First off, this is a great program! I wish I had it when I was 20 or 30.
But now that I'm pushing 50, I find myself now in a situation where I've over-saved for 401k, and under-saved for "regular assets." I'm thinking of early retirement, but the imbalance between regular and retirement assets makes results in an inability for ESPlanner to smooth my consumption.
I need to check my understanding of some of the program inputs and their interactions. I've made some assertions (below) for which I would certainly appreciate any comments or corrections.
Using Economics-based planning:
The "Assumptions/Nominal Rates of Return" Person #1, Person #2 retirement account inputs apply to *all* of 401(k), 403(b), IRA, etc.
I'm having a problem with the amounts I put in as the amounts we have currently in our retirement accounts are not showing up in the amounts the program lists in retirement account columns of the Net Worth section of the report. There is an approximate 50% difference between what it lists for this year and what we actually have in one of those columns.
Also, it lists current saving as zero in the Annual Suggestions section, but that's not what I put in there for that.
Any ideas what's going on?
Perhaps this is a simple terminology question. I have assets (cash, stocks, and mutual funds set aside for my retirement in several taxable brokerage accounts. They assets are from Employee Stock Purchase plan and inheritance. As far as ESPlanner is concerned are these taxable assets part of my Savings or part of my Retirement assets? In other words, does ESPlanner expect a Retirement account to be some form on IRA, Roth IRA, 401k, 401a, 403b etc and everything else is a regular asset?
This is my 3rd run of ESPlanner since I retired June 1, 2013. Last year, and this year 2016, I have done a bit of consulting.
1) Am I correct to put that Income on the Earnings page under Self Employment Earnings after setting the retirement age to 1/1/2016?
2) Will the program then treat me as retired for the entire 2016?
What do I look at to tell the source of a given year's retirement withdrawal, or when it switches from a TIRA or 401K to a Roth, assuming default order of withdrawal? Obviously the program knows the balances of these accounts, but I can't find where they are exposed. It seems like such a basic question that I must be missing something.
The economics based planning has me setting the assumptions for returns on my regular (taxable) and retirement account investments. My regular accounts are mainly in a Schwab broad stock index ETF plus some individual stocks; I set this category to 7.5 percent. My retirement accounts are presently in a Schwab intermediate term bond ETF, stable value funds, and (a small amount)in a Schwab international stock index ETF. I set the retirement accounts to 3 percent. I do not want overly optimistic assumptions here, but I don't want to err on the conservative side here either.
when I have income from a severance package that exceed my needs
I'm planning on using the Net unrealized appreciation (NUA) tax rule when I close out my 401k in a future year.
How do I accomplish this in ESPlanner Plus?
Example situation: $130,000 value of stock in 401k, cost basis $70,000 (taxable event at transfer to taxable account ), NUA $60,000 (after 12 months taxed as Long Term Capital Gain
I've tried the following but ESP doen't appear to handle the taxs correctly: