Scenario Assumptions

• Retirement age and life expectancy are critical assumptions that affect an overall financial planning strategy. Working with plan variables can demonstrate the financial consequences of an early retirement date or an untimely death.
  • Varying your clients' retirement age and life expectancy allows you to test the strength of your plan in the case that your clients' want to retire early or experience unexpected longevity.
  • You can also create an alternative scenario showing the negative consequences of early retirement, unexpected longevity, or unpredictable inflation on the clients' Current Plan scenario. This allows you to demonstrate the relative strength of your Recommended Plan scenario.
• Economic factors such as inflation affect the entire plan. Therefore, it is important to set realistic assumptions for these factors and to plan for the case that these factors become unpredictable.

• Changing the state of residence in a plan can be an important part of planning as many clients change their state of residence just before, at, or during retirement.
  • Changing the state of residence helps accurately reflect the tax rates for the new state in all reports when using the Detailed Tax method, and to accurately display the named state when using the Average Tax method.
• A state-QTIP trust will only be funded if the client currently resides in a state that allows these trusts at the time of the funding.
• If the Client(s) are already retired option is selected during plan creation in a plan using the Average Tax Method, the Future Change of State feature is not available.
• Whether any dependents move with the client(s) depends on the selection for Keep Dependent in Plan(s) in the Dependent Details dialog box.
  • If Until dependent is financially independent is selected, NaviPlan determines whether any dependents are still financially dependent, and if they are, the dependent will be moved with the client(s) during a change of residence.
  • If Permanently is selected, the dependent will always be moved with the client(s) during a change of residence.

• The Scenario Manager reflects the information entered in the clients' current plan. To override this information with scenario-specific assumptions and strategies select the Override option for the appropriate item.
• The Override option will appear in one of two ways in the Scenario Manager:
  • As an unlabeled check box beside a disabled field: .
  • As a labeled check box: .
• Once you have selected Override, the relevant fields will become editable.
• Clearing the Override option will undo any changes you have made and revert information back to match the Current Plan scenario.

1. From the General subtab, locate the Milestones section.
2. For each client, you will notice a set of two slider bars.
   • Use these slider bars to modify the Retire At age or the Life Expectancy date. The associated text fields will update as you make changes.
   • Alternatively, you can enter an age and/or offset into the text-entry fields associated with each slider bar. The associated slider bar will update as you make changes.

Note: This procedure may vary if you are using the Detailed Tax Method.

1. From the Future State of Residence section, select the Override option.
2. From the Future State of Residence menu, select the state to which your clients intend to move.
3. Use the Effective Date field to enter the date on which your clients will move.
   Note: You can use the Event Calendar to use a life event (such as Retirement or Death) instead of a specific date.
4. Enter the rate of taxation for the new state in the State Tax Rate field.
   

• The Inflation History graph displays the inflation rate and annualized inflation rate over time. Use this information as an aid when modifying assumptions on this page.