Transcript:
In this training, we’re going to discuss how to input income into a Voyant plan.
To do that, we’re once again going to use the plus button in the bottom-right corner and select the Income tile.
From here, we’re going to use the Employment Income option.
If you had other types of income that are non-taxable or considered non-traditional income, you would instead use the Other Income section. Additionally, if you have a one-time windfall entering the plan, such as an inheritance, you can use the Windfall option.
For this example, however, we’re going to use Employment Income.
We’ll call this Judy’s Employment Income and enter her annual salary amount.
We’ll also enter her annual bonus amount and note the growth rate, which is currently set to 3%. This growth rate is coming from the Plan Settings section.
You can leave that as-is, or if you receive updated information from the client, you can click Edit to adjust it. You can also return it to the defaults at any time.
Next, I’m going to move over to the Timing section.
Here, we’ll note that Judy’s employment income begins at the start of the plan and continues until her retirement.
Then we have the Steps section.
This is a great feature for stepping income up or down at any point during the employment period. For example, if Judy plans to transition to part-time work during the last few years before retirement, we can model that here.
I’m going to demonstrate that in this example.
Let’s say we want to reduce Judy’s employment income by half for the final few years before retirement.
Judy retires at age 65, so let’s go back a couple of years on the Timeline and create an event.
We’ll select the part-time work icon and name the event Judy Goes Part-Time.
We’ll then use that event as a step within the plan.
I’ll click Done to save that income entry, and then select Save and Add Another so we can immediately enter Philip’s employment income.
We’ll call this one Philip’s Employment Income.
Let’s assume Philip earns approximately the same salary, receives a $10,000 annual bonus, and plans to work full-time throughout his entire employment period.
We’ll click Done to save.
Now, on the cash flow chart, you’ll see blue inflows entering the chart. These blue areas represent employment income flowing into the plan.
You’ll also notice a black Total Need line. This represents the total expenses, goals, and estimated taxes within the plan.
You’ll also see an area representing surplus income.
At this point, I want to go back into Plan Settings and remind you about an important Calculation Setting.
Under Calculation Settings, the option to Transfer All Excess Income and Credit to Savings is not enabled by default. That means that, by default, Voyant assumes all excess or surplus income is spent.
If you would prefer for excess income to be saved automatically, you can toggle this option on.
Let me show you what that does.
Now that we’ve enabled the setting, you’ll notice the chart now indicates that surplus income is being transferred “to savings.”
That surplus is going into the clients’ default surplus accounts. These are nominal cash accounts that Voyant automatically creates for each individual within the plan.
If we now go into Year View and look at the Investment Accounts section, you’ll see that surplus income is accumulating in those cash accounts over time until it’s needed within the plan.
For example, during years where the clients have larger expenses, such as the Family Vacation or a vehicle purchase, the software may draw from those accounts as needed.
If we toggle that setting back off, those excess funds will once again be assumed spent.
Another important thing to point out is that now that we’ve entered employment income, the software is also accounting for taxes on that income.
That includes:
- Federal income tax
- Medicare tax
- Social Security tax
- State income tax
If we go back to the Let’s See screen, I’m going to switch to the Dual Chart option.
From here, we can also look at the Taxes Chart, turn on Details, and review more detailed information about the taxes being projected within the plan alongside the cash flow chart.
I hope this has been helpful.
If you have any questions, remember that you can always click the name of your client in the top-right corner, select Request Support, enter your question into the text box, and share client access. That will send both your question and the client case to our support team.
Thanks for listening.