Running a Sustainable Scenario

You can enter a client's Base Expenses to help determine how long your client’s money will last.

In some scenarios, it won't last as long as desired, while in others, the client may outlive their savings.

The Sustainable Spending tile within the Recommendations feature helps you show the constant level of spending that can be sustained without running out of Financial Assets until the last year of the projection; essentially calculating how much they can afford to spend every year so they will not outlive their money. 

From the Client, Spouse, or Combined Planning page, click the Recommendations button.

The following popup window will open up.  Click the Calculate button in the Sustainable Spending tile to start the calculations at the default age provided.

You can then choose to Apply & Run (with the option in the bottom left of the modal to "Copy scenario before applying recommendations"). Or, you can choose not to Apply & Run and instead use the information for discussions with your client or to inform other adjustments you may make to the plan.

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The Sustainable Spending tile within the Recommendations feature helps you show the constant level of spending that can be sustained without running out of Financial Assets until the last year of projection; essentially calculating how much your clients can afford to spend every year so they will not outlive their money. The software will calculate the spending to reach this goal.

You may find that individual years within the projection have a shortfall. This can happen if the level of spending is too high for a certain year. There is no constraint to block shortfalls within the projections when running a Sustainable Scenario. The calculated level of spending may be too high for some years of the projections, but this is allowed within the calculations. If any debt is built up, the Sustainable Scenario criteria will be satisfied as long as that debt can be paid off by the end of the projections.  If there is a shortfall at the end of projections, it will be covered by the amount remaining in the Financial Assets.

There are a few situations where you might see a shortfall when running a Sustainable Scenario:

1. If there are contribution overrides for any of the accounts - These will be highlighted in yellow and will block the software from automatically withdrawing from the assets to reach the spending goal. You can clear the overrides to allow the software to withdraw from the account. (If you don't want Snap to use the funds from a specific account during the Sustainable Scenario, it is easiest to delete that asset from the projections altogether since it is not included as a resource for the retirement projections.)
2. If there are additional income sources that begin over the projection - If new incomes are starting in future years (i.e., CPP, OAS, or a pension starting later in the projection) then the software may run a shortfall in the early years and then pay off the accumulated debt in the future once the additional income is available. You can reduce the Base Expenses amount before the year when the additional income starts. Then run a Sustainable Scenario from that point on.
3. If there is a LIF account - If there is a LIF account in the projections, the software may not be able to withdraw enough money in some years to reach the sustainable spending amount due to the annual maximum withdrawal limit. (Options: 1. You can reduce the Base Expenses value and run a regular scenario rather than a Sustainable Scenario, 2. You can consider unlocking a portion of the LIF at retirement and/or converting to a LIF account at an earlier age.)
4. If there is lump-sum income during the projections -  For example, an influx of cash from the sale of a real asset, an inheritance, or an insurance policy payout.  If one of these occurs within the projection, the sustainable spending amount might be too high before this payout and you would see a shortfall in those earlier years. You can reduce the Base Expenses amount before the year when the lump-sum income is received. Then run a Sustainable Scenario from that point on.

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