WealthTrace Frequently Asked Questions

WealthTrace retirement planning software frequently asked questions

FAQs- Using The Application

  • Q: There is no Save button. When is my information saved?

    A:  Your data in the application is saved when you leave a section or tab and move to another section or tab, and when you log out. Data in grids are saved when you click the floppy disk icon for the row that you are editing. *It is important to note that you should not hit the Back button on your browser. This will take you to a previous page and could prevent your work from being saved. You should also never just close the browser window without logging out first to ensure your data is saved.

  • Q: When expenses are deducted from investments, what is the order in which they are deducted?

    A: The order is: Required Minimum Distributions (RMDs) from Qualified Investments, Taxable/Tax-Advantaged Investments, Non-Qualified Tax-Deferred Investments, Qualified Tax-Deferred Investments left after RMDs. We chose this order because this is the most tax efficient way to withdraw money based on the tax rates that apply to each investment type at the time of withdrawal. Note that the order of withdrawal is also subject to settings for earmarking where you can specify when an investment can be used.

  • Q: Why are recurring expenses only used by the program after retirement begins?

    A: Before retirement we assume that the income received is enough to offset expenses. Any money left over as savings should be inputted as Contributions to investments. If there happen to be expenses before retirement that eat into the investments themselves, this should be entered under the Additional Expenses section.

  • Q: What is the difference between Annual Inflation and COLA inflation?

    A: Annual Inflation is used to determine the increase in recurring expenses during retirement. COLA Inflation is used to calculate Social Security benefits. These two inflation measures are slightly different. See this link for an explanation of how COLA is calculated: https://www.ssa.gov/oact/cola/latestCOLA.html

  • Q: Can I do income planning using the software?

    A: Yes. After calculating the plan, go to the Cash Flow Projections section and click Income Vs. Expenses In Retirement. You can now view income vs. expenses through time.

  • Q: How do vectors work?

    A: Vectors are very useful if you want to change growth rates during various years. If you feel that inflation will rise from 3% today to 5% three years from today, stay there for ten years, then fall back to 3% after that, the syntax for this vector would be: “3%|2019 then 5%|2029 then 3%”. The same idea holds for vectoring returns. You may also use a semicolon in place of the “|” symbol.

  • Q: Why do Roth IRA and 529 Plan show up under the Taxable/Tax-Advantaged section?

    A: Roth IRAs do not follow the same rules as regular IRAs and are not tax-deferred. This is why we have labeled Roth IRAs as “tax-advantaged”. When money is withdrawn from the Roth IRA account in the program, that amount is not taxed, as per the rules of Roth IRAs. 529 plans are also not tax-deferred. They are tax-advantaged in that investors normally do not have to pay taxes on the gains that occur inside the portfolio. Therefore, in the program we do not apply any capital gains taxes or income taxes to 529 plans.

  • Q: Why do I need to enter an estimated cost basis for Taxable/Tax-Advantaged and Non-Qualified Tax-Deferred investments?

    A: We strive for as much accuracy as possible when it comes to taxes. Tax assumptions can have a large impact on final estimates of when you can retire. In order to get the capital gains taxes as accurate as possible, it is important to at least come up with an estimate for the cost basis for investments that will be taxed when investments are sold and withdrawn.

  • Q: Why is there no program estimate for state taxes?

    A: There are so many rules for each state’s taxes that it would be risky to attempt to estimate taxes for each state. Therefore, we leave it up to the advisor or individual to input their average state tax rate. Note that the program requires the average rate and not the marginal rate.

  • Q: How are social security benefits estimated if I use the program estimate?

    A: We use the Social Security Administration (SSA) algorithm for estimating social security benefits. We highly recommend that you get an accurate estimate from the SSA. You can calculate an estimate here-https://www.ssa.gov/estimator/

  • Q: If I have a spouse, which age do Special Expenses and Cash Additions start with?

    A: They start with the age of Primary Client.

  • Q: Can I earmark funds for certain goals such that the money from certain investments is not touched until I want to spend it on a certain goal or expense?

    A: Yes. You can do this by going to the Investment Assets section and clicking on the pencil on the line of the investment account in question. From there, click View/Edit under the Account & Holdings Assumptions column, and look for the Allow Funds From This Account To Be Used toggle. You can input the age of the investment holder or a specific date of when the funds from an investment can be used to fund a goal or expense. For example, if you have a 529 plan set aside for a child's college education, and this expense is anticipated to begin when you are 55 years old, enter 55 for this setting in the 529 plan account.

