Thanks for clarifying. You can specify if you want distributions reinvested or not for each investment. The TIME MACHINE grows the investment and calculates the distributions. Setting an AUTOMATIC Withdrawal of all Distributions will set all distributions to not be reinvested from the date you set for that, and all distributions go straight to the Wallet account. Otherwise, any distributions not set to be reinvested go to the Cash Investment, while any set to be reinvested are reinvested first (which increases their adjusted cost basis).

Setting an AUTOMATIC Withdrawal, the TIME MACHINE takes the money from the Cash investment of the account and puts it into the Wallet ACCOUNT. Then the account is rebalanced. If the amount in Cash is negative because the distributions were reinvested, the selling of investments may be required and might lead to a capital gain. It depends on the adjusted cost basis of the investments sold.

Just set it up for the TIME MACHINE as you would for real life. Will you reinvest the distributions? Will you withdraw the distributions?

The TIME MACHINE calculates distributions every year and will tax them appropriately in non-registered accounts as interest, foreign dividends, and eligible dividends, given what it knows about your investments. The taxes will be calculated whether you withdraw the distribution from the account or not. 

Capital gains taxes will be calculated if you have additional sales of your investments, given their value and book value.

Automatic Withdrawals of given amounts may trigger additional sales and capital gains taxes. It would be hard to match the distributions exactly. I'm not sure why you would try, as it's easy to just withdraw the distributions as they come.

Check the detailed cash flow reports to see what is going on in terms of the withdrawals from the non-registered accounts and the taxes.

L’application MoneyReady est enfin offerte en français! Vous pouvez choisir votre langue de préférence dans PRÉFÉRENCES.

Toutes les pages du site Web ont maintenant été traduites, y compris les pages d’aide. Nous travaillons encore sur les versions françaises du livre électronique PDF et des articles de blogue.

The MoneyReady App is finally available in French! You can set your language preference in PREFERENCES.

All pages on the website have now been translated, including the help pages. We are still working on the French versions of the PDF eBook and our blog posts.

The only impact your current settings have is that they set the scenario that the results of the CPP/QPP and Withdrawal optimizer will be compared to (when showing you the difference in liquid legacy).

This optimizer will go through all combinations of ages and show you the best one, so your current settings in the CPP and OAS section don't matter, and you should probably set them to your preferred ones.  If the tool finds a better result, it will not change your settings automatically. We leave that up to you to decide if you want to change your preferred ages to use in future runs of the TIME MACHINE.

The Legacy amount you specify is already the amount of the last-to-die legacy. Last-to-die will first have inherited from first-to-die, so their Net Worth goes up at that time (and the first-to-die's net worth goes to zero).

If you have not yet made the TFSA deposit for this year, make sure to set your TFSA room in the screen right before running the TIME MACHINE.  If you've already made the contribution such that the current TFSA balance reflects it, the report for the remainder of this year will not show the previous deposit.

The TIME MACHINE calculates your taxes for you, so do not enter taxes in Expenses, even quarterly payments.
What’s very important is to capture the taxes you’ve already paid this year in the screens that capture that, right before running the TIME MACHINE.  It needsto know what you already paid so that it can credit you. 

Taxes and deductions paid year-to-date (at source taxes, CPP/QPP and EI contributions, tax instalments)

For the current year in the TM, it shows you the expected cash flow from today to the end of the year. 

That is: what expenses are left to pay, incomes to be received, taxes left to pay.

In the detailed year report for the current year, the taxes shown are then the total taxes minus whatever you’ve told it you already paid.

It may show you that you'll get a refund.

For the commuted value estimate, use GROSS income. The estimates of the transferable portion and the taxable portion will also be gross, but the TIME MACHINE will calculate taxes on your pension, and you'll see those in the reports.

If you're using the TVM calculator (or the AI ChatTVM) to get a present value calculation,  then use NET amounts; it has no concept of taxes.

For defined benefit pensions and annuities, we could consider adding the present value to net worth, although that is not usually done, so it would cause confusion.

New Year checklist:
  My favourite time to run the TIME MACHINE is early January. This is because the current year then acts very much like a future year in the TIME MACHINE. There is no need to consider what contributions have already been made, what taxes have already been paid, and no need to prorate any amounts for incomes, expenses and savings. Here is a list of things that need to be updated at the start of the year, and sometimes throughout the year, to keep the current year calculation as accurate as possible.

  1. CPP/QPP table(s). An entry for pensionable earnings for last year will appear. You will need to estimate what those were until the actual amount is updated at the CRA or Retraite Québec later in the year.
  2. RRIFs and LIFs.  For each of these, within 'Edit Account properties', enter the balance of the account at the end of last year. If you make any withdrawals during the year, update the total withdrawn this year.
  3. RDSPs. 'Edit Account properties' for these, and update the table of previous contributions if one appears. If you make a contribution this year, enter the amount once made, and you will need to come back and check the box once the grants/bonds have been received so that they are not double-counted in the TIME MACHINE.
 4. TIME MACHINE. There are up to 3 screens that capture current year tax information before running the TIME MACHINE: one for yourself, one for your spouse and one for your CCPC when applicable. Please update the amounts asked for the current year, and keep them updated throughout the year.
  5. Tax owing or refund. If you expect a tax refund from the previous year's taxes, you can enter it as an Income (Other, not taxable) with start and end dates on the date you expect to receive it. Similarly, for tax owing, enter it as an Expense for the date you expect to pay it.

Happy New Year!

Click AUTOMATIC SAVINGS and WITHDRAWALS in the left menu.
Click +Add Saving or Withdrawal
For Select Account for deposit/withdrawal: 
select the account you want from the dropdown list.

