This document explains the calculations My Financial Plan makes behind the scenes to estimate whether you will be able to afford an event. Based on our model and the information you provide, My Financial Plan will provide you with affordability messages. In reference to affordability messages, this article will discuss the following:
One of the most important aims of My Financial Plan is to provide you with information about the likelihood that you will be able to afford a big purchase or goal in the future. To accomplish this, My Financial Plan estimates the future life event in the context of the other information you provide. We then provide an affordability projection to you depending where on your timeline you added the future goal. You can test various goal options by adjusting the purchase settings. My Financial Plan will provide you with feedback for each option you test.
Not all the My Financial Plan events have a “can/can’t afford” message functionality. The events that do are:
All the My Financial Plan savings goals have “can/can’t afford” functionality, but with different messages (listed below):
Before you retire, for any event or savings goal you place on your timeline, we automatically draw down assets from your asset accounts in the order listed below. When one is exhausted, we draw from the next one in the displayed order.
For any event or goal on the timeline with a start date after your Retire start date, we draw down assets from the following available accounts in order. The only difference between pre- and post-retirement for these affordability messages is that the Retirement Assets are automatically drawn down in the post-retirement situation.
If you select the “Save for emergency fund” goal and connect it to a linked bank account, we will use information from the corresponding account type to determine whether we draw down from it to pay for future goals. If you link a savings account to your "Save for emergency fund” goal, the assets in the savings account will be dedicated only to your emergency fund goal. However, if you link a checking account to your "Save for emergency fund” goal, that does not prevent the checking account from being considered as funds to pay for future events and goals. In other words, the funds in your checking account may be used for more than one goal. We will then send you an affordability message based on the information we gathered and the goals you set.
Based on our model and the information you provide; you have sufficient projected assets to pay for this event or goal without dipping into savings.
Based on our model and the information you provide; you have sufficient projected assets that you can sell to pay for this event or goal.
Based on our model and the information you provide; you do not have sufficient available assets to afford this event or goal.
Our 50th percentile Monte Carlo projections (our median projection) estimates that you will have sufficient assets to support retirement expenses at the desired level from the start of Retire until End of Life events.
The 50th percentile Monte Carlo projections (median projections) estimates that your retirement assets will run out at the age My Financial Plan displays.
The amount of money you entered into the monthly savings goal field is not sufficient to reach your target savings goal.
The amount of money you entered into the monthly savings goal field is greater than your monthly net income.
The amount of money you entered into the monthly savings goal field is sufficient to reach your target savings goal and is not larger than your average monthly net income.
This is essentially a more specific version of the above message. The amount of money you entered into the monthly savings goal field is sufficient to reach your target savings goal. We provide the estimated date your savings goal will be reached.
You already have enough money in your selected savings account to pay for the goal event.