The Money Mustache Community
General Discussion => Post-FIRE => Topic started by: MntnFIRE on September 15, 2016, 02:28:59 PM
-
Hi,
There are endless tools for asset accumulation and calculators for retirement "success". Are there any comprehensive tools out there for drawing on assets in retirement? I've seen many articles that address only one issue - like yes, you will get larger social security payments if you wait until 70. But they don't include reduction in income from drawing down assets in the mean time. Other issues are how to balance withdrawals from taxable and tax-deferred accounts, timing the conversion of home equity to incoming producing asset, etc. I've been working on my own spreadsheet to work through various scenarios but I would rather not reinvent the wheel if such a calculator is already out there.
-
I don't think there are calculators, per se, because it's more straightforward than that. You write up your withdrawal plan, based usually on tax efficiency, and then follow it.
Like, it might have something like: withdraw from taxable first, until depleted, doing Roth rollovers to make a ladder along the way, then withdraw from there, etc. etc.
If markets are down, you sell in order to rebalance--e.g. stick in line with your AA, so if your AA is 80/20 and markets have fallen so now you're 60/40, sell some bonds, etc.
Between your AA/IPS and your withdrawal order (just a simple list, basically), what is there to "calculate"?
Maybe you can describe more of what you mean, but I think it's just a straightforward "sell to keep in line with your AA, withdraw to minimize taxes".
It's a good question though, I'm sure there's stuff I haven't thought of. Following.
-
www.i-orp.com might be the closest to what you describe.
See also https://www.bogleheads.org/forum/viewtopic.php?t=115839#p1686175 for some good suggestions.
-
Thanks for the replies. I will look at i-orp.
I suppose I don't know exactly what I'm looking for because I've never seen it. Perhaps a crystal ball....
But what I imagine would be something more inclusive than calculators I've used. Ideally you could include the tax rates and liabilities of your portfolio (though obviously the government can change these at any time). I would like the ability to input more variable spending scenarios - ie higher spending in early years for travel, etc. I would also like more ability to seek optimization.
As an example of the latter, I ran many scenarios in FIRECalc varying the year my husband and I take Social Security. For simplicity I had us taking it the same year (we are the same age and our benefits will be the same). I found that holding everything else constant, the success rate had an inverted-U shape with the optimal around full retirement age but not deferring until 70. I think that is because taking it early reduces the overall lifetime benefit and deferring too long results in drawing down our investments too much in early retirement years but I need to dig into it more. In any case, it would be nice to be able to answer these types of questions without running each scenario individually.
-
Following.
I've been trying to model similar stuff. In particular, the differences between taking larger distributions from an inherited IRA (and losing some or all ACA subsidies) vs enormous tax liabilities in my 70s.
-
Thanks for the orp link, MDM ... looks like a pretty good tool, with modifiable inputs and monte carlo and optimization modules too.
-
Thanks for the orp link, MDM ... looks like a pretty good tool, with modifiable inputs and monte carlo and optimization modules too.
You're welcome.
See https://www.google.com/search?sitesearch=bogleheads.org&q=i-orp for much discussion.
-
Portfolio Charts put out a calculator today that helps you examine different withdrawal strategies.
https://portfoliocharts.com/2016/10/06/an-illustrated-guide-to-retirement-spending-strategies/
Not quite what was discussed in this thread in terms of features, but interesting for someone trying to decide on a withdrawal strategy.
-
Portfolio Charts put out a calculator today that helps you examine different withdrawal strategies.
https://portfoliocharts.com/2016/10/06/an-illustrated-guide-to-retirement-spending-strategies/
Not quite what was discussed in this thread in terms of features, but interesting for someone trying to decide on a withdrawal strategy.
Was just going to post this!
-
Following.
I've been trying to model similar stuff. In particular, the differences between taking larger distributions from an inherited IRA (and losing some or all ACA subsidies) vs enormous tax liabilities in my 70s.
I really liked i-orp too.
But the ACA subsidy question is the big thing I'm still puzzling over.
Is it better to minimize income totally and qualify for ACA subsidy, which could be 10k/year?
Or is it better to forego the subsidy and get the benefits of a roth ladder?