Total Withdrawal vs. planned expenses

Post questions about how to use the planner and how the planner works as well as comments and suggestions. (If in doubt, post here.)
Post Reply
elrodvt
Posts: 3
Joined: Wed May 02, 2012 11:43 am

Total Withdrawal vs. planned expenses

Post by elrodvt » Wed May 02, 2012 11:54 am

Hi, I am confused by the median total withdrawal field in the detailed output.
Let's say I have a pension of 50K, target expenses of 100K, 1M in a 401K and the tax rate set to 20%.
In year 1 of withdrawal, with 100% funded, I expected to see:

50*.8 = 40K After Tax income. Check...
Then I expect to see it try and come up with 60K after tax from the 401K.
Thus a number of 60K/.8=75K in the median total withdrawal.
Instead I see 60K. But the % expenses funded is 100%.

It's like it thinks the 401K withdrawal is tax free.

I am not understanding something very basic here....

Thanks!

jimr
Posts: 520
Joined: Thu Feb 28, 2008 6:48 pm

Re: Total Withdrawal vs. planned expenses

Post by jimr » Wed May 02, 2012 2:34 pm

Any chance you entered the $1m portfolio as 'tax-free' instead of as tax-deferred?

The tax-free portfolio is for roth IRAs and 401ks while the tax deferred input is for traditional 401ks and IRAs.

Jim

elrodvt
Posts: 3
Joined: Wed May 02, 2012 11:43 am

Re: Total Withdrawal vs. planned expenses

Post by elrodvt » Thu May 03, 2012 8:23 am

Hi Jim, no, I entered it as tax deferred.

I think i'll restart everything and if it still happens will post a screenshot of the input screen and detailed output?
I'm sure I'm doing something dumb.

elrodvt
Posts: 3
Joined: Wed May 02, 2012 11:43 am

Re: Total Withdrawal vs. planned expenses

Post by elrodvt » Fri May 04, 2012 9:21 am

Hi, I guess I figured this out. I gave up and reloaded the app and entered everything again...
I think it had something to do with nocola pension income I had entered because prior to the reset if I removed this the numbers added up and if added back in they did not. Why that would change the withdrawal amount vs. after tax income is confusing though.

Anyhow, works great now.

jimr
Posts: 520
Joined: Thu Feb 28, 2008 6:48 pm

Re: Total Withdrawal vs. planned expenses

Post by jimr » Fri May 04, 2012 1:15 pm

I'm glad it's working for you now, although it'd be nice to understand exactly what was going on. Did you re-enter everything the same as in the first run, including the nocola pension?

Any additional pension income would of course reduce the amount of the withdrawal that's needed to fund expenses, since the amount withdrawn is the difference between after tax retirement income and expenses.

Aside from that, I'd have to see the inputs to troubleshoot it more. I did a simulation run with the inputs from your original post and everything seemed to check out.

While there are no guarantees, the planner's been around for a few years and been used by tens of thousands of users (probably over 100k by now). So over the years, with the help of feedback like yours, the planner's been given a good workout. Of course, any good programmer knows you can never be 100% sure, no matter how well tested you think your code is.

Jim

Post Reply

Who is online

Users browsing this forum: No registered users and 2 guests