An ongoing understanding of the overall health of your financial plan is helpful for both monitoring and goal setting. This is where the “Status” of your financial plan comes in. Your "Status", displayed in the top left corner of BodesWell, is an overall summary based on our models and the information that you entered.
On an ongoing basis, we provide your plan “Status” out of three possible states:
- On track: This status indicates that, based on our models and the information you have entered, you will likely be able to meet the life events that you are planning for, and still have a sizable amount of wealth remaining for discretionary planning. If you fall in this category, we can help monitor progress on your goals, as well as suggest new goals that could be appropriate given your financial picture.
- Progressing: This status means that, based on our models and the information you have entered, there is a realistic chance you will be able to meet the life events in your financial plan, but there is still room for improvement. If you fall in this category, we can help track progress toward your goals, as well as provide tips on enhancing your overall financial health. A majority of users tend to be in this state.
- Off track: This status means that, based on our models and the information you have entered, there is a high likelihood that you will not be able to afford the life events that you are planning for. If you fall in this category, we can help provide suggestions for adjustments that you can make to your financial plan.
How do we get to one particular plan status? From the data that you enter at the start of BodesWell: age, income, expenses, assets, debts, retirement age and end of life, we:
- Project your future income and expense streams
- Compute ratios like expenses vs. income, savings vs. expenses and debt payment vs. expenses
- Count the months between now and retirement, and retirement and end of life
- Project the future value of your assets using the Monte Carlo methodology.
- Estimate your debt pay-down schedule
- Factor in the estimated future costs of your life events
- Look for months when your plan is cash-flow negative, and finally,
- Weigh all those factors by your current age.
Since the worst result of any financial plan is running out of money in retirement, the single biggest factor in your Status is the number of months where we project that you could have a negative cash flow after your Retirement life event. Please read more about how we calculate retirement cash flow here.
Since younger people have more time to improve their plan than older people, up until age 30, we don’t weigh negative cash flow months in retirement as heavily as we do after age 30.
For purposes of determining your plan Status, if you choose to connect your other financial institutions to BodesWell we replace the numbers you entered during onboarding with the numbers we receive based on the data feeds from your financial institutions.
However, this will not necessarily result in a change in your Status. Please understand that your Status is not a guarantee that you will be able to reach any particular goal.