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Vanguard Personal Advisor Services

edited September 2023 in Fund Discussions
I contacted Vanguard a few weeks ago regarding an unrelated issue.
The Vanguard rep suggested a complementary meeting with a Personal Advisor Services (PAS) professional.
A preliminary financial plan was developed and sent to me yesterday.
I won't delve into all the specific details but will provide an overview since this info may be helpful to others.

Age: Early 60s
Goal: Retire in two years
Withdrawal rate: I requested a specific dollar amount which equaled 3.03% of my total portfolio

Asset allocation to age 80: 60% stock/40% bond - completed questionaires and discussed with Vanguard
Asset allocation from age 80 to 85: 55% stock/45% bond
Asset allocation from age 85 to 100: 50% stock/50% bond

The Vanguard Capital Markets Model (VCMM) is used to forecast returns for stocks, bonds,
and short-term reserves as well as inflation rates.
Monte Carlo simulations are run to project outcomes to age 100.
«1

Comments

  • edited September 2023
    Spending Strategy

    We have a withdrawal plan to help maximize the longevity of your portfolio.

    Our general approach is to use both the income and capital appreciation from your portfolio
    to meet your spending needs.

    We recommend directing all interest, dividends, and capital gains distributions
    from your taxable account(s) to a fund set aside for spending.

    If you need more income, generally we'll sell assets within your taxable account(s) that would produce
    the lowest taxable gains, or even realize a loss, in order to minimize taxes.

    To maximize your potential for tax-deferred growth, consider delaying withdrawals from your traditional
    tax-deferred account(s) until your taxable account(s) have been depleted or your required minimum
    distributions begin. Only consider withdrawing from your Roth account(s) once your traditional
    tax-deferred assets have been spent.


    Key Actions

    Recommended action #1
    We recommend that you use a target allocation of 60% stocks, 40% bonds,
    and 0% short-term reserves.

    Why we're recommending this:
    Over time, your asset allocation is the most important factor in determining your portfolio's risk and potential
    for return. Should your purpose, time horizon, or risk tolerance for this goal change, please contact us
    to discuss if any updates should be made to your investment strategy.

    Recommended action #2
    We recommend you adjust your portfolio by purchasing taxable bonds in your tax-sheltered account first.
    Then consider purchasing taxable bonds in your taxable accounts, if necessary, to achieve the target bond allocation.

    Why we're recommending this:
    It's more advantageous for you to hold bonds in tax-sheltered accounts where the interest is allowed to compound on a tax-deferred or tax-free basis.

    Recommended action #3
    Increase your investments in international stocks to 18% of your portfolio for this goal.

    Why we're recommending this:
    It's Vanguard's position that setting a target allocation for non-U.S. stocks of 20% to the market weight can balance the diversification benefits with the potential risks and costs. Based on our research, most diversification benefits are achieved with a 40% allocation to non-U.S. stocks, particularly when costs are taken into account.

    Recommended action #4
    Decrease your U.S. large-cap stock exposure to 27% of your portfolio.

    Why we're recommending this:
    Vanguard believes that most investors are best served by holding a significant allocation of investments that represent broad markets. Reducing your investments in large-cap U.S. stocks will bring your portfolio closer to the proportions of the broad U.S. stock market.

    Recommended action #5
    Increase your international bond investments to 12% of your goal's portfolio.

    Why we're recommending this:
    Foreign bonds are one of the world's largest asset classes and are not perfectly correlated with the U.S. bond market. Increasing your exposure to a currency-hedged international bond fund can lead to lower volatility in your portfolio.

    Recommended action #6
    Adjust your portfolio by purchasing stock index investments within your taxable accounts.

    Why we're recommending this:
    Broadly diversified stock index investments aim to track the underlying benchmarks of the broad U.S. stock market and typically have fewer taxable distributions than actively-managed funds. Therefore, they can provide a tax-efficient way to gain exposure to the stock market.
  • edited September 2023
    Select Disclosures

    Asset allocation: We assume the accounts supporting this goal are rebalanced
    annually to the target asset allocation over your entire planning horizon.
    However, we do not calculate the tax consequences of rebalancing the accounts
    each year to maintain the target asset allocation. We assume that each account in
    the portfolio is invested at the target asset allocation. For modeling stock market
    returns, we assume 60% of the equity portion of the portfolio is invested in U.S.
    equities and 40% is invested in international equities. For modeling bond market
    returns, we assume 70% of the bond portion of the portfolio is invested in U.S.
    bonds and 30% is invested in international bonds.

