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anonymous

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External income

What is the definition of External income on the report and how is it calculated?

Employee stock options

Thanks!

How you have set it up makes sense. 

So, the options are exercised and would be included in the "external" income, with associated taxes calculated accordingly?

That would explain the bump in external income over those 3 years.

Very cool, thanks again.

Employee stock options
I did implement employee stock options for you a while back. It’s not a commonly used feature and was a little tricky, so I’m wondering how’s that's working out?
Hi Elisabeth,
I can imagine that it was tricky, and I appreciate it. 
I’m still fiddling with it though.  Specifically the nuance of when the options are ‘in the money’ and when they ‘expire’ and have to be executed or be lost.
So how to force the ‘execution’ of the options – which are basically a ‘cash’ payout (market price less the option price- not stock retention), which triggers the taxable event?
I initially split one option into 3 separate options (with one executing each year over 3 years), then selecting 100% withdrawal each year and prioritized the account to be drawn down.
However, when optimizing, it ignored these ‘planned’ events, or didn’t recognize it’s taxable upon ‘execution’, or it is optimizing not to ‘execute it’  – which then jeopardizes the options expiring.
So I’m having fun with it.
Total Spending

I am confused about the Total Spending result on my TM runs. I plug in that I want $150k spending money (not other entries) at a particular age (71), yet the Time Machine result gives me $165K. Not sure why this is the case. Why would it do this? Is there a way to constrain the TM to provide a hard spending amount?

Why does the Optimizer ...?

Thank you so much for the quick responses and updates. MoneyReady is very helpful in knowing when I should convert my RRSP/LIRAs to the corresponding RRIF/LIF accounts, and how to optimize my withdrawals. It also confirmed my intent to defer CPP to age 70. It's exactly what I need.

One more item puzzles me. I have used all my TFSA contribution room. The Withdrawal Optimizer shows TFSA withdrawal of $1887.82 for 5 years from 2024 to 2028 (age 67 to 71), then large contributions (approx $13k to $20k) from 2033 to 2035 (age 76 to 78), then contributions drop back down to the $6k range. I have used all my TFSA contribution room. Can you tell me the reason for these withdrawals and recontributions?

Add investments?

The Investments screen for each account allows me to add specific securities (stocks or funds) by ticker symbol. What are these entries used for, since I am entering projected returns for each asset class anyway?

Defined Benefit Pension

My retirement income is entered as "OTHER" income but it's actually a defined benefit pension. How do I let the Time Machine know that, and that it can be split between spouses?

Is there a way to enter for the year of my death a new and ongoing stream of income for my wife as a percentage of my former pension?
Capital gains?

Why does the App calculate capital gains each year for taxes even though we have not sold any stocks? Is the reason based on the fact that insufficient cash is available so the App assumes that stocks will be sold to meet the desired withdrawal amount to cover expenses and taxes due?

Canadians make guesswork of retirement planning | Advisor's Edge

Hello Elisabeth,

This may be a good article to support your model? 

https://www.advisor.ca/news/industry-news/canadians-make-guesswork-of-retirement-planning/

Time Machine Interpretation

Money flows out of my spouse’s TFSA and into my unregistered account in 2023 and 2024. Would this not give up a tax advantage?

Current year

Is there a way I could set the software to include 2023 data for the full year (not just for the tax number)?