Modeling Roth Contributions
I am doing some simple Roth modeling (using Monte Carlo) and getting unexpected results...wondering if I'm missing something in how I'm using the software.
In Scenario #1 I am contributing $23,500 to a Roth account (representing 401k Roth + Backdoor Roth IRA contribution). In Scenario #2, I'm contributing $49,500 (my employer has a plan allowing post-tax 401K contributions that can then be rolled over to a Roth, similar to a backdoor Roth IRA). All other information is the same in both models.
However, in Scenario #2 my suggested annual spend is about 5% lower currently and in my first year of retirement. That doesn't intuitively make sense as I'm paying less in taxes (the contribution has already been taxed and the earnings are tax free), and it isn't a case of decreasing living standard now to have a higher living standard later since annual spend is lower in all years.
Any idea what's would be causing that?