1.  For a planned withdrawal from an account (entered in AUTOMATIC SAVINGS/WITHDRAWALS), just enter the amount you intend to withdraw specifying the same start and end date for the withdrawal on the date you are planning to do it. It won't be prorated that way. If the start and end dates are not the same, the amount is assumed to be an annual amount and will be prorated in any partial years covered between the two dates.

2. I'm not quite sure what you are asking. You set the inflation rate in RATES/YIELDS/CURRENCIES, the default rate is set to 2% (the long term target), but you can click Update on that rate and get the latest rate we obtain nightly from the Bank of Canada. You can set it up to change the rate to anything you like at any dates today and in the future. The results of your March run are not modified if you look at it again in September, it has used your assumed inflation rate at the time and the today's dollars results are for March dollars for that run. For many scenario entries we ask you for amounts in today's dollars, and a dollar is worth a dollar today. For amounts that start in the future, you can specify if you want that to be in today's dollars or future dollars when they start.  Future dollars are usually worth less today due to inflation. The TIME MACHINE uses your inflation rate(s) and will show you results in both future dollars and today's dollars.

This will happen with investments that provide Return of Capital distributions (ROC). These distributions reduce the Adjusted Cost Base (ACB) of the investment. The ROC distributions are tax free until the ACB reaches zero, then the ROC distribution are taxed as capital gains.

You can enter a ROC yield for mutual funds and ETFs in MRA. The TIME MACHINE keeps track of the ACB starting from the book-value it has for the investment (you enter it manually or get it automatically from Wealthica). It will treat the distribution either as tax-free or capital gains based on the ACB it calculates. The ACB is reduced by the ROC distributions and any selling of the investment, and increased by any additional buying or re-investment of distributions. Only if the ACB is zero will it add to your realized capital gains on which it will calculate taxes.

1.  A new graph. A graph of TFSA and RRSP room at the end of each year in the TIME MACHINE is now shown in the results. This is in addition to the graph of TFSA and RRSP room at the beggining of each year. These will help you determine how much room you have and how much room you used up each year.
2. The TIME MACHINE's results large table shows net-deposits to accounts (total deposits minus withdrawals) in the year. The individual year reports now break down the deposits and withdrawals to accounts. Instead of just the net amount seen in the Cash IN or Cash OUT sub-tables, you might have an entry for the same account in both, ie. the total withdrawals  for the year, and the total deposits for the year separately.
3. The Excel download of all investments in all acccounts now has an additional column showing the owner of the account (useful if there is a spouse).

The first 2 changes will only apply to new TIME MACHINE runs as they can't be made retroactively.

These changes were made due to user suggestions, so thanks for your feedback!

The MoneyReady App follows the methodology of the CPP legislation and its estimates are very accurate and also transparent as you can check the calculation in two ways.

First, where you enter your statement of contributions in the app, it will show its estimate of your CPP amount if you start it at age 65. You can check that this amount is very close to the estimate given to you at the CRA website. Unfortunately that estimate is not very accurate for planning, as for that calculation the CRA assumes your current average earnings stay the same until 65.

The MoneyReady App TIME MACHINE makes a more accurate estimate by considering not only your earnings to date but also your future earnings as you entered them in INCOMES. It will also consider the child-rearing provision if you entered DEPENDENTS, and it considers years you collected CPP disability payments and also the Post Retirement benefit when appropriate in your scenario. If a spouse pre-deceases the other, the combined benefit to the survivor is also calculated.

Once you have run the TIME MACHINE you can check the accuracy of the calculation by looking at the REPORT. The pdf report shows the calculated Pensionable table in all years. The table shows earnings, first additional earnings, second additional earnings and the months for the year included in the calculation. Average earning are shown at the bottom, those are used to get the final CPP amount. If you haven't run a TIME MACHINE yet, you can still see an example of that in the Sample plan that can be downloaded.

