Questions about the Optimal Retirement Decision

[jdw_fire]

I'm going to restate this to see if I've got it.

If I've got more money coming out of the TIRA via RMDs than I want to spend, that money will have to be invested somewhere. There is no other option that's as attractive as a Roth IRA. But the money that came out due to the RMD isn't eligible for a Roth.

The key is to move it to the Roth before the RMD. I could wait and do that at age 69, but I might want to move so much in one year that I'd drive myself into a 28% bracket in that year. So it's better to do some math and see how soon I need to start to spread it out enough to avoid the 28% bracket.

But, that calc won't necessarily show that I need to be moving money at 60. Depending on my assets and other income, it might turn out that I can wait a number of years before I start.

well said; just remember, income and tax brackets/rates can change so do the math early and convert as early and as much as the math tell you to.

 

[omni550]

well said; just remember, income and tax brackets/rates can change so do the math early and convert as early and as much as the math tell you to.

+1

 

[WilliamG]

I have enjoyed using ORP and we have converted such that about 17% of our investment portfolio is Roth. I would be hesitant to follow ORP's aggressive conversion advice now. How about we go to a strictly VAT taxing system and drop income taxes? Doubt that will happen, but future tax laws are very hard to predict. Settle for good diversification in your account holdings (taxable, taxed deferred, tax free).

 

[haha]

I have enjoyed using ORP and we have converted such that about 17% of our investment portfolio is Roth. I would be hesitant to follow ORP's aggressive conversion advice now. How about we go to a strictly VAT taxing system and drop income taxes? Doubt that will happen, but future tax laws are very hard to predict.

This is one that I can predict-in a 100 billion years it will not happen. Adopt VAT yes, drop income tax, never.

Ha

 

[WilliamG]

Ha -
As I said, doubt that will happen, but in our terrible fiscal situation the powers that be will go where the money is. Still think diversification in account allocation makes sense.

 

[gneeby]

Math Modeling

I experimented with the Optimal Retirement Decision Support website Optimal Retirement Calculator and Retirement Decision Support Systemthat I saw in a thread about RMD's on Friday and I am somewhat confused by the results. I think all the various reports are excellent and cover a lot of ground but what is the purpose of this exercise?

There are two purposes to mathematical modeling of this sort:

1) To get some guidelines for making cash flow decisions today.
2) To get a sense of perspective of your retirement situation over time.