Transcript:
In this training, we’re going to review Voyant’s expense fulfillment and liquidation order logic in the Voyant Global system.
First, let’s take a look at the Plan Settings and review the Liquidation Order settings.
This is the current liquidation order set in my plan. These are my default settings, with accounts ordered as Taxable, Tax Deferred, and Tax Free. Depending on your firm’s settings, you may see a different default order in your own plans.
These settings determine which accounts the software will liquidate, and in what order, when fulfilling expenses in the plan.
In this example, during the retirement phase, the software will first look for any available income sources in the plan. After available income is used, the software will begin following the liquidation order settings, starting with taxable accounts first.
Let’s take a look at what this looks like in the software.
If we turn on the Details button in the Cash Flow chart, you can visually see how the software is fulfilling expenses using different income and account sources.
For example, in Year 1 of retirement, the plan has a total expense need of $332,677.
Out of that amount, $222,654 is being fulfilled using taxable savings or investment accounts. The remaining amount is being fulfilled by other income sources within the plan for that year.
The software will continue using taxable assets until those assets are depleted. Only after taxable assets are exhausted will the software begin drawing from tax-deferred retirement accounts.
Now let’s review what this looks like in Year View.
If you scroll to the first retirement year, you’ll be able to see the specific accounts flowing into the plan during that year.
In this example, funds are being pulled from the client’s emergency fund and joint investment account. The remainder of the expenses are then covered using pension income and rental income.
If we move forward to the year where the plan begins pulling from tax-deferred investments, you’ll notice that we still have some non-registered savings remaining in the joint investment account, along with some emergency fund dollars. The remaining expenses are then being fulfilled using retirement savings accounts.
If you review the Investments section, you can see why the software has moved on to another funding source.
The joint investment account has reached a zero balance at the end of that year, and the emergency fund has reached its minimum balance requirement of $20,000.
Because of this, the software begins drawing from tax-deferred retirement accounts, while still leaving the tax-free account untouched.
If you have a more specific withdrawal strategy in mind, you can more tightly control withdrawals and withdrawal limits on individual accounts.
To do this, go to the Savings & Investments section and select the account you would like to control more directly.
For example, let’s look at Johnny’s employer-sponsored tax-deferred retirement account.
Go to the Withdrawal Limit settings.
By default, this account is currently set to “Pull from this account as needed.” However, you could change this to “Scheduled Only” if you want to create a more structured withdrawal strategy.
To create a planned withdrawal, select Add Withdrawal and save your changes.
For this example, we’ll create “Johnny’s Annual Retirement Withdrawal.”
You can choose several withdrawal methods, including:
- A fixed amount
- An amount adjusted for inflation
- A percentage withdrawal
- Or withdrawing all available funds
In this example, we’ll use a percentage withdrawal strategy and set the account to withdraw 4% annually.
You can also set the withdrawal as recurring and define the timing of those withdrawals.
For example, we may want withdrawals to begin at Johnny’s retirement event and continue through the end of the plan.
Once completed, click Done to save the withdrawal strategy.
You should now see the planned withdrawals displayed in yellow throughout the cash flow chart. These withdrawals will continue either until the end of the plan or until the account is depleted.
You can also return to Year View, go to the Investments section, and review the retirement account directly to see the scheduled withdrawal listed in the Withdrawal section.
I hope this was helpful.
If you have any questions or would like to walk through a plan with a member of our support team, you can click the client’s name in the top-right corner of the screen, select Request Support, enter your question into the text box, and share client access.
Thanks for listening, and talk to you soon.