The Real Estate Financial Planner™ software gives users unprecedented insight into how real estate investments impact your journey toward achieving financial independence. The software does an amazing job of modeling passive cash flow from rental properties and automatically adjusting cash flows as you consider paying off properties, refinancing properties, cash out refinancing properties and selling properties.
But, until recently, it did not have a great way to model other forms of passive income like social security income, pensions and annuities.
The software has the user define their Target Monthly Income in Retirement.
In fact, the software allowed to define two different versions of Target Monthly Income in Retirement: a MINIMUM Target Monthly Income in Retirement and an IDEAL Target Monthly Income in Retirement.
Ideal Target Monthly Income in Retirement is the amount you’d need to generate from your investments to live your ideal lifestyle and consider yourself financial independent.
We used MTMIR and ITMIR (and even 2 times your ITMIR) to determine which Phase of Financial Independence you’re in.
Historically, the software would use a combination of any cash flow you had from rental properties (after all expenses) and the amount of money you could generate using a Safe Withdrawal Rate on any stocks, bonds, etc.
But that’s not exactly true.
Really, you should be financially independent if the sum of all of these exceeds your Minimum Target Monthly Income in Retirement:
- Cash flow from rental property +
- Safe withdrawal rate times Account Balances +
- Passive income including:
- Social security income
- Income from pensions
- Annuity income
Income from your job stops when you stop working. Passive income from sources like social security, pensions and annuities can continue even after you’ve stopped working.
So, the software now has a new
Job income does not count toward whether you’ve reached your goal of financial independence, but passive income does.
Sample Passive Income Rule
Here’s an example of setting up a
Notice, since it is modeling social security income, we have it starting on a specific date in the future and continuing indefinitely.
Since social security income is also indexed for inflation, we do enter in the value of it today and have it increasing with inflation over time as well.
Passive Income Charts
And, here the
The social security income becomes much more important for