The Basics

From 4 Data Elements...

The initial set-up "wizard" collects just four pieces of data from you — Age, Savings, Income & Monthly Savings. From those values, we create a high-level estimate of YOUR ENTIRE FINANCIAL FUTURE. Below are several of the assumptions we make — and which must absolutely be validated by you...

The following topics will be covered in this Guide:

  1. My Profile
  2. The Middle Settings Bar: Retirement Age, Trajectory End Age, Inflation Rate
  3. Income
  4. Expenses
  5. Accounts & Taxes
  6. Actions: Adding Items, Ranges, Hiding & Reordering
  7. Excluding Items from Calculations
  8. The Undo Button
  9. Centralized 'Retirement Age'
  10. Re-calculate Success % / Chance of Success

1. My Profile

Basic Profile Settings can be found by clicking on the Menu button in the top right corner and choosing My Profile.

Basic Settings

The Start Date of your Trajectory defaults to the date you first completed the introductory "wizard". If you wish to change this value to start at the beginning of the year, for example, do so here.

Birth Year is the value you previously entered, and the Trajectory End Age defaults to 90, but of course, you can change it to meet your own expectations — this field is located on the main page in the middle of the form, along with settings for Retirement Age and inflation Rate, as shown below:

2. The Middle Settings Bar: Retirement Age, Trajectory End Age, Inflation Rate

Basic Settings

3 Settings are located on the gray bar in the middle of the screen, so that they can be easily changed at any time:

Retirement Age — The age at which you plan to 'fully' retire. We place an orange 'R' on the graph to mark this age, and it is also used when entering an 'R' in age fields. See the section below, Centralized Retirement Age for more information.

Trajectory End Age — This is the final year in your Trajectory, however this value may be extended past your assumed 'demise' to allow for additional years to be modeled. Doing so is particularly helpful when modeling scenarios that include a younger spouse — simply set this number to include additional years and then set the End Age on individual Income / Expense items, as appropriate.

Inflation — This is a central rate used to inflate Incomes, Expenses, and Contributions, by default. It is also used when viewing amounts in Today's / Tomorrow's Dollars. Today's Dollars means that the effects of inflation are included when looking at a number and represents the buying power of that amount TODAY. For example, $100 today, will buy less in 30 years — at 2.5% Inflation, you would have to spend $243 in TOMORROW'S dollars to purchase the same amount of product.

In addition to inflating the future, by default, we automatically "deflate the past" and base all dollar amounts on the current year. While this may seem conunterintuitive at first (because it does cause past "real" dollars to be automatically adjusted) from a modeling perspective, it produces more accurate results as the age of your model goes beyond year 1.

If OnTrajectory, did not deflate past amounts, it would cause a "pop" in your Trajectory End Balance whenever you crossed from December 31st to January 1st due to "losing" a year of inflation. That said, you can turn off this option by going to Menu / Calculation Options and deselecting "Deflate past Income, Expenses & Contributions".

3. Income

The Wizard generates two Income Items — the first from your Current Age to your estimated Retirement Age, and the second from your Retirement Age to the Trajectory End Age. The Income 'Amount' for the second item is a VERY rough estimate of your Social Security benefits (see the example below).

Income Items

You can (and should) change the Amount in your Social Security estimate based on your actual situation. SSA.gov is a great place to get more accurate estimates of your Social Security benefits.

There's much more to say about Modeling Income, including how to show other Income streams (from a spouse, for example) — or how to account for Income Taxes and annual raises. See the Modeling Income Guide for more information on these and other income-related topics.

4. Expenses

For your default Expenses, the Wizard generates a single item, with 2 Age Ranges. Age Ranges are a handy way of defining a single item that changes over different parts of your life. In this example, the first Age Range spans until your estimated Retirement Age, and the second goes from Retirement Age to the End Age of your Trajectory, as illustrated below:

Expense Items

Why use Ranges rather than creating separate Items? Because ranges prevent you from accidentally overlapping Ages, and it makes "what-if" analysis far easier when your Trajectory becomes more complex.

The Wizard calculates the Expense Amount in the first range by subtracting your monthly savings from your monthly income. The second range is simply a 15% reduction of those expenses (since most folks spend less during their Retirement years).

Again, these are merely estimates to get you started. You should enter your own unique Expenses here, such as those that recur monthly (like utilities, food, entertainment, etc.) and those with specific Start and End Ages (such as a mortgage, car payment, college, etc.)

We recommend entering recurring expenses as a single Expense Item. You can detail what specific expenses are represented by clicking on the make Group make Group button.

Expenses with specific Start/End Ages should be entered individually in order to more accurately calculate their financial impact — examples of both types of Expenses are shown below — the Item "Basic Expenses" consists of a Group of different monthly expenses:

Expense Items

Again, there's much more to know about Expenses, so do read the Modeling Expenses Guide.

5. Accounts and Taxes

Like Expenses, we model a Default Investment Account for you with two Age Ranges. The first range has a slightly higher % Growth rate than the second range. This reflects the common practice of investing more conservatively after Retirement (as illustrated below).

Your Default Account also contains your Effective Tax Rate, shown in the % Tax field, and which is also reduced in Retirement since most people have a lower Tax Rate during that time.

