What do I need to know about assumptions in the Lifetime Planner calculations?


Check that these assumptions about financial laws are still true.

  • Savings assumptions
    • The penalty for early withdrawal from tax-deferred savings is a 10 percent tax on the taxable amount of the withdrawal.

    • The early withdrawal penalty is in effect until age 59½.

    • The age at which you must take a minimum distribution from your tax-deferred savings is 70½ or when you retire, whichever is later.

    • The IRA default contribution limit is $3000 ($3500 if you're 50 years old or older).

    • The contribution limits for 401(k), SEP-IRA, 403(b), Keogh plan and Profit Sharing plans increment each year based on the inflation assumption you enter. (See the Help topics on each of these plans for an exact description of the limit increment each year.)
  • Social Security, Medicare, and pension assumptions
    • 85% of Social Security Benefits are taxed.

    • Social Security benefits increase each year by inflation.

    • Surviving spouse will receive the other spouse's benefit if it is larger.

    • Social Security benefits are decreased if you have earnings above a certain threshold.

    • Social Security tax is applicable to the first $72,600 of earnings. This amount indexes forward from 1999 based on the inflation assumption you entered in the plan.

    • The maximum qualified pension you can receive is $130,000 a year. This amount indexes forward from 1999 in whole $5,000 increments based on inflation

Return to Get started with the Lifetime Planner.

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