Planned

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Post-Tax Net Worth

Given the significance of taxation in various countries, it is vital to consider post-tax net worth for a more realistic financial overview. I propose the addition of a feature that calculates post-tax net worth by implementing customizable tax brackets and withdrawal strategies.

This could take the form of a straightforward feature allowing for the sale of financial assets on a specific date, similar to the current feature available for real assets. This enhancement will provide users with a clearer understanding of their financial standing after potential tax obligations.

5 votes

Tagged as Suggestion

Suggested 20 July 2023 by user Peter Juel Jensen

Moved into Planned 31 March

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  • 20 July 2023 Peter Juel Jensen suggested this task

  • 20 July 2023 Kyle Nolan approved this task

  • 31 March Kyle Nolan moved this task into Planned

  • avatar
    Aubrey Williams

    The value of having a cash flow simulation is that we can run the simulation and see how the pre-tax accounts are taxed, then use that information to come up with tax rates that the pre-tax accounts may be subject to, either on a per year basis or as an average across all years of the plan to come up with a “Post-Tax Net Worth” metric/milestone.

    Just like with other aspects of planning, we have the straight line value and we have values which result from simulation iterations.

    The straight line value results from whatever sequence of returns we defined in the model, and that will result in a certain % paid to tax from the pre-tax accounts. We could also know the % paid per year and each year calculate a “Post-Tax Net Worth” for the pre-tax accounts.

    Following the thread, using Chance of Success simulations we could also have an average % paid to tax on pre-tax accounts for the whole Plan period or a per year % paid to tax based on simulations, and it might be interesting to see the mean and standard deviation on these to understand how much they vary and how.

    Here are the options I would suggest for this feature:

    [Option 1] Define tax rate on pre-tax accounts for “Post-Tax Net Worth” (all the normal options: enter a value, advanced, etc.)

    [Option 2] Use average calculated tax rate on pre-tax accounts from Plan to calculate “Post-Tax Net Worth”.

    [Option 3] Use per year calculated tax rate on pre-tax accounts from Plan to calculate “Post-Tax Net Worth”.

    [Option 4] Use average tax rate on pre-tax accounts from most recent Chance of Success simulation to calculate “Post-Tax Net Worth” (or this value could be displayed and entered manually as in Option 1).

    [Option 5] Use per year average of tax rate on pre-tax accounts from most recent Chance of Success simulation to calculate “Post-Tax Net Worth”.

    31 March