Charts
The charts give a visual overview of your projection from now until the Final Year. Small black triangles on the zero axis indicate life events: retirement dates, downsizing of your principal residence and/or budget and, if you have specified them, the estimated year of death for both spouses.
The Cashflow chart is key to understanding how your retirement is funded and how excess funds are invested to optimize your estate.
Sources of cash are shown as positive values and include employment and pension income, account withdrawals and other income that you specify.
Uses of cash are shown as negative values and include your budget, charitable donations, taxes, loan payments, account deposits and other expenses that you specify.
In any given year sources of cash and uses of cash are equal.
The red lines on the positive and the negative sides of the chart show your total expenses. Expenses include your budget, charitable donations, taxes, loan payments and other recurring expenses that you specify. Any amount on the positive side that exceeds your expenses is excess cash. Amounts on the negative side exceeding your expenses show how that excess cash is deposited into your accounts. In the example above, funds from non-registered accounts are moved into TFSAs.
Using data that you specify in the Plan section of the Dashboard, the spreadsheet moves money between accounts in an attempt to maximize your estate. As shown in the example above, a common strategy is to move funds from non-registered and RRSP/RRIF accounts early in retirement into TFSAs to minimize your future tax burden.
In the event that your retirement withdrawal strategy does not withdraw enough cash to meet expenses and there are insufficient funds in your other accounts to cover the balance, the spreadsheet will draw from an Overdraft Account. This will result in interest being charged until the Overdraft is repaid. Withdrawals and deposits to your Overdraft Account are shown as red bars on the chart.
This chart shows how your account balances change over time. Retirement Fund Account (RRSP/RIF and LIRA/LIF) deposits and withdrawals are determined by the suggested values you enter along with contribution and withdrawal strategies you (or the optimizers) select. How the spreadsheet handles excess and insufficient cash is described in the Assumptions section in Retirement Planning.
Respecting your instructions for retirement fund withdrawals, the spreadsheet will draw from your Emergency Fund as a last resort. If your Emergency Fund is depleted funds are drawn from an Overdraft Account which is shown on the chart as a negative red bar.
Net Worth is everything you own less everything you owe. For most people this is the total of all their account balances plus the cash value of any life insurance policies less any loans. (Depreciating assets like cars, boats and RVs are often ignored for Net Worth calculations.) Your share of your principal residence less any mortgage is also part of your Net Worth; however, since the principal residence is often a major component of Net Worth, this chart displays it separately.
Net Estate Value is similar to Net Worth except it takes into account any taxes that are due and life insurance paid out (death benefit) when you die. For example, when a single person or surviving spouse dies the entire amount of their RRSP/RRIF becomes taxable. Large amounts are taxed at more than 50% - a significant hit on the estate. One strategy for reducing Estate Tax is to draw down RRSPs earlier in retirement.