Understanding the Assumptions Behind Your Boldin Plan

Default Rates

Withdrawal Order

Start Dates and Stop Dates

Today's Dollars or Future Dollars

Depreciation of Assets

Accounts

Deductible Contributions

Excess Income

Taxes

Social Security

Medicare Expenses

Long-Term Care Expenses

The Boldin Planner is designed to help you build a long-term retirement plan, understand how different parts of your plan interact, and make informed decisions over time.

Every plan is built on a set of assumptions, including asset growth rates, inflation and tax rules. Because of this, your projected estate value, account balances, withdrawals and taxes will naturally change over time. At times, you may notice differences between projections for income, expenses, or charts. The sections below explain why this happens and how to interpret what you're seeing.

Boldin is a forward-looking projection engine. Your plan is recalculated each month as time progresses. For current-year tax planning or filing, we recommend using tax software or working with a tax professional.

Your goal of your plan is to fund retirement through your (and your spouse's) projected longevity across a range of scenarios. Longevity is initially based on average life expectancy for your age, but can be adjusted. You can view and update this in My Plan > Summary.

Default assumptions are based on long-term economic data. You can adjust these values based upon your own research and rationale, but even small changes can have a meaningful impact on your results. You can modify assumptions such as inflation, Social Security COLA, housing appreciation, and medical inflation in My Plan > Rate Assumptions. The "Average" inflation and returns setting computes the linear average of the Optimistic and Pessimistic assumptions.

Switching between Optimistic, Pessimistic, and Average assumptions allows you to see how your plan performs under different conditions.

Inflation and non Social Security income increases are applied in January, beginning the year after the current year.

Annual return assumptions are converting into a monthly growth rate using:

(1 + growth rate)^(1/12) − 1.

Housing appreciation is applied monthly.

The Boldin Planner automatically funds the expenses in your plan. Income sources (work income, Social Security, pensions, etc.) are used first.

If income does not fully cover your expenses, the Planner uses withdrawals based on your selected strategy and the following default order:

Within each category, the growth rate on accounts will influence the order of withdrawals. Accounts with the lowest growth rate will be used first, allowing higher-growth accounts more time to compound. 529 accounts are not included in the withdrawal sequence and must be distributed manually.

You do have the ability to add manual distributions by creating transfers from retirement accounts to taxable accounts (e.g. checking, savings, or brokerage account).

NOTE: The Planner allows withdrawals prior to age 59.5 and does not apply early withdrawal penalties.

Start Dates take effect in the month you reach the selected age. Stop Dates remain in effect through the selected age.

If you select "Retirement Date" as an end date, the expense or income ends immediately prior to the retirement date.

Projections run through December in the year that the longevity age is reached for both the primary user and partner to ensure 12 months of data for reporting. The surviving spouse switches from married to single in the first year in which their spouse has been deceased for the entire year.

You can view your plan projections in either Today's Dollars or Future Dollars using the Assumptions toggle:

These are two ways of viewing the same projections over time. You can learn more about this feature in this article.

Future Dollars reflect actual projected values based on your assumptions. Today's Dollars adjust those values for inflation to reflect present-day purchasing power. If income appears flat or lower over time, switching to Future Dollars often clarifies the underlying growth.

You can model depreciation for "Other Assets" within the Planner.

Boldin models your plan based on overall assumptions rather than individual investment performance. The default rates of return in the Planner are stated above, and PlannerPlus subscribers have the ability to change the rates of return. You should enter nominal rates of return that reflect your expectations.

If rates appear inconsistent, check whether your plan is set to "Optimistic" or "Pessimistic" assumptions.

For tax-deferred investment accounts like 401ks, Traditional IRAs and Other Pre-Tax accounts, contributions reduce your taxable income, returns are not taxed, and all distributions are taxed as income. These accounts are also subject to Required Minimum Distributions (or RMDs).

Starting at age 72 or later, the calculator estimates required minimum distributions based on IRS Publication 590-B. Excess withdrawals not used to cover monthly expenses are assumed to be added to your Excess Income.

For Roth accounts, contributions do not reduce your taxable income since these accounts are funded with after-tax dollars. However, the model assumes no taxes on the growth and distributions from these accounts.

For HSA accounts, contributions are treated as pre-tax and will reduce your taxable income for federal taxes and all states except California and New Jersey. Returns are not taxed except in California and New Jersey. All distributions are assumed to be used on healthcare expenses and so are not taxed. These accounts are not subject to RMDs.

For 529 accounts, contributions are treated as post-tax for federal taxes but as pre-tax and will reduce your taxable income in all states except California, Delaware, Hawaii, Kentucky, Maine, New Jersey, and North Carolina. Indiana, Utah, and Vermont offer tax credits for contributions rather than tax deductions and are treated as such. Returns are not taxed. All distributions are assumed to be used on education expenses, and so are not taxed. These accounts are not subject to RMDs.

At this time, the model does not assume any penalties for early withdrawals.

If you model a Roth conversion, the amount being converted is treated as taxable income at the age selected for conversion. Simulated new Roth accounts grow at specified rates of return and withdrawals are tax-free.

You have the ability to view your deductible contributions in the Insight > Taxes > Federal Tax Deductions Chart.

Excess income is any income not allocated to spending or saving in your plan and can be accessed through My Plan > Money Flows > Excess Income.

You will have "Excess Income" anytime your monthly income from ALL sources – including Required Minimum Distributions – is higher than what you have specified for your total monthly expenses. Some years, you may earn more than you have designated in your budget, so you will need to tell the tool what to do with the excess income.