  • Q: How do I input expenses before retirement?

    A: Before retirement we assume that the income received is enough to offset expenses. Any money left over as savings should be inputted as Contributions to investments. If there happen to be expenses before retirement that eat into the investments themselves, this should be entered under the Additional Expenses section.

  • Q: Why would I want to set “Change Returns Linearly Towards Retirement” to Yes?

    A: Having returns step down in a linear fashion as retirement approaches is a more accurate representation of how portfolios usually behave. This is because most investors move their investments toward a more conservative, lower returning strategy as retirement approaches. Having returns step down towards the return that is achieved during retirement simulates this rebalancing effect.

  • Q: What if I want to retire at age 62, but then work part-time after that?

    A: You should still input your retirement age as 62, but you would want to add a line in the Cash Additions section that incorporates your part-time income and how long it will last.

  • Q: How are Required Minimum Distributions from Qualified plans handled?

    A: The program accurately captures Required Minimum Distributions (RMDs) as required by federal law. The funds go towards expenses first, then into the taxable account if funds are left over. RMDs are taxed at the client’s marginal income tax rate when they are withdrawn.

  • Q: Is this program useful for those who are already retired?

    A: Yes, even those already retired can use the software to forecast when they will run out of money and to figure out what they can do to change the year that a shortfall occurs.

  • Q: Can the program be used by those outside of the United States?

    A: Yes, there are many people in different countries that use the program. You would simply have to change the taxes in the Settings/Assumptions/Taxes section.

  • Q: I want to change how much I contribute during certain years. The program only allows one number for contributions. How do I get around this?

    A: You can set the inputs for Contribution Start Age and Contribution End Age for each investment. However, we do not allow changing contributions through time as this could cause double-counting of expenses. The program looks at the situation this way: A decrease in contributions before retirement will be due to a change in expenses, normally a large expense. So if you will not contribute anything to a savings account in the year 2025 due to a wedding, you should enter an expense for the wedding under Goals & Additional Expenses. The program will automatically deduct this expense from your contributions for that year first. If the contributions are not enough to pay for the wedding, the program will take the remainder out of investments.

  • Q: How does the Company Match work?

    A: The company match is calculated as a % of the amount the client contributes. For example, if the client contributes $5000 per year to a 401k plan and the company match is 20%, the amount that the company will contribute per year is .20*5000 = $1000 per year.

  • Q: How does Maximum Match (% of Salary) work?

    A: The maximum match limits how much the employer will contribute as a percent of the employee’s income. For example, if the maximum match is 10%, the client makes $100,000 per year, and the company match is 20%, the maximum match is .10*100,000*.20 = $2000 per year.

  • Q: In the Output I see the average shortfall in dollars and today’s dollars. Why would I want to see both?

    A: Dollar figures far out into the future can be rendered nearly meaningless by the compounding effect of inflation. It can be more intuitive to view future dollars adjusted for inflation to bring them back into today’s terms. This helps users understand more fully how much more they might need to save or cut back on expenses today in order to achieve retirement goals in the future.

  • Q: What is the best way to use the Age of First Shortfall and Average Shortfall information together?

    A: It is very important that these two outputs be used in conjunction with each other. Let’s look at two examples: a. Age of First Shortfall: 75 Average Ten Year Shortfall (Today’s Dollars): $1,000 b. Age of First Shortfall: 78 Average Ten Year Shortfall (Today’s Dollars): $20,000 Which situation is preferable? Although the second output shows an age of first shortfall that is three years later that the first output, we would argue that situation #1 is preferable. This is because the average shortfall is so much less. Over ten years the shortfall (in today’s dollars) is only a total of $10,000. By saving only approximately $10,000 more before the age of shortfall hits, this person can extend the first age of shortfall by about 10 years to age 85. This is much more difficult to do in the second situation since the shortfall is $20,000 per year. This is why it is so important to use these two figures together when analyzing the retirement situation.

  • Q: Why do I need to enter % Return Due to Dividends and % Return Due to Interest for Taxable/Tax-Advantaged and Non-Qualified Tax-Deferred investments?

    A: We strive for as much accuracy as possible when it comes to taxes. Tax assumptions can have a large impact on final estimates of when you can retire. Dividends and interest payments are usually taxed at different rates. In order to get overall taxes as accurate as possible, it is important to at least come up with an estimate for the percent of the return due to dividends and percent of the return due to interest from certain investment types.

