Search found 121 matches

by Cincy_1988
Sun Feb 02, 2025 1:17 am
Forum: Personal Investments
Topic: How to "correctly" use backtesting
Replies: 50
Views: 4531

Re: How to "correctly" use backtesting

bonesly, thank you for responding.

I agree with you that I don't want to deprive myself of fun activities - I want to travel as much as possible while I still can walk and am healthy.
Like you, I like "modeling" & coding. I never learned Visual Basic though (I was taught Fortran using punch cards!!). I use R (a powerful open source version of Matlab) or develop long, inefficient Excel worksheets.
by Cincy_1988
Sat Feb 01, 2025 7:04 pm
Forum: Personal Investments
Topic: How to "correctly" use backtesting
Replies: 50
Views: 4531

Re: How to "correctly" use backtesting

Thank you all for your detailed responses and explanations. I've learned so much!

My brain seems to understand Monte Carlo simulation (despite its major shortcoming of using a normal distribution, which we know isn't correct) better than back testing - I should educate myself about back testing.

Knowing the limitations of Monte Carlo, I made following arbitrary (hopefully conservative) assumptions:

Add 1% to the historical inflation data from 1968 to 2024 resulting in 5.1% rate for general expenses & 6.4% for medical expenses.

I used all the available historical data for my portfolios. tIRA (VBTLX 25%, VTABX 13%, VFIAX 42%, VTIAX 20%) was limited by VTABX, which goes to 2013-06-04, taxable brokerage (VTSAX 61%, BRK-B 39%) was limited ...
by Cincy_1988
Fri Jan 31, 2025 5:44 am
Forum: Personal Investments
Topic: How to "correctly" use backtesting
Replies: 50
Views: 4531

Re: How to "correctly" use backtesting

Thank you very much for sharing your spreadsheet. I was able to download it. I'll go through your file and let you know if I've any questions.

Thanks again!
by Cincy_1988
Thu Jan 30, 2025 8:45 pm
Forum: Personal Investments
Topic: How to "correctly" use backtesting
Replies: 50
Views: 4531

Re: How to "correctly" use backtesting


I update the models I use from time to time so use these links (although the text discussion at the links @Raspberry-503 provided are still relevant).

Data and Models I use for Monte Carlo:
NYU Data Set 1928-2017 with Model Fits
Accumulation Monte Carlo
Withdrawal Monte Carlo

You'll need a MS Excel license; download to your local machine and enable macros (required for the 1,000 random trials and results aggregation).


Thank you very much for providing your excel files - they're very detailed and laid out very nicely! I've the following questions:

1) Let's assume I've a pension (with no COLA) of $100,000, and my expenses (without inflation) is $50,000. If the pension increases with inflation, then there wouldn't be a need to withdraw ...
by Cincy_1988
Thu Jan 30, 2025 8:07 pm
Forum: Personal Investments
Topic: How to "correctly" use backtesting
Replies: 50
Views: 4531

Re: How to "correctly" use backtesting

Raspberry-503 wrote: Mon Jan 27, 2025 9:45 pm Cincy_1988, my spreadsheet has the performance of US stock, Int'l Stock, Bonds and Inflation for every year since the beginning of the last century. One row per year, 4 columns, although I remove the effect of inflation by making the stocks returns real (above inflation) as I like to see results as real dollar.
Are you able to share your spreadsheet, of course after removing your own private numbers? Thanks in advance!
by Cincy_1988
Sun Jan 26, 2025 7:56 pm
Forum: Personal Investments
Topic: How to "correctly" use backtesting
Replies: 50
Views: 4531

Re: How to "correctly" use backtesting

Thank you. I assume you mean 1972-1981 and another one for 2000-2009. Am I correct?
by Cincy_1988
Sun Jan 26, 2025 3:14 pm
Forum: Personal Investments
Topic: How to "correctly" use backtesting
Replies: 50
Views: 4531

Re: How to "correctly" use backtesting

Thank you so very much. I've downloaded your spreadsheets and study them to understand your thought process.

I'm like you and need to know what's, as you said, under the hook. I really don't care about having fancy interfaces - just about the numbers and where they came from.
by Cincy_1988
Sat Jan 25, 2025 6:39 pm
Forum: Personal Investments
Topic: How to "correctly" use backtesting
Replies: 50
Views: 4531

Re: How to "correctly" use backtesting

Raspberry-503 wrote: Sat Jan 25, 2025 4:54 pm bonesly's MC model
I don't know about this model. Is there a reference for it? Does it describe a methodology for building a spreadsheet?

Thanks!
by Cincy_1988
Sat Jan 25, 2025 6:37 pm
Forum: Personal Investments
Topic: How to "correctly" use backtesting
Replies: 50
Views: 4531

Re: How to "correctly" use backtesting


I could provide examples, but only if any of the commentary above made sense to you


Thank you very much for your detailed response. I'm kind of familiar with those tools in the links, but I really don't understand the assumptions and inner workings of the tools. I certainly would appreciate if you can provide some examples in Excel or other tools.

So, I tried to run Monte Carlo simulation based on historical mean & standard deviation (both in Excel and R programming language).

This was my "logic" (which apparently doesn't make sense based on some feedback I received from another post):

1. Determine the annual mean & standard deviation of my portfolio. Because of when my funds started, I couldn't get data from major market drops ...
by Cincy_1988
Sat Jan 25, 2025 11:49 am
Forum: Personal Investments
Topic: How to "correctly" use backtesting
Replies: 50
Views: 4531

How to "correctly" use backtesting

I've seen folks on this forum use backtesting to assess their retirement spending (or for planning). I've downloaded Backtest-Portfolio-returns-rev24b.xlsx.

Let's assume I've assembled my portfolio (with fund names & their weights). Depending on the range of years, the spreadsheet gives different CAGR & std dev. Let's assume I use 2007-2008 and get real CAGR = -7.76%. For how long out of a 30-year retirement would I use this rate to assess my finances? I don't think it's correct to use it for the entire 30 years. Do I randomly select a 2-year period in my retirement and use -7.76% for those 2 years? If this the way to use backtesting, then I can randomly select another 2-year period (another bad one say 2001-2002 to get -6.12% or a good ...
by Cincy_1988
Fri Jan 24, 2025 9:20 am
Forum: Personal Investments
Topic: CAGR vs. mean and nominal vs real
Replies: 13
Views: 1443

Re: CAGR vs. mean and nominal vs real

Wow, so many detailed responses - I really appreciate it. I’ll be going through all of your responses over the weekend to digest everything.

Again many thanks!!!
by Cincy_1988
Thu Jan 23, 2025 8:35 pm
Forum: Personal Investments
Topic: CAGR vs. mean and nominal vs real
Replies: 13
Views: 1443

Re: CAGR vs. mean and nominal vs real

Thank you.

I want to compare the annual value of my portfolio vs my annual expenses to see if I would run out of money or not during 20-30 years of retirement. Can I at all use CAGR to see the change in my investment per year?
by Cincy_1988
Thu Jan 23, 2025 8:05 pm
Forum: Personal Investments
Topic: CAGR vs. mean and nominal vs real
Replies: 13
Views: 1443

CAGR vs. mean and nominal vs real

I've found an excellent spreadsheet for back testing developed by several folks on this forum. This spreadsheet calculates the nominal and real CAGR & std dev.

I've 2 basic questions:

1) Is CAGR the same as mean (average) rate of return? Can CAGR be used as mean in: NORM.INV(RAND(),MEAN,STD DEV)) in Excel? If not, is there a way to convert CAGR to mean?

2) Expenses would be increased based on some inflation rates if the nominal rates of return are used. How about if I use the "real" rate of returns? Would the expenses remain constant at the present values for 20-30 years while the portfolios go up based on the real rate of return?

Thanks in advance for your help!
by Cincy_1988
Wed Jan 22, 2025 7:38 pm
Forum: Personal Investments
Topic: success rate of a portfolio based on [Monte Carlo] simulation
Replies: 20
Views: 2306

Re: success rate of a portfolio based on [Monte Carlo] simulation

Thank you all for very detailed responses, I really appreciate it.

The program that I’ve written pulls the daily data from Yahoo, which seems to be limited to 10 years - that’s why my dataset is 2015 to present.

It seems I need to learn quite a bit before proceeding. I’ll keep everyone posted about my progress - assuming anyone is interested!

Thanks again for all of your responses and very useful information.

Back to the drawing board (or back to learning and coding!!).
by Cincy_1988
Wed Jan 22, 2025 12:12 pm
Forum: Personal Investments
Topic: success rate of a portfolio based on [Monte Carlo] simulation
Replies: 20
Views: 2306

Re: success rate of a portfolio based on [Monte Carlo] simulation

Your portfolio returns are correlated with each other - are you using a joint normal probability distribution, or are you assuming the returns are independent of each other?

I calculate each portfolio’s mean and standard deviation separately. I calculate random rates of return for each portfolio (based on its mean and standard deviation) using a normal distribution. There’s no connection between randomized returns for each portfolio.

I hope I’m answering your question.
by Cincy_1988
Tue Jan 21, 2025 9:35 pm
Forum: Personal Investments
Topic: success rate of a portfolio based on [Monte Carlo] simulation
Replies: 20
Views: 2306

Re: success rate of a portfolio based on [Monte Carlo] simulation


Second, what you seem to be doing (If I understand) is... not what I described above? From your description I think you're sampling the return for each year BUT ALSO have a binary distribution (yes/no) for if there's a recession each year, and that decides what return to use each year? If that is the case you're probably doing what we used to call "Double dipping" your assumed probability distributions... in this case you're accounting for bad returns twice.


Honestly, I don't understand the first method that you've described - I need to read it more carefully and think about it.

I've written a code in open source R programming language, which has nice features to get stock prices and can manipulate them and is much faster than Excel ...
by Cincy_1988
Tue Jan 21, 2025 11:42 am
Forum: Personal Investments
Topic: success rate of a portfolio based on [Monte Carlo] simulation
Replies: 20
Views: 2306

Re: success rate of a portfolio based on MC simulation

vrr106 wrote: Tue Jan 21, 2025 10:34 am I don't believe that is how most tools run their simulations - mainly, I don't think they have those many runs (10,000 in your example) for EACH YEAR.
I always assumed when they say 1000 runs over say 30 years, that they took a series of 1000 sets of RoRs in a normal distribution.
It makes no sense to me to to 10000 runs in one year, especially the beginning years when you are definitely not running out of money.
The reason for doing 10,000 runs per each year is to randomize investment returns, inflation rate, and whether there's a bear market or not.
The simulation, like what you're saying, indicates I won't run out of money during the early years.
by Cincy_1988
Mon Jan 20, 2025 8:50 pm
Forum: Personal Investments
Topic: success rate of a portfolio based on [Monte Carlo] simulation
Replies: 20
Views: 2306

Re: success rate of a portfolio based on MC simulation

Thank you - I need to do some reading!
by Cincy_1988
Mon Jan 20, 2025 8:18 pm
Forum: Personal Investments
Topic: success rate of a portfolio based on [Monte Carlo] simulation
Replies: 20
Views: 2306

Re: success rate of a portfolio based on MC simulation


Good question, however, so much will change over that period including income needs as you age and new inflation data the modeling will need to consider.


I agree, my expenses are increased based on inflation and some will change as I get older. For example, initially I'll have more international trips but later my travels will be only domestic, and eventually I stop traveling at advanced age. Also, I increase my medical expenses. Since nobody knows about the future, I just randomly select inflation (some high, some low but not less than some minimum values).


What made you decide to model it this way?

For MC, I just use 10-15 & 35 year modeling segments and back test 10 year distressed historical periods from various starting points ...
by Cincy_1988
Mon Jan 20, 2025 7:13 pm
Forum: Personal Investments
Topic: success rate of a portfolio based on [Monte Carlo] simulation
Replies: 20
Views: 2306

Re: success rate of a portfolio based on MC simulation

This is the process that I'm using:

Run 1

Year 1:
Use my current balances as the starting point.

Assuming a normal distribution (which I know it's not correct), I randomly select a rate of return and inflation rate based on historical data. To make sure the generated inflation numbers won't become less than 0, I assume a minimum inflation rate.

Based on an assumed probability, each year may be a bear market. If that happens for that year, I use the worst rate of return (a negative value based on historical data).

Calculate the value of each account at the end of the year.

Year 2:
Use the values at the end of year 1 as the starting value. The process for year 1 is repeated.

Year 3:
Use the values at the end of year 2 as the starting ...
by Cincy_1988
Mon Jan 20, 2025 6:14 pm
Forum: Personal Investments
Topic: success rate of a portfolio based on [Monte Carlo] simulation
Replies: 20
Views: 2306

success rate of a portfolio based on [Monte Carlo] simulation

[Title edited for clarity - moderator oldcomputerguy]

I'm doing Monte Carlo simulation of my portfolio for each age for a total of 29 years - 10,000 runs for each year. For each age, I calculate the number of cases for which my total portfolio drops below zero (i.e., I run out of money). This is what I get:

# of cases with portfolio dropping below 0:

years 1-20: 0
year 21: 5
year 22: 16
year 23: 37
year 24: 121
year 25: 286
year 26: 580
year 27: 1054
year 28: 1741
year 29: 2591

TOTAL # of cases: 6431

Is the success rate of my portfolio calculated as (29*10,000 -6431)/(29*10,000) = 97.8%?

Pralana and other programs report the success rate. Is it how these programs calculate the success rate?

Thanks in advance!
by Cincy_1988
Mon Jan 20, 2025 12:38 pm
Forum: Investing - Theory, News & General
Topic: Rob Berger tested out Monte Carlo on Boldin, Pralana and Project Lab
Replies: 40
Views: 7271

Re: Rob Berger tested out Monte Carlo on Boldin, Pralana and Project Lab


I am just a plug and play retirement software user with no background in finance

I've no background in finance either but I've tried to educate myself "enough" to determine (a) rate of return & standard deviation for a given set of funds (stocks) and their weights, (b) calculate RMD, (c) federal and state income taxes, and a few other minor things.


But it would certainly be confidence building if Boldin were more transparent about their SD settings and the reasoning behind them.

I really need to know the assumptions to see if they make sense (at least to me) and if I want to change them. Boldin, Pralana, firecalc, etc. are nice but are black boxes.

I've been checking my spreadsheet to make sure it's correct, which I hope it's!!
by Cincy_1988
Mon Jan 20, 2025 12:05 pm
Forum: Investing - Theory, News & General
Topic: Rob Berger tested out Monte Carlo on Boldin, Pralana and Project Lab
Replies: 40
Views: 7271

Re: Rob Berger tested out Monte Carlo on Boldin, Pralana and Project Lab

My question is different from the "theme" of this post.

I'm doing MC simulation for each age over 29 years - 10,000 runs for each year. For each age, I calculate the number of cases for which my total portfolio drops below zero (i.e., I run out of money). This is what I get:

# of cases with portfolio dropping below 0:

years 1-20: 0
year 21: 5
year 22: 16
year 23: 37
year 24: 121
year 25: 286
year 26: 580
year 27: 1054
year 28: 1741
year 29: 2591

TOTAL: 6431

Is the success of my portfolio calculated as (29*10,000 -6431)/(29*10,000) = 97.8%?

Pralana and other programs report the success rate. Is it how these programs calculate the success rate?

Thanks!
by Cincy_1988
Sun Jan 19, 2025 12:59 pm
Forum: Investing - Theory, News & General
Topic: Rob Berger tested out Monte Carlo on Boldin, Pralana and Project Lab
Replies: 40
Views: 7271

Re: Rob Berger tested out Monte Carlo on Boldin, Pralana and Project Lab

As a structural engineer, I need to know the assumptions before I trust any number. All of these fancy looking software packages are black boxes with limited user inputs, e.g., Boldin doesn't allow standard of deviation to be entered. This is a huge drawback in my opinion. Also, these packages don't account for the possibility of a few years of consecutive bear market right after someone retires. How about the probability of having some years of bear market during retirement? I've no idea how the programs calculate the federal and state income taxes, how about capital gains taxes? I can go on and on.

I've developed a spreadsheet (with no bells or whistles) that does Monte Carlo simulation. I use Portfolio Visualizer (or a program that I ...
by Cincy_1988
Wed Jan 15, 2025 9:21 pm
Forum: Personal Investments
Topic: A question about PortfolioVisualizer
Replies: 2
Views: 402

Re: A question about PortfolioVisualizer

I see, thank you very much!
by Cincy_1988
Wed Jan 15, 2025 8:55 pm
Forum: Personal Investments
Topic: A question about PortfolioVisualizer
Replies: 2
Views: 402

A question about PortfolioVisualizer

I'm exploring the following:

tIRA: BND (27% of total portfolio) & BNDX (12% of total portfolio)

Roth IRA: VTI (37.5% of total portfolio) & VXUS (23.5% of total portfolio)

I can enter these four tickers (they add up to 100%) in PortfolioVisualizer to get the mean & standard of deviation of my total portfolio. But I want the mean and standard deviation of tIRA by itself and do the same thing for Roth IRA (the mean and standard deviation of Roth IRA by itself). I can't just enter 27% & 12% or 37.5% & 23.5% because they don't add up to 100%. How can I use PortfolioVisualizer for what I'm trying to do?

Thanks in advance for your help!
by Cincy_1988
Fri Jan 10, 2025 8:46 am
Forum: Personal Investments
Topic: How to account for "high" standard deviation & small Sharpe ratio
Replies: 2
Views: 209

How to account for "high" standard deviation & small Sharpe ratio

I've the following tIRA portfolio:

VFIAX 44.71%
VBTIX 46.23%
VTIAX 9.06%

I used daily returns from 11-27-2010 and calculated the following values:

Portfolio annual average return = 7.96%
Portfolio annual standard deviation = 8.94%
Sharpe ratio (with 3% as the reference) = 0.534

I want to account for the "volatility" of my portfolio to figure out my retirement (in a few months) expenditures, Roth conversion, etc. How can I incorporate the standard deviation? I know I can't use a normal distribution, so +/-2 or +/-3 standard deviations don't really mean much.

Thank you!
by Cincy_1988
Thu Jan 09, 2025 8:18 pm
Forum: Personal Investments
Topic: Is there a way to trick Portfolio Visualizer to account for taxes?
Replies: 3
Views: 524

Is there a way to trick Portfolio Visualizer to account for taxes?

Portfolio Visualizer appears to account for RMD (I don't know if it assumes RMD starts at 72 or 73) but not for taxes (federal & state income taxes or investment taxes).

As a way to account for taxes, does it make sense to use withdrawal amount = amount needed to cover actual expenses + estimated income taxes + estimated tax on investment return?

Thanks in advance!
by Cincy_1988
Thu Jan 09, 2025 8:01 am
Forum: Personal Investments
Topic: Can one fund be considered to be a 4-fund portfolio?
Replies: 7
Views: 989

Re: Can one fund be considered to be a 4-fund portfolio?

Thank you all for your comments. I'll check out the link.
by Cincy_1988
Wed Jan 08, 2025 11:56 pm
Forum: Personal Investments
Topic: Can one fund be considered to be a 4-fund portfolio?
Replies: 7
Views: 989

Can one fund be considered to be a 4-fund portfolio?

Vanguard has four "life Strategy Funds", one of which is VSMGX :
Expense ratio: 0.13%
Composition (essentially 60% stock, 40% bond):
37.50% Vanguard Total Stock Market Index Fund Investor Shares
27.00% Vanguard Total Bond market II Index Fund
23.50% Vanguard Total International Stock Index Fund Investor Shares
12.00% Vanguard Total International Bond II Index Fund

I can "replicate" VSMGX with the following four funds:

VTSAX (Vanguard Total Stock Market Index Fund Admiral Shares, expense ratio: 0.04%) or VTI (Vanguard Total Stock Market ETF, expense ratio: 0.03%)

VTBLX (Vanguard Total Bond Market Index Fund Admiral Shares, expense ratio: 0.05%) or BND (Vanguard Total Bond Market Index Fund Admiral Shares, expense ratio: 0.03 ...
by Cincy_1988
Tue Jan 07, 2025 10:43 am
Forum: Personal Investments
Topic: Can RMD be deposited in a Roth IRA after I retire?
Replies: 35
Views: 3249

Re: Can RMD be deposited in a Roth IRA after I retire?

22twain wrote: Tue Jan 07, 2025 6:38 am
Cincy_1988 wrote: Tue Jan 07, 2025 4:40 am I calculated the taxes that I have to pay with and without conversion.
How much would your kids have to pay, with and without your doing the conversions? When they inherit, will they be in a higher or lower tax bracket than you are now? What matters is the net amount that they end up with, whoever pays the taxes.
I did look at my kids' after-tax inheritance with and without conversion. They'll be ahead if I convert.
by Cincy_1988
Tue Jan 07, 2025 4:40 am
Forum: Personal Investments
Topic: Can RMD be deposited in a Roth IRA after I retire?
Replies: 35
Views: 3249

Re: Can RMD be deposited in a Roth IRA after I retire?

Running Bum wrote: Sun Jan 05, 2025 8:53 pm
Cincy_1988 wrote: Sun Jan 05, 2025 3:37 pm The only benefit of Roth conversion (at least for me) that I see is to leave less taxable inheritance to my kids, but the total dollar amount drops by converting.
Comparing an IRA balance to that of a Roth is nonsense. You can't look at an IRA as being worth the full amount. You've got the deferred tax liability. And someone is going to pay it. If you don't, that money isn't available for you to spend. If it makes more sense (lower tax rate) for your heirs to pay the tax on the inherited IRA than for you to while you're alive, great. Otherwise, how is dying with tIRA money you couldn't spend to your advantage?
I agree!
by Cincy_1988
Sun Jan 05, 2025 3:37 pm
Forum: Personal Investments
Topic: Can RMD be deposited in a Roth IRA after I retire?
Replies: 35
Views: 3249

Re: Can RMD be deposited in a Roth IRA after I retire?

The only benefit of Roth conversion (at least for me) that I see is to leave less taxable inheritance to my kids, but the total dollar amount drops by converting.

These are the balances that I get after paying for taxes and expenses if I convert 105K for the first 6 years before RMD kicks in (I've accounted for IRMAA). The numbers in the parentheses are Roth IRA balances:

age no conversion w/ conversion
67 1321000 1293000 (114000 )
68 1466000 1387000 (229000 )
69 1622000 1488000 (354000 )
70 1797000 1605000 (490000 )
71 1985000 1722000 (638000 )
72 2186000 1848000 (799000 )
73 2386000 2011000 (869000 )
74 2590000 2186000 (946000 )
75 2820000 2383000 (1029000 )
76 3069000 2584000 (1120000 )
77 3328000 2799000 (1219000 )
78 ...
by Cincy_1988
Sun Jan 05, 2025 12:47 pm
Forum: Personal Investments
Topic: Can RMD be deposited in a Roth IRA after I retire?
Replies: 35
Views: 3249

Re: Can RMD be deposited in a Roth IRA after I retire?

Dufus wrote: Sun Jan 05, 2025 12:43 pm Check out Mike Piper's Roth Conversion discussion at Bogleheads Conference - https://www.youtube.com/watch?v=Wjbf9KVSG7s&t=3s

Here are the slides: https://boglecenter.net/wp-content/uplo ... p-Dive.pdf
Thanks, I go over the slides
by Cincy_1988
Sun Jan 05, 2025 12:45 pm
Forum: Personal Investments
Topic: Can RMD be deposited in a Roth IRA after I retire?
Replies: 35
Views: 3249

Re: Can RMD be deposited in a Roth IRA after I retire?

tibbitts wrote: Sun Jan 05, 2025 12:12 pm There's a reason so many people use software/spreadsheets developed by someone else.
I've two main issues with software packages: (1) I really don't know their underlying assumptions and (2) they don't allow changes for specific situations that we've. I much prefer to use a spreadsheet where I can see how various numbers are calculated. Are there spreadsheets that the folks on the forum have developed?
by Cincy_1988
Sun Jan 05, 2025 12:03 pm
Forum: Personal Investments
Topic: Can RMD be deposited in a Roth IRA after I retire?
Replies: 35
Views: 3249

Re: Can RMD be deposited in a Roth IRA after I retire?

Thank you all for providing very useful information - I really appreciate it. I need to make some changes to my spreadsheet.
by Cincy_1988
Sun Jan 05, 2025 11:35 am
Forum: Personal Investments
Topic: Can RMD be deposited in a Roth IRA after I retire?
Replies: 35
Views: 3249

Re: Can RMD be deposited in a Roth IRA after I retire?

Hmm, my RMD doesn't start until I'm 73 (6 years from now) and I'll retire in a few months. So, if I have to take RMD first before conversion to Roth, does it mean I won'e be able to do any conversions for the next 6 years?
by Cincy_1988
Sun Jan 05, 2025 11:15 am
Forum: Personal Investments
Topic: Can RMD be deposited in a Roth IRA after I retire?
Replies: 35
Views: 3249

Re: Can RMD be deposited in a Roth IRA after I retire?

Thanks, but I'm now confused. During retirement, I won't have income (as you and IRS define) but can I still take money out of my tIRA (and pay income tax) and put it a Roth IRA that I'll open after retire?
by Cincy_1988
Sun Jan 05, 2025 10:51 am
Forum: Personal Investments
Topic: Can RMD be deposited in a Roth IRA after I retire?
Replies: 35
Views: 3249

Can RMD be deposited in a Roth IRA after I retire?

I know before retirement there're some income limits on whether a Roth IRA can be opened. I'm wondering if it's possible to invest RMD from a tIRA in a Roth IRA after I retire even if my income from pension+social security+investment exceeds Roth IRA limits.

Thanks!
by Cincy_1988
Fri Jan 03, 2025 10:47 am
Forum: Personal Investments
Topic: Funds for tIRA & Roth IRA
Replies: 4
Views: 334

Re: Funds for tIRA & Roth IRA

Thank you all for your replies!
by Cincy_1988
Fri Jan 03, 2025 7:33 am
Forum: Personal Investments
Topic: Funds for tIRA & Roth IRA
Replies: 4
Views: 334

Funds for tIRA & Roth IRA

Currently, I only have a tIRA but most likely will convert some of it to a Roth IRA.

tIRA (~ 1.1M)
VFIAX 44.4%
VTIAX 9.1%
VMRXX 5.7%
VBTIX 14.3%
Traditional TIAA (not annuitized) 26.5%

Taxable portfolio (~ 88k):
VTSAX 60.8%
BRK-B 39.2%

I think my current portfolio is fairly distributed among various total market/bond index funds (except for VMRXX & BRK-B). I'm not sure about what to choose for my eventual Roth IRA as I don't want to duplicate tIRA funds but would like to remain as broad as possible.

I really would like to hear your opinions/recommendations.

Thanks in advance!
by Cincy_1988
Wed Jan 01, 2025 8:27 pm
Forum: Personal Investments
Topic: Limit on conversion from tIRA to Roth IRA per year
Replies: 7
Views: 839

Re: Limit on conversion from tIRA to Roth IRA per year

ehh wrote: Wed Jan 01, 2025 4:39 pm The "Whether, when, and how much to convert" section of the Roth conversion Wiki page might be of interest to you. https://www.bogleheads.org/wiki/Roth_conversion A much discussed forum topic.
Thank you, I'll go over the link.
by Cincy_1988
Wed Jan 01, 2025 3:20 pm
Forum: Personal Investments
Topic: Limit on conversion from tIRA to Roth IRA per year
Replies: 7
Views: 839

Re: Limit on conversion from tIRA to Roth IRA per year

Thank you all for answering my questions and educating me!

I'm not planning to add any money to my tIRA. I just would like to gradually convert some of my tIRA to a Roth IRA.
by Cincy_1988
Wed Jan 01, 2025 2:05 pm
Forum: Personal Investments
Topic: Limit on conversion from tIRA to Roth IRA per year
Replies: 7
Views: 839

Limit on conversion from tIRA to Roth IRA per year

Back in March 2024, I opened a Roth IRA and put the maximum amount of $8,000 (from my savings account). A few weeks ago, I realized (thanks to this forum!) that I couldn't contribute to a Roth IRA because my income is above the IRS limits. So, I transferred the $8,000 out of my Roth IRA and paid an estimated tax on the gains.

I potentially would like to convert some of my tIRA to a Roth IRA when I retire in a few months (over several years without pushing myself to 32% marginal tax bracket). I've the following questions:
  • Do the IRS limits also apply to this kind of transfer?
  • Is there a limit on how much tIRA can be converted to a Roth IRA in a year?
  • Is this kind of transfer the same as "back door Roth IRA"?
by Cincy_1988
Tue Dec 31, 2024 11:18 am
Forum: Personal Investments
Topic: Roth conversion considering life expectancy
Replies: 63
Views: 3372

Re: Roth conversion considering life expectancy

I'll retire in May 2025 (4 months shy of turning 67).

The only reason I was exploring Roth conversion was to leave as much tax-free inheritance as possible for my two kids (23 & 34 years old). As I get older, I can revisit Roth conversion, but my kids could also deal with the tax consequences after I'm gone. This all assumes I won't be spending every penny for long-term care before I die.

Thanks again for your replies!
by Cincy_1988
Tue Dec 31, 2024 10:21 am
Forum: Personal Investments
Topic: Roth conversion considering life expectancy
Replies: 63
Views: 3372

Re: Roth conversion considering life expectancy

Thank you. I've pension, social security, & taxable accounts. I adjusted Roth conversion so I won't be pushed to 32% marginal rate.
Clearly, I need to evaluate year by year as things will change and be different from today's calculations. But at least I understand (I think :happy) how to proceed in the future.
by Cincy_1988
Tue Dec 31, 2024 8:48 am
Forum: Personal Investments
Topic: Roth conversion considering life expectancy
Replies: 63
Views: 3372

Re: Roth conversion considering life expectancy

In my case, I've no Roth at this point.

If I want to deplete my tRIA, my Roth conversion would push me to 32% and even 35% marginal tax rates until I'll be 77. It'll then go down to 22%. I'm not sure if it's a good idea to try to deplete tRIA and pay hefty taxes even though I'll pay for them from other sources (pension+social security+a taxable account).

I agree that these are just numbers, but this exercise and your feedbacks are helping me to come up with some sort of plan. I had a bad experience with a financial advisor and decided to educate myself and plan things on my own.

This forum has been VERY helpful. Thank you ALL!
by Cincy_1988
Tue Dec 31, 2024 7:40 am
Forum: Personal Investments
Topic: Roth conversion considering life expectancy
Replies: 63
Views: 3372

Re: Roth conversion considering life expectancy

This is a followup post.

I did simplify my spreadsheet, which hopefully is easier to follow. You can see the spreadsheet from the following link:
https://docs.google.com/spreadsheets/d/ ... ue&sd=true

As far as I can tell, the "only" benefit of Roth conversion (at least for my case) is to leave the least taxable amount to my kids. I say this because, the total amount without conversion, which will be all taxable, is higher than taxable+Roth.