Note: The tool will automatically default to choose "Cash (Default Account)" for your excess income. If you set up a taxable investment account (like a Checking, Savings, or Investment account) in My Plan > Assets and Debts > Savings, you will be able to designate one of these accounts for your Excess Income. We suggest that you do this, as rates of return can have a significant impact on your plan results

You can view your Excess Income in the Insights > Surplus-Gap chart.

Double counting can occur if you connect a credit card while also manually entering recurring expenses (e.g., rent, utilities). To fix this issue, either disconnect the credit card or remove recurring expense entries to prevent overlap. Alternatively, calculate the average monthly payment toward your credit card and enter it as one recurring expense. This approach simplifies tracking and avoids inflated expense totals.

Boldin utilizes proprietary methods to reasonably estimate taxes and therefore tax estimates should only be considered directional. As needed, consult a tax professional for more precise tax estimates, payment, and filing requirements if you want more precise values.

For Boldin PlannerPlus users, income taxes are estimated using all currently available state and federal tax rates and tax brackets through longevity.

In addition, income taxes are estimated using either standard deductions for single/married filers or itemized deductions, whichever is optimal each year for both federal and state income tax calculations. Boldin Basic (Free) users have a flat 3% state tax rate modeled.

Itemized deductions include mortgage interest, state income tax, and all deductions listed on My Plan > Expenses, including property tax; for Federal Income Taxes, the $40,000 cap on State and Local Taxes (SALT) is enforced.

The Boldin model exclusively uses each state’s standard deduction when estimating taxes at the state level.

Taxes portrayed in the Insights > Taxes > Estimated Taxes Chart represent your tax liability for the year.

Taxes portrayed in the Insights > Income & Expenses > Estimated Expenses Chart represent your tax expense for the year.

Tax brackets and standard deduction amounts are indexed each year for inflation.

The Net Investment Income Tax (NIIT) and Alternative Minimum Tax (AMT) are not included in the projections.

Estate tax, gift tax, and the generation-skipping transfer tax rules are not included in the projections. Asset values at the end of the plan are not adjusted for income taxes that may be due at a later date.

Future Social Security estimates are subject to wage offsets as described here.

The planner computes the Full Retirement Age (FRA) for both you and your spouse (if applicable). You have the option to input your Primary Insurance Amount (PIA), or rely on Boldin's Social Security estimator to estimate your benefit based on your current income. The planner will apply early retirement reductions or delayed retirement credits to your PIA to determine your benefits at your selected claiming age.

The planner will also automatically calculate spousal benefits. For you and your spouse, the tool will use your own benefit or your spousal benefit, whichever is greater.

Additionally, at longevity age of the first spouse, the model will assume the surviving spouse will receive 100% of the deceased’s benefit, if greater.

The amount of Social Security income that is considered taxable is based on publication 915 for federal income tax and state-specific rules for state income tax.

For Boldin users on the Basic (free) plan, a blended federal-state income tax table is used with 2022 standard deduction amounts to approximate US national averages. The amount of Social Security income that is considered taxable is based on publication 915 guidance.

The estimates for average Medicare expenses modeled in Planner are inclusive of premiums, deductibles, prescriptions, and out-of-pocket expenses such as dental costs and vision assuming “Excellent” health. If you think your needs are beyond "national average", you may consider adding additional recurring expenses in your plan.

As future healthcare costs are difficult to estimate, we rely upon the average cost by state data from Medicare.gov in our projections. Boldin PlannerPlus subscriber Medicare estimates are state-specific. Additionally, PlannerPlus users can model different policy, health, and premium level options to more accurately estimate Medicare expenses. Estimates used are based upon assumptions for:

The values are adjusted from today using the medical inflation rate in your plan.

PRO TIP: Set your medical inflation rate to zero in your Assumptions and head over to your Insights > Income & Expenses > Estimated Expenses Chart to view your projected medical costs in today's dollars.

The planner models default long-term care expenses during the last 28 months of your life (and/or your spouse's, if applicable) if you do not indicate that you have a long-term care policy, plan to purchase a long-term care policy to cover long-term care, expect a family member to help care for you, or predict that you will not ever need long-term care. You might want to research costs in your area and at your comfort level and make adjustments you feel appropriate. See this article for details.

You can view these long-term care expenses in your Insights > Income & Expenses > Estimated Expenses Chart:

You have the ability to change the long-term care assumptions in My Plan > Expenses and Healthcare > Long-Term Care.

If you select "Plan to use my home equity to fund the costs," the Planner will model the long-term care costs described above. You may want to go to the housing page and estimate when the care would be needed and how you might want to access your home equity. Common solutions include getting a reverse mortgage to fund in-home care or selling your home to fund a nursing home.

If you select "Have a long-term care policy" or "Plan to purchase a long-term care policy," the Planner will model 20% of the long-term care expenses in the last 28 months of your life (and/or your spouse's), as if the insurance pays the other 80%. Be sure to include the cost of any long-term care insurance in your recurring expenses.

If you have medical coverage or don't need long-term care, you can select "Will never require any kind of long-term care." The Planner will assume that you have no long-term care expenses.

Bear in mind that long-term care expenses are subject to the medical inflation rates in your plan assumptions.

PRO TIP: Set your medical inflation rate to zero in your Assumptions and head over to your Insights > Income & Expenses > Estimated Expenses Chart to view your projected long-term care costs in today's dollars.