Savings Items

Again, why use Ranges rather than creating separate Items? Because Ranges prevent you from accidentally overlapping Ages and it makes "what-if" analysis far easier when your Trajectory becomes more complex.

Now, in reality, you probably have funds in both low-interest accounts (like checking/savings accounts) and higher- yielding accounts — both taxable and tax-deferred (such as an IRA or 401k). As elsewhere, you should model your accounts to reflect your unique financial situation.

Since OnTrajectory automatically calculates how much you save (based on your Income and Expenses), you need not designate any contributions to the default account that's created. You will see "automatic" in the Contributions/year field for that account. For all other accounts you create, you can designate contributions to be made.

In addition, this account cannot be deleted (because you always need a "place" to deposit funds whenever Income is greater than Expenses). The % Growth for the 'Default Account' represents the rate-of-return you expect on your investments generally (often placed in a taxable mutual fund or brokerage account).

Again, every person is different, and you should configure OnTrajectory to meet your unique situation. The example shown below shows someone with a 401k, Roth IRA, and a regular non-interest-bearing Checking account. The Contributions/yr field is used to indicate how much is going into their Retirement accounts each year.

Savings Items

As with Income and Expenses, there's more to learn about modeling Accounts & Taxes, including account drawdown rules around RMDs (Required Minimum Distributions) and Withdrawal Penalties. See the Modeling Accounts & Taxes Guide for more information.

6. Actions: Adding Items, Ranges, Hiding & Reordering

To add a new Item, click the "Add" button beneath the Item table.

Add Account

A menu will appear on the left side of the screen — select the Item you wish to add. To delete an Item (including all of its age ranges), select the "Trash" icon

A number of actions can also be performed on items based on the action buttons displayed:

Item Actions

To add a new Age Range, select the "Add Range" icon Add Range.

To delete the Age Range, select the icon.

To hide an item, select the icon. To unhide, click the button next to add item button, as shown below.

Unhide Button

To reorder an item, click and hold the icon and move to the desired position.

7. Excluding Items from Calculations

The column with the Exclude icon Exclude Icon allows you to remove that item from calculations. You will continue to see it represented in the Output Data, however all values will be 0 for that item.

This is an easy way to model certain "what-if" scenarions and quickly judge the impact of including / excluding the long-term financial impact of an item.

If two items are linked, for example a Home Equity account can create a Linked Mortgage expense, you can exlude the linked item independently — however if you exclude the "parent" (in this example the Home Equity account), then the linked-item will automatically be excluded as well.

8. The Undo Button

Each time you make a data change on the Income, Expenses, or Accounts tabs, your data is automatically saved. You can 'undo' each succesive change by clicking on the undo button — the left-most button on the top right part of the screen. Within a scenario, there is no limit on the number of changes that can be undone.

Undo Button

If the button is not visible, no data or settings changes have been made. Note, only changes to data and settings within a scenario can be undone. Adding/removing scenarios or progress points cannot be undone.

In addition, each scenario maintains its own undo history — if you change to another scenario, the button will disappear until you have made a data or settings change. If you return to a previous scenario where changes were made, you can subsequently undo those previous changes. All changes are lost if you logout or refresh your browser.

9. Centralized 'Retirement Age'

Rather than entering a discrete value for your Retirement Age, such as '67' in an Income, Expense, or Account item — you can enter 'R' to represent your retirement age.

In the example below, notice the End Age for Base Income and the Start Age for Social Security are both set to 'R'. Since Retirement Age is '67', and since ranges cannot overlap, when R is used as an End Age, it is translated as Retirement Age minus 1-year. Think of it as the item ending at the beginning of your Retirement period. Therefore, Base Income's End Age is interpreted as '66' (the last year before retirement begins).

Centralized Retirement Age

The 'Retirement Age' and 'Inflation Rate' fields are located just above your Income, Expense & Account data. Changing your Retirement Age here will universally change the value everywhere the 'R' is used — making 'what-if' analysis easier than ever before.

10. Calculate Success % / Chance of Success

Your 'Chance of Success' (located on the right side of the screen above Trajectory End Balance) automatically runs both Historical and Monte Carlo analysis on your inputs (see the guide Historical & Monte Carlo Analysis for more information on how to run each separately). OnTrajectory then averages the results and displays your 'chance of success'.

Two percentage values are produced. The first, called 'Chance of Success', represents the number of simulated Trajectories that result in an end amount above 0. The second is the number of Trajectories that result in an end amount above the Final Trajectory you have defined and is displayed next to the Final Trajectory amount. In other words, a 90% chance of success means that an ending amount above 0 was achieved in 90% of the Historical and Monte Carlo 'runs'. Again, we urge you to read more about this type of analysis in the Historical & Monte Carlo Analysis guide.

It is important to note that this percentage is NO GUARANTEE of success in your investments, and successive runs may vary due to the random nature of Monte Carlo analysis — usually +/- 3%. Finally, NO information provided by OnTrajectory should be considered investing advice. All financial information is solely for educational purposes. Please see your own professional for personal investment advice.

At this point, you've just scratched the surface of OnTrajectory. Click the Main Menu in the top right corner to access other Actions and/or Guidance on topics such as: