Transcript
First, we’ll create a What-If scenario based on the client’s current plan. Go to What-If, give the scenario a name, and create the plan. You’ll see that you’re now in the What-If line of credit plan.
Next, navigate to the Plus Button → Debts and Loans → Line of Credit. Enter a name, credit limit, and interest rate. Then, go to the Withdrawal Limit and select As Needed, and click Done.
Now that the line of credit is in the plan, go to Plan Settings → Liquidation Order and set the line of credit as the first stop in the liquidation order. This ensures that any expenses are drawn from the line of credit before liquidating invested assets. Click Done.
In Year View, you’ll see that initially, no funds are drawn from the line of credit. Over time, a balance builds as it’s used for expense fulfillment. During retirement, expenses are drawn from the line of credit, leaving invested accounts untouched to benefit from compound growth.
Next, let’s go to the Let’s See screen → Compare Plans → Chart View. We can compare the line of credit plan with the base plan.
-
Assets Chart: At the end of the plan, assets in the line of credit plan are significantly higher than in the base plan because invested assets are left untouched and continue to grow.
-
Net Worth Chart: At the end of the plan, more assets remain even after the line of credit is repaid, thanks to uninterrupted investment growth.
-
Legacy Screen: You can compare estate passing to heirs. In this example, the estate tax is slightly higher with the line of credit, but the total wealth transfer after tax is significantly greater than in the base plan without a line of credit.
I hope this demonstration was helpful. If you have any questions, reach out by clicking the client’s name in the top right, selecting Request Support, entering your question in the text box, and sharing client access.
Thanks for listening.