Scenarios - Use an event to create an early (or late) retirement scenario

Early (or Late) Retirement Scenarios

Use an alternative event to end income before or after the earner's retirement. 

Although Retirement is normally the event used to end (earned) incomes, a different event could be added and selected to schedule the end of an income either before or after your client’s planned retirement. After all, what is retirement? Is it when your client plans to stop working or is it when he/she plans to begin taking retirement income? Considering the software is defaulted to assume that money purchases are crystallised at the owner’s Retirement event, it might be a good idea to add an alternative event to the timeline to mark any different assumption that should be applied to an income that needs to be scheduled to end before or continue past the start of retirement income.

For example, you have a client who would like to know if he could stop working early, at age 55. He would like to live off his accumulated liquid assets and begin taking drawdowns and tax free cash from his money purchase at a later date, at his planned Retirement event. In this case, you could add an event to the timeline - let’s call it “Retire Early”.

1. First, go to the Employment screen and select the income in the ledger, right, provided the income has already been entered into the plan.

2. On the Time panel (also right) select the Event tab.

3. Click the New Event button in the bottom-right corner if this panel.

4. Enter a Name for the new event - “Retire Early”.

5. Events can be positioned on the timeline based on future year or owner age. Select your client as the Owner of the event and enter 55 in the Age or Year field.

6. Click Add and the new event will be added to the timeline in the year your client will turn 55. Now you can use this new event to schedule the early end of your client’s employment.

7. With the income still selected in the ledger, go to the Time panel, right, and click the red button (the end event) that is currently situated next to the earner’s Retirement event, deselecting Retirement as the event scheduling the end of employment.

8. Next, click the new “Retire Early” event. A red dot will appear next to the event, indicating that it is now being used as the end event – the event scheduling the end of earnings from this income source.

You will notice that the line graph at the bottom of the screen adjusts to show that earnings from this income source stop a few years short of planned retirement.

Now you have a free moving event that ends earnings from this income source at least, that can be moved independently from Retirement, the event marking the start of retirement income. You could move the new “Retire Early” event earlier in the timeline to discover how early your client might stop working and still be able to afford beginning retirement income on schedule.