    Inflation: We assume you’ll increase the dollar amount of your annual spending
    over time to match the rate of inflation. In other words, rather than assuming you
    will simply spend a constant dollar amount every year, we assume you will keep
    your total purchasing power constant over time by increasing your dollar amount
    of after-tax spending each year at the consumer price inflation rate (based on
    VCMM forecasted inflation figures). We assume Social Security benefits increase
    at the rate of the forecasted inflation unless the forecasted rate is negative, in
    which case we assume no increase/decrease to the benefits for that year. All
    other income and expense items are assumed to increase at the rate of inflation
    unless you indicated otherwise.

    When we forecast goals that include accounts outside the portfolio (including
    Vanguard accounts):
    They’re based solely on the account balance information
    and contribution rates provided to us. For accounts held outside the portfolio,
    we’ll assume the asset allocation is the same as our recommended allocation.
    Thus, the hypothetical projections and your results will vary. You might consider
    adjusting the asset mix of accounts outside the portfolio to our recommended
    mix. This recommendation assumes the objectives of those accounts are the
    same as your portfolio accounts.
  • edited September 2023
    @Observant1- In the many years that I've been with MFO I've never seen anyone present such complete, detailed and interesting information with respect to a retirement plan that was recommended by a financial firm. Nice job! It should be useful to other MFO members, and initiate some healthy conversations.

    Regards- OJ
  • @Observant1 What did you think of the information that was kicked back to you ?
    I see nothing that hasn't been brought up here from time to time.
    I was contacted by rep from Schwab for the second time , to make a plan. I passed for the second time.
    So now I'll ask if anyone has participated in their planning offering .
    I'm not trying to steal your thread only add to it.
    I get a kick out of VG's use of the word assume !
    Thanks Derf
  • edited September 2023
    Vanguard's spending strategy and recommended actions are sensible*.
    The Vanguard Capital Markets Model is proprietary but appears to be robust.

    Approximately half of my total portfolio is held outside of Vanguard.
    While the corresponding dollar amounts are included in Vanguard's financial plan,
    asset allocation for outside investments is not reflected in the current asset mix.

    Examples:
    Recommendation #3 - increase international to 18%
    Portfolio X-Ray indicated 24.48% international exposure

    Recommendation #4 - decrease U.S. large caps to 27%
    Spreadsheet indicated 24.87% large cap fund exposure (actual large cap stock exposure will be less)

    Consequently, Vanguard suggests making unnecessary trades (with tax consequences)
    to align my portfolio with the 60/40 asset allocation target.


    * Edit: Recommended actions are sensible assuming your entire portfolio is managed by Vanguard PAS.
    If this is not the case, some of the recommended actions may not be prudent.
  • edited September 2023
    Derf said:

    @Observant1 What did you think of the information that was kicked back to you ?
    I see nothing that hasn't been brought up here from time to time.
    I was contacted by rep from Schwab for the second time , to make a plan. I passed for the second time.
    So now I'll ask if anyone has participated in their planning offering .
    I'm not trying to steal your thread only add to it.
    I get a kick out of VG's use of the word assume !
    Thanks Derf


    @Derf,

    Overall, the spending strategy and recommended actions were sensible and the projections were favorable.
    My main issue is that outside accounts are not considered when determining the current asset allocation mix.
    This can lead to unnecessary trades with potential tax consequences.
    Since I favor a more holistic solution, I strongly prefer that outside accounts be factored
    into the current asset allocation mix.
    Although this was a worthwhile exercise, Vanguard PAS will not work for me.
    YMMV.
  • Old_Joe said:

    @Observant1- In the many years that I've been with MFO I've never seen anyone present such complete, detailed and interesting information with respect to a retirement plan that was recommended by a financial firm. Nice job! It should be useful to other MFO members, and initiate some healthy conversations.

    Regards- OJ

    Thanks, OJ!
  • edited September 2023
    Yes. Agree with OJ. And it’s so nice to know we still have some “kids” under 70 posting on the board.:)
  • We are in similar situation as @Observant1 with respect to Vanguard PAS. Their proposed Plan is very detailed as described above with many recommendations . Once you import external account holdings, a comprehensive customized plan can then be made for their clients.

