CFpro 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 serves clients by using CFpro to understand the various financial tradeoffs they can control for themselves, 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:
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| 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 |
| Mortgage |
| Loan balance at start of Planning Period |
| Number of Mortgage Remaining Years |
| Mortgage annual interest rate |
| Spending |
| 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 |