Annual Transfer From IRA to Savings?
Posted: Fri Aug 24, 2018 5:54 pm
I was experimenting with FRP today and stumbled across something I don't know if I'm doing right, because the results seemed surprising.
I defined my tax deferred savings (my IRA) with a 6% return, 6% deviation.
I defined my regular taxable savings with a 1.6% return, 0% deviation (on the top half of the additional inputs screen).
Then I added my wife's pension and both of our social security incomes on the additional inputs screen.
Everything seems fine when I run the simulations.
Today I wondered what would happen if I withdrew 15K annually from the tax deferred portfolio (the IRA), and deposited that 15K to the taxable portfolio (our regular savings) on the additional inputs screen. I was surprised to see the overall portfolio values and the probability of success increase. That didn't quite make sense to me since the money was going from a 6% return to a 1.6% return, albeit with less deviation. The IRA ran out of money sooner, but the regular savings went on to grow larger with less risk. Somehow this seems too good to be true.
What am I missing?
I defined my tax deferred savings (my IRA) with a 6% return, 6% deviation.
I defined my regular taxable savings with a 1.6% return, 0% deviation (on the top half of the additional inputs screen).
Then I added my wife's pension and both of our social security incomes on the additional inputs screen.
Everything seems fine when I run the simulations.
Today I wondered what would happen if I withdrew 15K annually from the tax deferred portfolio (the IRA), and deposited that 15K to the taxable portfolio (our regular savings) on the additional inputs screen. I was surprised to see the overall portfolio values and the probability of success increase. That didn't quite make sense to me since the money was going from a 6% return to a 1.6% return, albeit with less deviation. The IRA ran out of money sooner, but the regular savings went on to grow larger with less risk. Somehow this seems too good to be true.
What am I missing?