenses of personal and rental properties can be modeled, and this is fully integrated with the tool’s tax calculations.

College education expenses for your children can be modeled, and this includes 529 plans, student loans and pay-as-you go options.

Healthcare expenses are modeled across up to five typical time periods, over which expenses can vary significantly: while both partners are working, while only one partner is working, when neither partner is working and not yet eligible for Medicare, when only one partner is eligible for Medicare and when both partners are eligible for Medicare. This also includes modeling of ACA policies and automatic calculation of Medicare Part B, along with IRMAA adjustments.

Discretionary spending across three different user-specified time periods is modeled. Typical periods might be pre-retirement, early retirement and late retirement, but it’s totally up to you how the time is partitioned. All expenses are adjusted for inflation.

Do you anticipate some one-off expenses such as a big wedding or a once-in-a-lifetime vacation? These can be modeled as Miscellaneous expenses. But the tool can also handle unique expenses that span multiple years and/or have unique taxation characteristics such as alimony.

Charitable giving expenses are modeled and this is fully integrated with the tool’s tax calculations. Are you familiar with Qualified Charitable Donations? If not, you should be if you make charitable donations. If these are made directly out of your tax-deferred account after you reach age 70, these donations can count as part of your RMD and they are excluded from your taxable income even if you use the standard deduction. And Pralana models this.

Term life insurance can be modeled for both husband and wife. Pralana Gold (and in the near future, Pralana Online) will calculate the amount of term life insurance that both you and your spouse need to maintain your standard of living in the event of the untimely death of the partner. You can then choose to modify that value as you desire and specify the associated insurance premiums. Naturally, this life insurance has a key role while investigating survivor scenarios.

Cash value life insurance can be modeled for both husband and wife. The premiums can be paid out of the dividends once the policy becomes “paid up” and cash withdrawals can be modeled as well. Naturally, these life insurance policies play a key role while investigating survivor scenarios.

Visit the Manuals page to get a free download of the Pralana User’s Manual and you can get the details on all of these input pages.