The TIME MACHINE on its own does not optimize at all, it just follows your orders for your scenario that you set with AUTOMATIC WITHDRAWALS and your Withdrawal PRIORITIES, still enforcing tax rules along the way.

The WITHDRAWAL OPTIMIZER does optimize for tax efficiency over the retirement years indirectly. The optimizer algorithm considers more than just taxes and considers all those years together to maximizes your legacy and tries to beat the original TIME MACHINE scenario you set.  It does not matter whether you want to leave a legacy or not.

So yes you should use the optimizer to determine if your set withdrawal strategy is optimal, and if not, to consider the results of the optimal strategy obtained by the program.

I'll look into capturing that better for these types of funds. In the meantime, you can just enter your expect foreign dividend yield as income yield, since the tax treatment is the same. Reduce the eligible dividend yield by the same % as they are additive.

Try increasing your TFSA contributions amount in AUTOMATIC deposits, if there’s room and other sources of cash it will make the contribution, but won’t go over the limit. Also check there is money to cover it in the accounts of the same spouse that has room.

Hi,

You can set up to withdraw all distributions from the TFSA accounts in AUTOMATIC WITHDRAWALS. Once started these withdrawals will never end, and will add to your contribution room for the following year.

You can then set up AUTOMATIC DEPOSITS to the TFSAs. To cover the fact that you have that extra contribution room due the previous distribution withdrawals, enter a larger amount than the yearly allowed increase in TFSA room (currently, $6,500). For example enter $10,000, indexed. The TIME MACHINE will only make contributions up to the contribution limit it calculates in every future year.

Set up your WITHDRAWAL PRIORITIES to your RRIFS as the top priority, then the Non-reg accounts, then the TFSAs.

That should achieve the scenario that you want. Once you run it, can also try running the WITHDRAWAL OPTIMIZER to see if it can beat it.

The form does not allow you to enter a negative amount for the balance of a credit card loan. The issue is what would you want te TIME MACHINE to do with it? A credit balance on a credit card card is not a a good investment so usually insignificant and temporary.

It is a heuristic search. To be precise, the core algorithm is exact, but heuristics are applied to deal with constraints like minimum and maximal withdrawals, spouses (CRA attribution rules, pension income splitting) etc...

In the example you provided, disallowing withdrawals from the TFSAs forces you to bail out your spouse as that money is not available to them when they run out of other sources of income. That turns out to be more slightly more optimal in the end for your case, but the algorithm finds the optimal answer with your spouse paying for their own share of expenses, more exactly following the scenario you ordered.

The algorithm is described in the blog post:

Finding the optimal withdrawal strategy in retirement to minimize taxes and to maximize your financial legacy.

The post gives references for the algorithm's origins, describes it in some detail and goes over its application and limitations. Let me know if you still have questions after reading it.

The Optimizer optimizes for your liquid legacy, after tax, at death. Many things can come into play, like as you say capital gains taxes within your lifespan and at death. Expected investment rates of return are also a big factor if some accounts return more than others. It works by doing the math given tax rules and your inputs for your scenario.

You can set up your scenario the way you want, the Optimizer will try to beat it and often does. If it can beat it it'll tell you something like "this scenario has been optimized and ignored your priorities". If it can't it just goes with what you ordered it to do. It always goes with the optimum for your heirs, after the unavoidable death and taxes.

See https://www.moneyreadyapp.ca/blog/post/8

We've added a new way to add repeating expenses, so we now offer three options for entering the dates and amount applicable for an expense.

Updates on this as people ask me questions about the AI:

1. Is it safe? Yes, your data is not sent to OpenAI, only your question. Don't put personal information in the question.
2. If you did, it wouldn't know what to do with it anyway. It's a language model, instructed to answer questions based on the MoneyReady documents only. It's not a calculator or a financial advisor/planner.  It understands language and is aware of the MoneyReady documents only. It can't run the tools for you or analyse your data.
3. Vous pouvez lui demander des questions en Français, et le AI repondra en Français si possible car il peut faire la traduction des documents. C'est pas toujours parfait.

