The Paycheck Calculator is a tool that can help make the abstract world of retirement planning more concrete. It helps clients connect with what is being communicated by starting with their take home pay — something most everyone can connect to. This provides a gateway for discussing with the client the need for increased deferrals and help them manage their other assets.
The Paycheck Calculator is really a suite of three tools working together to help you educate your clients about retirement.
1.The Paycheck Calculator is the base tool for which other analysis is provided. It helps you connect with your clients and provide a quick analysis for them on the effects of increasing the deferral on their take home pay. It is the key for working with either of the other calculators.
2.The 1040 Analysis Calculator can help clients increase their contributions by quickly illustrating for them how to move some or all of the projected federal refund into their qualified plan. It may also help you determine if the client has money in low interest CDs or bonds that may otherwise be invested in retirement.
3.The Paycheck Projection Calculator can help a client see the effects of the deferrals accumulating to retirement and distribution in retirement, illustrate the cost-to-wait and help you, as an advisor, find out through education if the client has any unmanaged retirement monies that they may need additional assistance with.
Quickly and easily illustrates the effects of various qualified plan contributions on take-home pay. It allows for quick analysis of hypothetical growth projections into retirement and payout values during retirement. It also allows for automatically moving a Federal 1040 return into a qualified plan with no change in take-home pay.
|The Paycheck calculator can work with different types of qualified plans (e.g. 401(k), 403(b), 457, etc.) and may be configured to work with multiple plans (e.g. the client may have a 403(b) plan, a 457 plan, and a state sponsored retirement plan). This help file interchanges the usage of the various plan types.
Following are a few enlightening scenarios of what the Paycheck Calculator is well equipped to do:
•Present the changes in a qualified plan contribution by setting specific values to take home pay.
•Portray the effect a client's next raise may make on take home pay.
•Demonstrate the effect of changes in filing status and/or additional deductions or withholding allowances (prior to 2020).
•Create additional investment dollars by showing how Section 125 deferrals can increase the client's spendable income.
•Calculate the reduction in the client's take home pay that results from putting a specific amount into their 403(b) account.
•Move savings deposited into a credit union to a qualified plan.
Below are links to several topics that can help you use this powerful tool efficiently.