How to create a Safe Savings Rate Plan

The Safe Savings Rate plan is a great tool to help your clients understand how much money they need to save per year to reach their goals.  It displays the percentage of net income that will need to be saved and will simulate the effects that will have on your clients plan.

Note: the percentage saved as outlined in the cash flow report is [(Net Income x inflation) x Savings Rate]

To get started:

1. The first screen prompts you to set the Distribution amount which is the annual amount that your client will need for retirement. 
2. The next screen prompts you to include all the accounts associated with the plan. However, to trigger the accounts you want the annual savings to go to, you must set the contribution of those accounts to at least $1 to activate that account.  For example, say you have a brokerage account, a 401(k), and a Roth IRA.  If you want the annual savings to go to the 401(k), you must add a contribution of at least $1 to that account to activate the account to receive the annual savings.  NOTE: with multiple accounts activated, the system distributes the savings to the accounts in the following order: 1) Tax-Exempt Accounts 2) Tax-Deferred Accounts and 3) Taxable Accounts. 
3. After you select the accounts you want activated in the plan, the following screens allow you to set the Allocation, Income, Taxes, and Inflation amounts.
4. You will then arrive at the Rules screen which will allow you to input a set of rules that will override the Inflation, Distribution, and Contribution amounts 

• Inflation Adjustment: when turned on, each years inflation will be adjusted by the standard deviation that is set
• Distribution Inflation Cap: the maximum amount inflation will be in any given year
• Floor: is the absolute minimum distribution amount for your client in any given year
• Ceiling: is the absolute maximum distribution amount for your client in any given year (Hard Ceiling)
• Maximum Distribution: is the maximum percentage amount of your client’s portfolio that will be distributed in any given year (Soft Ceiling)
• Minimum Distribution: is the minimum percentage amount of your client’s portfolio that will be distributed in any given year (Soft Ceiling)
• Portfolio Return Distribution Freeze: will maintain the previous year’s distribution amount when the portfolio return in a given year hits a certain percentage level.
• Maximum Contribution Amount: the absolute maximum amount of excess income that can flow into a tax-deferred or tax-exempt account.