    Still we have yet to explore other advisory service they provide besides investment and spending in retirement. That include Roth conversion and timing before RMD at 73.

  • Those suggested allocations for VG PAS in 60s & 70s (60-40), early-80s (55-45), late-80s & beyond (50-50) are much higher than those for target-date funds (TDFs), including Vanguard TDFs. Of course, the questionnaire for PAS determined the specifics.

    Most TDFs have 50-50 in 60s (retirement age) and then flatten out to 20-80/40-60 over several years. TDFs also have issues. But I am just noticing the huge discrepancy between the VG PAS recommendations and TDFs.
  • The difference between the individual recommendation and glide paths of various TDFs is likely due to the low (3.03%) withdrawal rate requested. That's quite low compared with the "rule of thumb" 4% or the base case of 4.7% used in this Vanguard paper (analyzing the relationship between health, spending, and asset allocation).

    With a lower withdrawal rate, one can be (somewhat) more aggressive in asset allocation. That's assuming that "optimizing" a portfolio means making the most money available subject to it not running out.

    Alternatively, one could optimize by investing more conservatively, improving odds of success from very near certainty to very, very near certainty. (That's somewhat tongue-in-cheek, but a real response to the question of whether it would be better to be more conservative if one doesn't need the extra money.)

    As @Sven noted, Vanguard PAS can incorporate outside investments in its planning. It is one of several robo/hybrid advisors that do this (including the top five in M*'s ranking). See thread on Robo Advisor Evaluation.
    https://mutualfundobserver.com/discuss/discussion/61501/robo-advisor-evaluation

    From the M* report: "Having access to this [external asset] information can help robo-advisor programs provide more accurate advice on savings, asset allocations, and progress toward investment goals."
  • Assume comes up once again ! Let's say you put your plan to work a few years ago, 3,4 5. Along comes rate increase , now over 5% that's taken place. Would you be willing to stand pat , or clear out some equity & jump into CD's & T-bills or notes ? I know I've lowered equity side by 5 to 7 %.
    With that said, I 'assume" ones age would play a big part where one invests.

    @Observant1 Thanks for posting I enjoyed your info !
  • @Derf

    Funny you should ask. After asking my Schwab rep if he had some way to help me calculate Roth conversions amounts, he suggested talking to the "Wealth Enhancement Group" for a no commitment plan. WEG guy says they are the 6th largest independent advisory firm in the country with over 70 Billion in assets

    I just got off the call with this guy. I was generally impressed. ( While he was not calling form his yacht, he was calling from second home in Maine!) They have a model which will calculate Roth Conversions and expected taxes with breakeven points ( Example says 2040!). Assumes 5% return in taxable and 7% in Roth

    They will do financial plan free of any fees, but of course want to manage your money. The fee is fairly reasonable at 1% for first 1,000,000 up to 0.7% over 5,000,000, so in line with most firms that do portfolio management only, and a bit higher than many mutual funds.

    For this you get the plan, quarterly reviews, tax planning etc. Their "value dividend growth " portfolio has returned 12% net of fees since 2007, pays 3% and lost only 7% in 2022. They also have a growth portfolio, and buy individual bonds for income. They have on site CFA, CFPs, tax lawyers estate planners etc.

    I agree the Vanguard info is pretty comprehensive, but to me it is predictably Vanguard, ie 60/40, 20% International, tax loss harvesting. Not sure that is worth their fees which I think are 0.3% correct ?


  • Having a more complete portfolio picture helped in our planning. Remember, the initial plan is merely a proposal. The clients need to review it thoroughly and make adjustments (asset allocation (risk tolerance), investment vehicles, and % active vs. % passive). We have VG to manage part of several IRA accounts for us with the objective of capital appreciation (the third bucket). We manage the other half for generating income (first and second buckets).

    As @lynnbolin21 said earlier there is an element of "leap of faith" when using financial advisor. This is new to us so we take it slow. Our ultimate goal is to have a human advisor to help manage our retirement funds if and when I can no longer able to manage it.

    On Vanguard site, there is other links on the bottom that have many useful information on financial planning and templates for their advisors.
    https://advisors.vanguard.com/advisors-home

    I found particularly informative is under the "Advisor's Alpha®" tab where it goes into Advisor's Alpha® overview, Investors' view on advice, and Behavioral coaching. On the Wealth Management tab, it goes into useful tools for Health Care Cost Estimator, Intergenerational wealth, and Roth Conversion Calculator.

    I believe sharing these information is helpful for everyone's planning in the future.
  • edited September 2023
    Those recommended age specific equity allocations are fascinating. Sound about right for disciplined really long-term oriented investors. A lot of us (self included) may have a hard time “shutting our eyes” and letting those long-term investments play out. To some extent, that may be a characteristic of those who frequent investment forums or follow markets closely (eyes always wide open).

    Not sure if covered above, but fairly certain those recommendations are aside from a hefty stash of cash / short term investments for emergencies or to ride out an equity bear market. Pretty much goes without saying …

    Thanks to @Observant1 and others who have contributed to this thread.
  • @sma3 stated:

    For this you get the plan, quarterly reviews, tax planning etc. Their "value dividend growth " portfolio has returned 12% net of fees since 2007, pays 3% and lost only 7% in 2022. They also have a growth portfolio, and buy individual bonds for income. They have on site CFA, CFPs, tax lawyers estate planners etc.

    In the "value dividend growth" portfolio 12% net of fees since 2007 figure above provided by the Wealth Enhancement Group, do they compare this portfolio to what index? Is their portfolio earning 13% since 2007 for a little more than 15+ years (ie, 12% net of fee + 1% advisor fee)? I'm curious as it appears they are earning equal to S&P 500 index returns or possible better with lower risk profile.
  • Preset allocation funds including target date funds do work and meet the target, but it takes patience. Yes, we set aside cash and cash equivalents for emergency.

    Our personal experience is to send our kids to college using the 529 fund exclusively. These plans can be set to change allocation automatically ( or manually) according to the child age and withdrawal date. Through 2000, 2008 and 2022 drawdowns, we stay the course and came out okay and manage to pay the college bills.
  • edited September 2023

    Those suggested allocations for VG PAS in 60s & 70s (60-40), early-80s (55-45), late-80s & beyond (50-50) are much higher than those for target-date funds (TDFs), including Vanguard TDFs. Of course, the questionnaire for PAS determined the specifics.

    Most TDFs have 50-50 in 60s (retirement age) and then flatten out to 20-80/40-60 over several years. TDFs also have issues. But I am just noticing the huge discrepancy between the VG PAS recommendations and TDFs.

    Vanguard has defined five risk levels for asset allocation schedules:
    very conservative, conservative, moderate, aggressive, very aggressive.
    The asset allocation schedule suggested in my plan is considered aggressive.
    For some context, two 2025 target-date fund portfolios (08/31/2023) are listed below.

    VTTVX
    U.S. Stock: 32.60%
    Intl. Stock: 22.00%
    U.S. Bond: 28.30%
    Intl. Bond: 12.40%
    Short-Term TIPS: 4.70%

    TRRHX
    U.S. Stock: 38.39%
    Intl. Stock: 17.58%
    U.S. Bond: 26.18%
    Intl. Bond: 9.75%
    Cash: 4.80%
    Other: 2.66%
    Convertibles: 0.42%
    Preferred Stock: 0.22%

    The glide path in my plan differs from target-date fund glide paths.
    Equity allocation is 60% until age 80, 55% from ages 80 - 85, and 50% from ages 85 - 100.
    I was surprised by the relatively high equity allocation beyond age 80.
    Perhaps a more conventional glide path exists for conservative or moderate asset allocation schedules?
  • sma3 said:


    I just got off the call with this guy [at Wealth Enhancement Group]. I was generally impressed. ( While he was not calling form his yacht, he was calling from second home in Maine!) They have a model which will calculate Roth Conversions and expected taxes with breakeven points ( Example says 2040!). Assumes 5% return in taxable and 7% in Roth

    Is this the example you were shown?
    https://static1.squarespace.com/static/5ed7df046f291c4a9e5546fc/t/63ffc63f2a2d1c36743d9803/1677706815803/Sample+Roth+Conversions+DCFI+-+2023_with+notes+-+JH.pdf
    sma3 said:


    They will do financial plan free of any fees, but of course want to manage your money. The fee is fairly reasonable at 1% for first 1,000,000 up to 0.7% over 5,000,000, so in line with most firms that do portfolio management only, and a bit higher than many mutual funds.

