Need Analyser, Savings and the Performance Slider - Using the two simulations together

About the Savings Need Analyser

When run, the savings need analysis creates a special reserve account called "Needs Analysis" when running the simulation. Funds are deposited into this account, which is an investment account, and held until the specified target event after which they are released for payment of expenses.

The net assumed growth rate of this taxable investment account can be viewed by clicking any bar of the lower chart shown when running the simulation, prior to the savings target event selected for the simulation - e.g. Retirement. This bottom chart shows the simulation results. Click the Detailed Info link at the bottom of the chart legend. The chart details panel will display. Select the Investments tab. Find the "Needs Analysis" account. A growth rate will be shown for this reserve account, net of account fees.

This growth rate is set from Preferences > Plan Preferences (on the right side of the screen) > Default Inflation / Growth Rates > Investment Growth %. The default fees, deducted from this default growth rate, are also set in Plan Preferences on the Investment Fees panel, in the Taxable % field.

The default account fees on this taxable account are also taken from Preferences > Plan Preferences > Investment Fees > Taxable %. Again, the growth rate shown on the Let's See chart's Detailed Info panel, Investments tab are net of these account fees (i.e. the realised growth rate).

Using the Savings Need Analyser with the Performance Slider

The performance slider, if activated, could be used to adjust this assumption upwards or downwards. I've never used the two together until now but this is an interesting approach. Again, you can view the performance slider's adjusted growth rate as applied to the" Needs Analysis" account on the Let's See chart's Detailed Info panel, Investments tab.

If you run the savings need analysis and then adjust the growth rate using the performance slider, the chart results will adjust, showing any surplus or shortfall, but you would need to click the Analyse button again to get an adjusted annual savings figure based on the adjusted growth assumption.

Using the Savings Need Analyser to Find the Amount Available to Gift, Spend

The Savings Need Analysis can also be used to determine the amount per annum your client could spend or gift, provided the plan has no shortfalls.

The Annual Savings Need Analyser works differently when dealing with annual gifting / spending. It tests the entire timeline for any shortfalls. There is no concept of excluding a shortfall but continuing to gift/spend. The plan must have no shortfalls for potential gifting/spending to be considered in the analysis.

If no shortfalls are present, the analyser will begin building a recurring annual expense for a timespan set between the plan's start the projected goal event. This expense has no inflation rate. It is a flat expense. The analyser then report as a negative result the amount per annum that should use all of the plan's available liquid assets without incurring a shortfall.