List Plans button

RPS will allow saving input parameters under a Plan Name. This button will allow listing your all of your saved plans.

Get Plan button

Plan input parameters can be retrieved by entering the Plan Name in the Plan Name field pressing this button.

Social Security

Enter the annual benefit expected from social security. Estimated benefits are found on SSA.GOV. I have found that SSA.GOV estimated benefits assume working until benefits start. So, for the age 70 estimated benefit SSA.GOV assumes working until age 70. A more precise estimate can be determined by using ANYPIA32 downloaded from the SSA web site. If planning to work until age 62 and taking benefits at age 70, ANYPIA32 will provide a more accurate benefit estimate.

RPS does not support complicated scenarios such as windfall elimination rules and file / suspend.

Roth Conversion

RPS can look for opportunities to do a Roth Conversion during the simulation. If there is enough in the brokerage account to live on for 1-3 years before drawing down from the IRA, it is likely taxes will be extremely low (if not zero). This might be a good time to consider a Roth conversion. RPS will limit the taxes paid to either the 0%, 10% or 12% tax bracket in the conversion year - depending on the option selected. Try each and see what works best.

Brokerage Taxable Distribution

For brokerage accounts, there are dividend and capital gains distributions that are considered income for tax purposes. RPS can include these in the income tax calculation during the simulation. RPS calculates as Brokerage Beginning Balance minus Brokerage Draw Amt times specificed percentage. The default assumption is 2%.

Annual Budget

This should be the amount minimally needed to live on comfortably during retirement. Include non-discretionary expenses such as rent, utilities, health care, groceries, Medicare, and insurance. Also include discretionary expenses such as travel, hobbies and dining out. In short, enter the amount planned to spend in a comfortable retirement. Do not include mortgage principal and interest in this amount - that is entered in a separate field. Do not allow for federal income or capital gains taxes as RPS will estimate.

Enter annual budget in today's dollars - RPS will adjust for inflation. Mortgage is not adjusted for inflation.

RPS separates the budget into 4 different timeframes. This will allow RPS to simulate using budgets that will change throughout retirement.

RPS includes a method to consider assisted living budget during the last 3 years of life. Depending on state of residence, assisted living and nursing home costs could cost at least $100,000 per year in today's dollars. RPS assumes that assisted living costs will be incurred in the last 3 years of the plan.

Mortgage Amount:

Enter the annual mortgage principal and interest. RPS tracks this separately as it is not subject to inflation adjustments like the rest of the budget.

Enter your age when the last mortgage payment is made.

Stock Allocation %

This is the precentage amount of retirement assets invested in stocks. RPS assumes the remainder will be invested in an intermediate bond index fund.

Retirement Bonus %:

This is a unique feature of RPS that I have not found with other tools. RPS will simulate taking a bonus whenever the simulated historical ending balance for a given year is greater than the baseline plan ending balance for the same year.

For example, assume the baseline plan shows $900,000 for an ending balance after first year of retirement. After year 1 of a simulated scenario, the ending balance is $950,000. A Retirement Bonus of 10% will result in a $5000 bonus withdraw for that year.

The idea is for RPS to look for additional opportunities to withdraw funds over and above the budget to be enjoyed during retirement.

Baseline Stock and Bond Returns

The default return rates for the baseline simulation is 6% stock ad 3% for bonds. These can be overridden for the simulation. The bonus paid out during historical simulation will be impacted by annual baseline ending balance.

Withdrawals

RPS will start the withdraw simulation after both you and your spouse have retired. If one of you is not retired, the simulator will not start the withdraw.

RPS will simulate drawing down assets in the following sequence: 1) IRA RMD 2) Roth / H.S.A pending age 3) brokerage accounts 4) IRA Fill The Tax Bracket 5) IRAs non RMD

RPS will draw down Roth / HSA at the age specified in the input form.

Fill the Bracket Max Tax % allows for increasing IRA withdraw up to a maximum percentage specified in the input form. For example, in some years, your taxes may be in the 10% bracket. You may ask RPS to assume that you want to prioritize additional withdraw amount from your IRA up to the 10% tax bracket limit - in anticipation of potentially being in a higher tax bracket in the future.

RPS assumes withdrawals occur each year on January 1st.

Annual Process

Inflation adjustments are made starting January 1st of each year simulated.

RPS will simulate rebalancing to preferred asset allocation on January 1 of each year simulated .

Roth / HSA

RPS assumes that HSA and Roth money will be the last accounts to be withdrawn - and all money can be used tax free. For HSA, the assumption is medical expenses incurred will be greater than the amount withdrawn.

Excess RMD

Required minimum distribution from IRA may exceed total need (Budget plus taxes minus social security and pensions). In this case, RPS assumes that excess money will be deposited into the brokerage account.

Budget Adjustments Upon First Passing

When testing a scenario for a couple when the first person dies, RPS will automatically reduce the budget 25%. It assumed that when one person dies, budget needs are 25% lower.

Taxes

RPS calculates estimates federal taxes using simple standard deduction assumption. Estimating taxes is essential in comparing different retirement scenarios such as the benefits of taking social security at various ages, and benefits of doing a Roth conversation early in retirement.

RPS only assumes 1 (filing single) or 2 exemptions (married filing joint). No other options are provided.

Tax implications for employment wages is not considered. RPS does not consider itemized deductions, alternative minimum tax, or any eligible credits. It also does not consider self-employment tax, employment taxes or other taxes that may impact the true final federal tax.

Federal Taxes are calculated and combined in with the following year budget.

Brokerage account gains are assumed to be long-term and taxed at the capital gains tax rate.

Calculations for married filing jointly and single filing options are provided. Head of household and married filed separately are not included.

State income taxes are not calculated.

Social Security Taxable

RPS uses the process defined IRS Publication 915 for calculating the estimated Social Security Taxable Amount. Social Security benefit amount is federally taxable up to 85% of the benefit amount.

Enroll Medicare B

RPS will estimate the Medicare B premiums if desired. If the budget amount already contains an allocation for Medicare B premium, or you will not be enrolling in Medicare B, set this field to NO. Otherwise, set this field to YES.

Other Resources

Here are other websites that I found very useful.

https://www.i-orp.com/
https://www.firecalc.com/