    That is certainly in line with the industry:
    image
    From: https://www.advisoryhq.com/articles/financial-advisor-fees-wealth-managers-planners-and-fee-only-advisors/
    Comparison of types of services and typical fees:
    https://smartasset.com/financial-advisor/financial-advisor-cost

    Fees do depend on what you get. I was just looking at someone's Separately Managed Account (SMA) portfolio with a couple of hundred large cap stocks (with little S&P 500 overlap). Real portfolio, outperformed the S&P 500 net of fees since owned (about 2.5 years), fees closer to 1/2% than to 1% (well under $1M in assets). Would perform tax harvesting except it is in an IRA. Don't know about other services included.
    sma3 said:


    I agree the Vanguard info is pretty comprehensive, but to me it is predictably Vanguard, ie 60/40, 20% International, tax loss harvesting. Not sure that is worth their fees which I think are 0.3% correct ?

    As @hank observed, Vanguard builds a glidepath. I noted in the Robo advisor thread that per M* this is unusual for low cost (i.e. robo) advisors. Also note that that 20% international is out of 60% stock, i.e. 1/3 of equity is foreign. Vanguard, being enthusiastic about matching market attributes, observes that 40% of the equity market is abroad.

    Vanguard Digital Advisor costs 20 basis points all in, or 15 basis points excluding underlying fund expenses. One adds another 15 basis points (30 basis points excluding underlying expenses) in order to get human attention and financial planning. More services, higher fees.
    https://investor.vanguard.com/advice/compare-investment-advice#comparison-chart
  • edited September 2023
    ”As @hank observed, Vanguard builds a glidepath”

    Likely @msf intended to credit someone else with this astute observation …

    Personally, never cared for prefabricated glide-paths, although lightening up on risk with age would seem appropriate. ISTM one’s life span shrinks exponentially as age advances, so that offloading of risky cargo occurs more and more frequently after about age 70.
  • edited September 2023
    msf said:

    [snip]
    As @Sven noted, Vanguard PAS can incorporate outside investments in its planning. It is one of several robo/hybrid advisors that do this (including the top five in M*'s ranking). See thread on Robo Advisor Evaluation.
    https://mutualfundobserver.com/discuss/discussion/61501/robo-advisor-evaluation

    From the M* report: "Having access to this [external asset] information can help robo-advisor programs provide more accurate advice on savings, asset allocations, and progress toward investment goals."

    The dollar values for outside investments were incorporated into the portfolio
    but these investments were treated as cash in the current asset mix*.
    Consequently, unnecessary and counter-productive trades (with tax consequences)
    were suggested to align my Vanguard accounts with the targeted asset allocation.
    My understanding is that Vanguard PAS can not provide advice for outside accounts.
    I'm certain there are legal reasons for this stance.
    I'm ok with not getting advice for outside accounts but believe it would be much better
    if these investments¹ were factored into the current asset mix in the beginning.

    When we forecast goals that include accounts outside the portfolio (including
    Vanguard accounts):
    They’re based solely on the account balance information
    and contribution rates provided to us. For accounts held outside the portfolio,
    we’ll assume the asset allocation is the same as our recommended allocation.
    Thus, the hypothetical projections and your results will vary. You might consider
    adjusting the asset mix of accounts outside the portfolio to our recommended
    mix. This recommendation assumes the objectives of those accounts are the
    same as your portfolio accounts.

    * Edit: Outside investments were assumed to be allocated according to the plan (60/40 in this case)
    when goals were forecast. However, outside investments were entirely ignored in the current asset mix.
    This would result in unnecessary and senseless trading to align my portfolio with the target asset allocation.


    ¹ A list of all outside investments was provided.
  • @Observant1 - point noted. Though treating the investments as cash seems to conflict with building goal forecasts by scaling the managed portion of your portfolio to your total portfolio size. The former would lead to a lower projected return over the long term. So I'm not quite sure what it is Vanguard is trying to say here. Either way, the M* statement seems to be off.

    @Hank - You wrote: "Those recommended age specific equity allocations are fascinating." Fore each age range, there's a different allocation. There's your glidepath. Give yourself credit on the concept, if not the wording.
  • @msf

    Yep that is the same spreadsheet I saw. How did you get a copy?

    I got a bunch of Morningstar reports on their portfolios and am going over them. Will report back as soon as I have finished.

