Our Cash Flow Projection Tool

Retirement planning is fraught with important assumptions about many significant, unpredictable events, which can substantially impact cash flow calculations and results. RocketCap has built a tool, CFpro, that provides clients with a better understanding of the duration of their future cash flows under a wide variety of such assumptions.

In retirement cash flow planning for clients having both pre-tax and after-tax accounts, it often goes un-noticed that the sequence and amounts of withdrawals from those two accounts can make a big difference to the longevity of the retiree’s cash flow. Cash flow longevity depends on the amounts in the two accounts, the amount of tax deductions the client has, returns on investment and spending.

RocketCap uses CFpro to understand the various financial tradeoffs an investor can control for himself, and see the impact of different withdrawal strategies on the duration of their cash flows under a wide variety of pertinent assumptions.

For each set of assumptions as listed below, the CFpro tool calculates the duration of cash flows needed to sustain lifestyle under the assumptions:

Planning Period
Age at start of retirement year
Number of years in planning horizon
Investment Performance
ROI each year, Inflation-Adjusted
Pensions or Income
Pension (taxable) (Example: Social Security)
Age at first pension payment
Tax Rates Assumed
Average Tax rate (State)
Federal Taxes from Tax Table
Property tax
Assumed growth rate of Property Tax
Medical Expenses
Initial Price of Medical Insurance
Initial Annual growth rate of med insurance
Late stage Growth rate of medical Insurance
Year in which you switch to Medicare
Expected Total Unreimbursed Medical Expense
Loan balance at start of Planning Period
Number of Mortgage Remaining Years
Mortgage annual interest rate
Discretionary spending goal: Initial
Discretionary spending goal: later reduction in spending to fraction of original spending
Year in which initial spending ends
Initial Nest Egg
Initial After-tax growth account (only interest+dividends are taxed)
Initial Tax-free growth (only withdrawals are taxable income, e.g., IRA)
Strategy for withdrawing cash from the two accounts

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