When logged in, you can select to search all the MoneyReady documentation using OpenAI from our forum search page. Just type in any question you may have and a response will be generated with an OpenAI large language model. The model has been fed all the information in the MoneyReadyApp eBook, all the app's help pages, all the forum posts, all our blog posts, the app's homepage, and our various other pages. It is instructed to answer only based on those documents. It does not know your data.

The answer given is sometimes surprisingly smart, sometimes disappointingly wrong, and often incomplete.  We attempt to provide the references to the top documents it used to form its answer so you can quickly find the source of the information.

If the AI answer is not useful, please don't hesitate to contact us with your question or post it on the Forum. You'll get a real human to respond.

To accomodate mostly pensions but also any other INCOMES, REVENUES, EXPENSES and AUTOMATIC SAVINGS/WITHDRAWALS that are indexed proportionaly to inflation, we' ve added a new parameter to fine tune indexing to inflation in the TIME MACHINE.

See the FAQ for (logged in) users: https://www.moneyreadyapp.ca/forum/topic/76-how-is-indexing-to-inflation-set for details.

The general model we use (with some modifications for Canadians, to bring it up to date to today, and some additional factors relevant to our users like USD exchange rates) is described https://www.soa.org/resources/research-reports/2000-2006/research-modeling-of-economic-series-coordinated-with-interest-rate-scenarios/ and https://www.moneyreadyapp.ca/blog/post/14. It drives all the rates, for each year, in each the 100 TIME MACHINE runs. They are generated on the fly with the model, they are very variable, we don’t store these inputs. You can look at at an individual simulation in RATES/YIELDS/CURRENCIES and see the rates there, and then run that particular simulation through the TIME MACHINE, but for the 100 simulations we don’t store them, or analyze which gave you the worst case case. It’s not important, as we may not have even hit the very worst-case (due to the 100 limit, and the model itself. It’s just a model, a good one, but still not reality). What’s important here is to see how likely and when, you run into a cash-flow problem with these simulations, that is helpful to know so you can adjust your spending to avoid it.

You can set when you to convert an RRSP (or similar types) accounts by editing the account, and make sure to click submit until it asks you  “age to convert”. The default is 71 but you can change it. You can also do partial conversions by setting it up in AUTOMATIC WITHDRAWALS. 

The CPP calculations are done following the CPP Act, so the way the CRA would do it when you apply for the pension. It’s more accurate than the estimate you get from the Service Canada today which  is calculated  as if you were 65 today and your average earnings so far.  Our estimate considers your expected future income and contributions, and also considers your expectations for inflation until you start CPP. The TIME MACHINE Report provides a summary of the the CPP calculation given your entered table of contributions if you are curious about how the calculation was done,. It’s the last thing in the pdf report, so you’ll need to scroll all the way down.

I  checked on your run it and it does looks fine. I see what you mean about it optimizing to 66 for you. Looking at the 3D graph, it’s very flat. Essentially any ages after 63 for you and 62 for your spouse for starting CPP, results in about the same legacy. Why? I think the most likely explanation in your case is that you have a large portfolio set to earn decent returns, so any money you get from CPP earlier reduces what you need to withdraw from those accounts and they thus get to grow more, and that dampens the effect of receiving more CPP if you delayed. Generally the better investor you are, the more advantageous it is to take CPP earlier. I agree delaying CPP is generally advantageous, but not always, you have to do the math which is what we do. If you haven’t already, see https://www.moneyreadyapp.ca/blog/post/9 for my study of the issue. 

I’m glad you’re enjoying the MoneyReadyApp, thanks for you kind words,

You can now specifify the months to add to the age you start/started taking the pensions. The CPP/QPP Optimizer will still only explore the starting dates on each of your birthdays after retirement.