The Limit Inflation in Old Age feature allows advisors to cap target income at a specific age, creating a smoother transition in spending rather than a sudden reduction. Below is a hypothetical example of using the limit inflation in old age starting at age 80.
Client Information:
- John Doe, age 76, birth date: 01/01/1950, already retired
Incomes:
- Social Security (SS): $24,000 COLA 2.8%
- Pension: $48,000 COLA 2.8%
Assets:
- ROTH 401(k): $1,600,000, Conservative 2% net growth per year
- Traditional IRA: $350,000 Conservative 2% net growth per year
- Taxable Brokerage Account: $2,000,000, Conservative 2% net growth per year
Goals and Objectives:
- Target Income: Will start at $120,000 with an inflation factor at 2.8%. At age 80 limit the target income for the remainder of the lifespan.
- Traditional IRA: In retirement years, withdraw the amounts to meet the yearly RMDs amounts.
- ROTH 401(k): In retirement years, withdraw the amounts to meet the yearly RMDs amounts.
- Taxable Brokerage Account: Contribute any excess amount for the remainder of the plan. Withdraw from the account to help meet the target income.
Expenses:
- Gifting to family: $12,000 remainder of the plan
- Charitable Contributions: $6,000 remainder of the plan
Step 1: Edit: Click the green Edit button underneath the Structured Income Planning heading. 
Step 2: Add Target: Click the green Add Target button underneath the Structured Income Planning heading. 
Step 3: Target Name Text Box: SIPS will automatically take you to the Manage Target landing page. Enter a name for the target income column (Limit Inflation). 
Step 4: First-Year Target Income: Enter the first-year target income ($120,000). 
Step 5: Inflation Rate: Enter the inflation rate (2.8%). 
Step 6: Limit Inflation in Old Age: Click the Limit Inflation in Old Age checkbox. 
Step 7: Age for Limit: Within the text box, select the age at which you want the limit to begin (80). 
Step 8: Age to Limit Radio Buttons: Select the client for whom the income will be limited (Client 1 age). 
Step 9: Save: Click the green Save button underneath the Manage Target heading. 
Step 10: Structured Income Planning Landing Page: SIPS will automatically return you to the Structured Income Planning landing page. 
Step 11: After-Tax Target Column: A new column, titled “Limit Inflation,” is automatically created in the Structured Income Plan. 
Step 12: Target Income at Age 80: Note that the target income is limited starting at age 80 and remains capped for the remainder of the plan. 
If you feel you need more support or would like to set up demo time with one of our representatives, please contact us at: support@planscout.com.
