Subscribers now have the ability to change the percentage of excess income saved up to 5 times during their lifespan.
What is Excess Income?
The Boldin Planner allows you to account for your income and expenses through your lifespan.
You will have a surplus any time your monthly income from all sources is higher than what you have specified for your expenses and savings contributions. And, any time that your income exceeds your expenses, you have an opportunity to strategically allocate your surplus funds to enhance financial security, investment growth, and wealth preservation.
The Excess Income feature allows you to manage your surplus funs in the Boldin platform, ensuring that the software saves as much or little of your surplus funds when and where you specify.
What are the benefits of this feature enhancement?
This feature enhancement allows you to change the percentage of excess you are saving up to 5 times during your lifespan and more accurately represent what you would do with surplus funds in real life, such as increasing or reducing your excess income saved during different phases of your life.
Advantages of saving a high percentage of excess income
Compounding Growth: The earlier you save, the more time your investments have to compound, leading to exponential wealth growth over time.
Financial Security: Savings provide a safety net for unexpected expenses, reducing financial stress.
Tax Efficiency: Investing in tax-advantaged accounts like Roth IRAs and 401(k)s can minimize tax liabilities on capital gains and dividends.
Investment Flexibility: Extra savings allow for diversification across different asset classes to optimize risk and return.
Retirement Readiness: Building a sizable portfolio before retirement may help to ensure a steady income stream in later years.
Disadvantages of saving a high percentage of excess income
Lower Immediate Consumption: Saving more means spending less today, which may impact lifestyle choices.
Investment Risk: Even diversified portfolios carry market risk, which could lead to temporary reductions in your savings balances.
Inflation Erosion: If savings are kept in low-yield accounts, inflation may diminish their purchasing power over time.
Should You Save More Before Retirement Than After?
Saving more before retirement is generally advisable because pre-retirement savings benefit from a longer compounding period, higher earnings potential, and higher returns.
After retirement, savings may shift toward more stable, income-generating assets (such as bonds and dividend stocks) to preserve capital while still allowing for growth
You might want to increase the percentage of excess income saved
⬆️ When children enter school and child care expenses decrease
⬆️ When school loans, mortgages or other debt are paid off
⬆️ After Required Minimum Distributions begin, because if you don’t need the
RMDs for living expenses, reinvesting them may maximize wealth preservation
You might want to reduce the percentage of excess income saved
⬇️ In the early years of retirement, as this may allow you to maximize lifestyle spending while relatively healthy
NOTE: Excess income saved is not included in the Financial Wellness Metric: Savings Rate