Affordability in My Financial Plan

Last updated:
July 2, 2021

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:  

  1. Introduction
  2. Events with “can/can’t afford” messages
  3. Savings goals with “can/can’t afford” messages
  4. Available asset count
  5. All life events “can/can’t afford” messages
  6. All savings goals “can/can’t afford” messages
  7. Conclusion and contact support

Introduction

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.    

Events with “can/can’t afford” messages

Not all the My Financial Plan events have a “can/can’t afford” message functionality. The events that do are:

Savings goals with “can/can’t afford” messages

All the My Financial Plan savings goals have “can/can’t afford” functionality, but with different messages (listed below): 

Available asset accounts

Pre-retirement available asset accounts

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. 

Asset Description Client Message
Free Cash Projected difference between income and expenses "We think you can afford this"
Checking Accounts Projected balance of accounts at event start date "We think you can afford this"
Saving Accounts Projected balance of accounts at event start "We think you can afford this if you dip into your savings"
Public Stocks Projected balance of equities at 50th percentile Monte Carlo at event start "We think you can afford this if you dip into your savings"
Mutual Funds Projected balance of equities at 50th percentile Monte Carlo at event start "We think you can afford this if you dip into your savings"
Private/Illiquid Stock Private company stock or options "We think you can afford this if you dip into your savings"
Collectables Stamps, comic books, etc. "We think you can afford this if you dip into your savings"
Other Crypto, IOUs, etc. "We think you can afford this if you dip into your savings"
The following assets are not automatically used for pre-retirement events or goals. You must sell these assets for them to be available to satisfy an event or goal.
Retirement Assets 401k, IRA Accounts "We don't think you can afford this"
Real Estate Any real estate assets "We don't think you can afford this"
529s College savings accounts "We don't think you can afford this"

Post-retirement available asset accounts

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.

Asset Description Client Message
Free Cash Projected difference between income and expenses “We think you can afford this”
Checking Accounts Projected balance of accounts at event start date “We think you can afford this”
Saving Accounts Projected balance of accounts at event start “We think you can afford this if you dip into your savings”
Public Stocks Projected balance of equities at 50th percentile Monte Carlo at event start “We think you can afford this if you dip into your savings”
Mutual Funds Projected balance of equities at 50th percentile Monte Carlo at event start “We think you can afford this if you dip into your savings”
Private/Illiquid Stock Private company stock or options “We think you can afford this if you dip into your savings”
Collectables Stamps, comic books, etc. “We think you can afford this if you dip into your savings”
Other Crypto, IOUs, etc. “We think you can afford this if you dip into your savings”
Retirement Assets 401k, IRA Accounts “We think you can afford this if you dip into your savings”
The following assets are not automatically used for post-retirement events or goals. You must sell these assets for them to be available to satisfy an event or goal.
Real Estate Any real estate assets “We don’t think you can afford this”
529s College savings accounts “We don’t think you can afford this”


What about the “Save for emergency fund” account?

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.  

All life events “can/can’t afford” messages

“We think you can afford this”

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. 

“We think you can afford this if you dip into your 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.

“We don’t think you can afford this”

Based on our model and the information you provide; you do not have sufficient available assets to afford this event or goal. 

“You will likely have enough money during retirement.”

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.

“You will likely run out of money by age [year]”

The 50th percentile Monte Carlo projections (median projections) estimates that your retirement assets will run out at the age My Financial Plan displays.

All savings goals “can/can’t afford” messages

“You won’t meet your savings goal in time”

The amount of money you entered into the monthly savings goal field is not sufficient to reach your target savings goal.

“You can’t comfortably save this much every month”

The amount of money you entered into the monthly savings goal field is greater than your monthly net income. 

“You should meet your savings goal on time”

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. 

“Based on your per month savings goals, you should meet your savings goals on [date]”

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 have met your goal”

You already have enough money in your selected savings account to pay for the goal event.

Tags

How it works
Close

Contact support