Enter a Date (YYYY-MM-DD) to start the withdrawals.
For Set the amount: select Withdraw all distributions.

Click Save and Continue

You are looking at the results in Today’s dollars which are discounted for inflation. Anything growing with inflation will look flat. Look at the Time Table (and other reports) in Future dollars, and you’ll see the amounts increase.

The program is not indexing the CPP and OAS to inflation, it's the same amount all the way down.

There’s no need for a separate account type, both spouses can contribute to it. eEnter it as an RRSP. 

Great question.

The TIME MACHINE will convert the RRSP accounts to RRIFs at the age you set to be converted.
Default is 71, but you can change that: Edit Account Properties, and I on the next screen after you Save/Continue the first.
You can also run a SCAN on the age to convert if you want to explore a range of values.
Once converted to RRIF (you’ll see that in the Warnings/Info column of the TimeTable), minimum required withdrawals will be withdrawn in the TM.
You’ll also see withdrawals in the detailed report or year report, as voluntary or required.

The TM treats all withdrawals from RRSPs or RRIFs after age 65  as splittable pension income. In real life you need to do a partial conversion to RRIF for it to be considered splittable income. So be careful, the TM assumes you will do that.

The Withdrawal Optimizer also considers all of this.

Yes. You can answer the question by forcing the TIME MACHINE to make withdrawals from the Non-registered account so that the capital gains are realised. You set that up with AUTOMATIC withdrawals from the account, and you can set the amount and timing of the withdrawals as you wish. If the money is not needed for spending, then it will be deposited  back into that or another account based on your deposit PRIORITIES. If you want to play with the amount and timing, you can run a SCAN to systematically vary the parameters of the AUTOMATIC withdrawal entry, and this way find the optimal solution.

My last announcements have been all about Building a Resilient Financial Plan, using Monte Carlo simulations and SCANS.
These address the risks to your financial plan stemming from market volatility and the uncertainty in the timing of various life events like retirement and death.

There is yet another risk to financial plans: policy risk,  as governments can change tax and pension policies. 
A recent federal budget and a climbing budget deficit have got people anxious and speculating about what changes the government will make. They ask me how those changes would affect their financial plan.

We do not know what changes governments will make, nor when a change would apply, but the MoneyReady App was always meant to be an exploratory tool. We've set up some canned scans that can modify internal parameters of the app to address a selection of users' fears or expectations of particular policy changes:

1: Reduce the OAS Minimum income recovery threshold:
This scan reduces the current OAS Minimum income recovery threshold by a factor of 0.9 (a 10% reduction) to 0 (no minimum income for clawback).
2: Reduce capital gains exemption on sale of principal residence:
This scan reduces the current capital gains exemption on the sale of principal residence by a factor of 0.9 (a 10% reduction) to 0 (no exemption).
3: Reduce RRIF/LIF required minimum withdrawals.
This scan reduces the current RRIF and LIF required minimum withdrawals by a factor of 0.9 (a 10% reduction) to 0 (no minimum withdrawals required).
4: Capital gains inclusion rate.
This scan changes the current (50%) realised capital gains inclusion rate into taxable income from 0% (no tax on capital gains) to 100% (capital gains fully taxed as regular income). 
This only applies to non-registered investments (personal or business).

The scan applies the changed parameters from today. 

Obviously, this is only a small selection of potential policy changes. We could imagine changes in tax brackets and rates, caps on tax-advantaged accounts, etc.

I don't want to scare you. These are not predictions; they are just for fun.

Let us know if there's another policy change you'd like to explore.

Other announcements:

• Once an account has converted to an RRIF or LIF, this is now indicated in the Warning/Info column of the Timetable.
• The year reports and detailed reports of the TIME MACHINE now break down the total of TDA withdrawals by required minimum withdrawals and voluntary withdrawals. 
• You can now set the age at which to stop CPP or QPP contributions if you work past 65.
• You can now set GIS to be ignored in the TIME MACHINE.
• We've added support for BC and AB property tax deferral loans for users from those provinces.

You can now set to ignore GIS but not CPP/QPP. Under CPP/QPP and OAS  tab check the box Ignore GIS calculations in the TIME MACHINE. Please read the Help for this page.

Thanks for the suggestion

Yes. The TIME MACHINE assumed you would always contribute.  You can now change that under the CPP/QPP and OAS tab, set the age at which you will stop contributions.

Thanks for that suggestion.

The easiest way to vary the conversion age over multiple values to gauge its impact, would be to set up a SCAN. Under Setup new SCAN, select the ACCOUNTS table, and then the Age of conversion will appear as parameter for each applicable account you have. This way, you can consider a range of ages all in one go. You can add additional parameters to the scan to vary simultaneously on multiple accounts.

The only thing conversion does is to force a minimum withdrawal every year after conversion. This does not mean you can't make withdrawals from (not locked-in) accounts before conversion. Often people don't convert until they have to (age 71) for maximimum flexibility. The Withdrawal Optimizer does honour the minimum withdrawals, but it also optimizes for withdrawals irrespective of the conversion status, so it may start withdrawing earlier from those accounts. You can have the SCANS run with the Withdrawal Optimizer.

You make a good point that the age of conversion is not currently shown in the reports. I think it could be useful in the detailed reports to seperate out the mandated minimum withdrawals from other withdrawals that were made, I'll add that.

I know the second page issue is a little awkward, but the system needs to know what type of account it is to know what questions it needs to ask next, and the type of account can be modified on the first page (so you can convert your RRSP to RRIF when that time comes yourself). I'll see if there's any way to make it easier.
Thanks.