  • Q: When should I check Today’s Dollars?

    A: Some inputs allow the selection of Today’s Dollars. If checked this means the input will be treated as a dollar figure as of the retirement analysis date. It will then be adjusted for inflation going forward.

  • Q: When cash inflows, social security payments, or RMDs come in and are not used for expenses, where do they go?

    A: They are deposited into all taxable accounts pro-rata, based on the current investment balances at that point in time.

  • Q: In the Taxable/Tax-Advantaged section I have a 529 plan that I want funds to come out of after all of the other Taxable/Tax-Advantaged investments. How do I do this?

    A: The easiest way to handle this is to set Allow Funds To Be Used to the age when you want to use the funds from the 529 plan. For example, if you will begin paying for college at age 55 then set Allow Funds To Be Used to 55 for this investment.

  • Q: What is the difference between the regular calculation results and the results I get when I run monte carlo analysis?

    A: Results that are not generated via monte carlo are the “expected” or “mean” results using expected or average total returns inputted by the user. When monte carlo analysis is run, the program runs 1,000 simulations using the inputted total returns as the mean. Using these simulations the program can calculate the probability of funding all spending goals as well as multiple calculations in the worst 25% of the simulations and the best 25% of the simulations.

  • Q: I need to use the pipe "|" symbol for a vector. Where can I find this symbol on my keyboard?

    A: The pipe “|” symbol is on the same key as the “\” key on most keyboards. This is usually above the Enter key. Users may also use a semicolon in place of the “|” symbol.

FAQs- General

  • Q: How is WealthTrace different than most retirement planning software solutions for advisors?

    A: Unlike most retirement planning applications for advisors, the WealthTrace retirement planner is interactive with the clients, easy to use, and doesn't inundate the advisor and the clients with hundreds of pages of reports. Our application also has the most intuitive, user-friendly scenario capabilities in the industry. No other retirement planning software makes it so easy to change multiple variables at one time and run multiple scenarios to quickly find the solution to your client's goals. And all of this is shown on the screen as you interact with the client. You won't have to sift through pages of reports to show clients how they might be able meet their retirement goals.

  • Q: How is WealthTrace different than most retirement planning software solutions for individuals?

    A: Our retirement application was built to be powerful enough for financial advisors, yet so intuitive and easy to use that individuals who want to do their own financial planning can use it. Most retirement planning applications out there consist of free online tools that take multiple shortcuts, are prone to errors, and guide you towards a company's financial advisors to help explain any shortcomings. Our application is comprehensive enough to where you can be your own financial planner and trust the results that you get.

  • Q: What is WealthTrace's privacy policy?

    A: We hold the security of our clients' personal data in the highest regard and never share data with anybody that is not given permission. For both advisors and individuals, we maintain clients' personal data with security and confidentiality. When information is sent to us through the application web site, we establish a secure session via an encrypted technology, which prevents unauthorized persons from viewing any such information. Disclosure of Your Personal Information: Under no circumstances do we disseminate personal data to any third party unless specifically requested by a client.

  • Q: Does the software work on a Macintosh?

    A: Absolutely. Because our software is web-based, it works on all browsers on PCs, Macintosh, and even smart phones.

  • Q: I am using a Mac and I cannot see the scrollbars. How do I make sure they show up?

    A: Sometimes the scrollbars are not easy to view on a Mac computer because of the way they are hidden most of the time. To more easily view the scrollbars at all times follow these simple steps: -Click the Apple menu at the top-left of the screen, then select System Preferences. -Next, select the General preferences pane; it’s the very first one, up at the top. -Under the “Show scroll bars” heading, you’ll find three options: “Automatically based on input device,” “When scrolling,” and “Always.” -Go ahead and select that last “Always” option. You’re done!

  • Q: Is there a questionnaire that advisors can give to clients?

    A: Yes, we have both an online fact finder/questionnaire and a hard copy version. To access the online fact finder you must sign up for a free trial. The online fact finder can be viewed here. The online fact finder can be accessed by your prospects and clients. Once they complete this a pdf file will be emailed to you with the completed results. For the hard copy version you can access it here- Questionnaire for clients.

  • Q: Can advisors allow their clients to view their plans online? If so, do advisors control the level of access?

    A: Yes, the advisor can give clients access to their plans using the client portal. The advisor can control whether or not the clients have access to their plan and whether or not they can save any information they change in the plan.