Selectively override order of portfolio withdrawals

The planner offers plenty of flexibility and can handle many complicated real-world scenarios, but sometimes it can be tough to figure out how to do it. Check out this forum for discussion of how to model things like selling a house, long-term care expenses, and much more.
Post Reply
drbrandt1
Posts: 14
Joined: Fri Nov 21, 2014 5:52 pm

Selectively override order of portfolio withdrawals

Post by drbrandt1 »

Is there a way to model selectively pulling (say) $10,000 a year from tax deferred investments to fund a portion of retirement over a set number of years? So in this example, instead of starting with taxable investments, you would start with tax deferred for $10,000 and then pull the remainder per the order indicated in the settings page.

jimr
Posts: 585
Joined: Thu Feb 28, 2008 6:48 pm

Re: Selectively override order of portfolio withdrawals

Post by jimr »

There isn't a simple way to get the simulation to do this automatically, but if you are close to retirement, you could perhaps make manual adjustments to the tax deferred and taxable portfolio balances before the plan starts to roughly approximate this.

For example, say you want to withdraw $10k per year from tax deferred for 5 years, then switch back to the standard withdrawal ordering. That will be a total withdrawal of $50k, plus $10k more for taxes on the deferred withdrawal (at 20%). To simulate this, when you create the plan lower your actual tax deferred portfolio balance by $60k and increase the taxable portfolio balance by $50k. This is only an approximation, but it should get you in the ballpark.

drbrandt1
Posts: 14
Joined: Fri Nov 21, 2014 5:52 pm

Re: Selectively override order of portfolio withdrawals

Post by drbrandt1 »

That's a very simple way to do it. It will at least give me a ballpark for modeling. Thanks

Post Reply

Who is online

Users browsing this forum: No registered users and 1 guest