    So far for the 65% Equity income oriented portfolio I see that it lost 9% 10/21-9/22.

    More later
  • @Observant1, thank you for sharing. Great post from all.
  • msf
    edited September 2023
    Schwab & Wealth Enhancement Group:
    Partnering for a Superior Client Experience
    https://network.wealthenhancement.com/

    From there, follow the full services link to:
    https://network.wealthenhancement.com/services

    Then to Financial Planning:
    https://network.wealthenhancement.com/financial-planning

    That has the link to Dynamic Cash Flow Tax Plan- Roth IRA Conversion (the sample spreadsheet)

    The key is the "network" part of the URL (working with Schwab), as opposed to using "www".

    The spreadsheet illustrates a straightforward strategy. "Prepay" taxes (via conversions paid for out of taxable account) as a way of moving that tax money into sheltered accounts. If it weren't for graduated tax rates, one might want to convert all of an IRA up front. Instead, convert gradually over many years, going up to but not into the next tax bracket.

    (Since some states exempt some or all of the conversion amount, the combined fed/state rate on some conversions can be less than your current bracket even if you edge into the next bracket).

    A first order approximation for the ultimate target is to convert enough over many years that what one is left with in the T-IRA generates RMDs not greater than one's cash flow needs (after accounting for SS, pensions, and taxable account assets). Notice in the spreadsheet that this couple never depletes their taxable account and that their RMDs are below their cash flow needs.

    (Depleting taxable assets would be a good thing, because then assets would all be in tax-advantaged accounts. This couple can't do that without the conversions moving them into a higher (32%) bracket.)

    This strategy depends on the assumption that one's tax bracket in retirement will not be much less than one's tax rate for the conversions. (It can be somewhat less because of the tax-sheltering effect of prepaying taxes.) Given today's low tax rates (even the spreadsheet assumes a future increase in rates), that's an assumption I've been willing to make. In the end, what taxes will be 30 years from now is a crap shoot.
  • edited September 2023
    @msf said, Dynamic Cash Flow Tax Plan- Roth IRA Conversion (the sample spreadsheet)
    Thank you. That is very insightful to see it on a spreadsheet. These are the next set of questions I was planning to ask Vanguard.

    @Observant1, if you are a Fidelity customer, they have a very detail planning tool where you can include all your investment and it generates several outcomes based on future inflation rates and market returns. That is more useful for the customers to see a more complete picture. Higher than average inflation will erode future buying power. Same effect will result from below average market returns.
  • edited September 2023
    @Sven,

    Thanks!
    I am a Fido customer and have used one of the Fidelity planning tools in the past.
    It provided detailed information and utilized Monte Carlo analysis to project outcomes.
    I'm not sure if it's the same tool (don't recall name) you are referring to.
  • Do these future projection show " More services, higher fees" effect on projected profit ?
  • Many years ago, Fidelity was my 401(k) plan administrator. A planning tool, the Financial Engines was made available in their Net Benefit portal. Here is more information on it.
    The users have the ability to input a number of variables into the model and it generates the probability of outcomes. That model works well with index funds but not so much with active managed funds. Nevertheless, I came to appreciate asset allocation as the most direct factor on long term return. @lynnbolin 2021 also mentioned Financial Engines in a recent post.
    https://mutualfundobserver.com/discuss/discussion/comment/166992/#Comment_166992

    It appears that both Fidelity and Vanguard use some version of the Financial Engines that can accommodates active funds just as index funds. Our Fidelity planning report provides a full picture of our finance before we engage with Vanguard PAS. You are correct that Vanguard cannot legally advise on external funds. Their plan only advises those $ that you direct them to manage. This is a new experience for us working with advisors but being prepared really help to guide the planning discussion accordingly. Unlike Vanguard customer lines that customers complain about, the advisor phone numbers and Secure Messaging are excellent. Again, thank you for sharing.

  • @msf

    Have you used the Schwab WEG group for anything?

    The example in the spreadsheet shows without the conversions their tax rate is 22% but in retirement with RMDS rises to 28% and eventually to 33%

    With the conversion they start out at 24 to 25% but keep it around 28%

    It is surprising that they only save $80,000 in lifetime taxes and it takes until 2041 for them to break even on taxes paid. They come out ahead estate wise by $500,000 and their heirs get the Roth tax free.

    So you are essentially paying your heirs tax bill for them.
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