Q - Viewing the Let's See cashflow chart I notice that in certain years of my plan, especially in retirement, inflows the cash inflows are an exact match to my total need, as indicated by the need line. How can this be?
A - Liquid Assets are Used to Supplement Income in the Cash Flow
The software will top-up income from liquid assets automatically, if assets are available, in order to prevent potential shortfalls in the cash flow, provided that you place no withdrawal limits on these accounts. Liquid assets include cash accounts (savings and current accounts), ISAs, unwrapped investments, offshore taxable accounts and in some cases even tangible assets, provided it is not one’s primary residence and that the Liquidation of the asset is set to “when needed”.
This top-up of income from liquid assets can be best viewed by ticking the Detailed check box near the bottom-left corner of the Let's See screen. The colour coding will indicate the composition of each year's inflows. If you notice gold inflows from Savings & Investments, these usually indicate ad hoc withdrawals. Note that ad hoc withdrawals are distinguished from planned withdrawals, which are displayed in pink.
In years where the total inflows match expenses, the software is drawing funds from liquid assets in order to top off income and prevent shortfalls.
This can be seen most easily on the Let's See cash flow chart in its detailed view.
If viewing the software, tick the Detailed check box in the panel near the bottom-left corner of the charts.
In this view you will see the various categories of inflows. You should see that that the black need line is above the blue income, in most cases yellow/gold savings and investments are flowing into the plan to meet the portion of annual expenses that are not being covered by regular income from employment, pensions, annuities, etc.