Median Portfolio Value

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mat.schmit@gmail.com
Posts: 4
Joined: Thu Aug 01, 2019 6:48 pm

Median Portfolio Value

Post by mat.schmit@gmail.com »

There is a period where I am not withdrawing nor contributing to my portfolio and the portfolio reduces by 3% each year. I assume this is for the 3% inflation. However, I have entered that I will be earning 3% on the portfolio balance. Wouldn't they cancel each other out and the balance would stay the same?

Thank you and I love this tool!

Matt
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jimr
Posts: 634
Joined: Thu Feb 28, 2008 6:48 pm

Re: Median Portfolio Value

Post by jimr »

The 3% growth and 3% inflation should almost cancel each other out, however if any part of the portfolio is taxable, the taxes due on portfolio gains could be a factor.

If you haven't already done this, I'd suggest looking at the detailed view tab and selecting the show more detail radio button on the top right of the screen to see if you can see any other reason for cash flows out of the portfolio. Also, if you right-click on a column header in that table, there's an option to show all columns which will give you even more details about any withdrawals that might be happening.

One other thing that may be worth checking is to set the investing style to custom and set the standard deviation to 0, which should make it easier to track what's happening with the portfolio value from year to year.

mat.schmit@gmail.com
Posts: 4
Joined: Thu Aug 01, 2019 6:48 pm

Re: Median Portfolio Value

Post by mat.schmit@gmail.com »

Hi Jim and thanks for the reply.

I have set the investing to custom and set the standard deviation to 0 and set the table to view all columns.

This reduction is happening at age 70 and for the life of the run (to age 95). I see "taxes on portfolio growth" but that only accounts for a portion of the total reduction (e.g., $99 of the $1700). I do see the "taxable portfolio value" goes from $0 to $21k the same year (with similar increases each year). Maybe it has something to do with required minimum distribution? However, I cannot see a column with the cash flow out.

Thanks again for your help.

Matt

jimr
Posts: 634
Joined: Thu Feb 28, 2008 6:48 pm

Re: Median Portfolio Value

Post by jimr »

Since you're seeing the issue starting at age 70, RMDs seem like a good candidate for suspicion. There should be a column for RMDs as well as one for taxes on RMDs as long as you've clicked the show more detail radio button on the top right of the screen.

If expenses are less than income, then RMDs are basically just a transfer from the tax deferred portolio to the taxable portfolio, with taxes due on the income deducted in the process. That could be what's causing the discrepancy.

The key is to click that "Show More Detail" radio button at the top right of the detailed view tab so you can see the extra columns that include the RMD stuff.

jimr
Posts: 634
Joined: Thu Feb 28, 2008 6:48 pm

Re: Median Portfolio Value

Post by jimr »

Wait. I steered you wrong. It looks like you have to click the "Show More Detail" radio button before you select "show all columns".

This is a quirk in the way I implemented that view. There are actually two completely separate table objects being used and when you show all columns for the "Show Less Details" table, it doesn't add all the extra stuff in the show more detail table.

That's really confusing and I'll have to think about a better way to handle that.

In the meantime, just hit the "Show More Detail" radio button and you should see the RMD stuff.

mat.schmit@gmail.com
Posts: 4
Joined: Thu Aug 01, 2019 6:48 pm

Re: Median Portfolio Value

Post by mat.schmit@gmail.com »

Hi Jim. I was able to get all the columns displayed so no worries there.

The columns with RMD are there. The "TAX on RMD" is $4,733. The "Additional Withdrawal" is ($3,134) (It's negative because all my "Planned Expenses" are covered by my annuity and SS with a gain of $3,134). The difference between these two numbers is $1,599. The reduction in Portfolio value is $1,779. There is also $99 "Taxes on Portfolio Growth." So I am close to $1,779 but... (maybe I'm way overthinking this).

I would be happy to share my run with you. I tried to upload a screenshot but the format was not allowed.

Thanks again for your time!

Matt

mat.schmit@gmail.com
Posts: 4
Joined: Thu Aug 01, 2019 6:48 pm

Re: Median Portfolio Value

Post by mat.schmit@gmail.com »

...also while looking at it in the "less detail" I see a "median total withdrawal" of $1,600. This coupled with the $99 tax on portfilio growth gets me to $1,699. The portfolio difference between age 69 and 70 is $1,700. Maybe that is it.

jimr
Posts: 634
Joined: Thu Feb 28, 2008 6:48 pm

Re: Median Portfolio Value

Post by jimr »

With the standard deviation set to 0, the numbers should perfectly add up except for very slight differences from rounding errors. From what you've described, it sounds like you may be there already and you can now explain everything you're seeing completely.

If that's not the case, I'd be happy to take a look at anything you'd like to send to info@flexibleRetirementPlanner.com (screenshots or .frp file)

Please understand that email isn't secure at all and isn't reliable at protecting personal information. If you have a junk email address without your name in it, that might be best to use. Also, it's best for protecting your privacy if you change around some amounts like portfolio values and also remove any names from the additional inputs memo fields.

Jim

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