How to Model TIPS Ladder?
The recent thread about TIPS ladders and RMD withdrawals made me question the manner in which I was modeling a recently built TIPS ladder in PRC.
To model the ladder in PRC, I removed the money from my IRA account balance that was used to purchase the ladder, and then added an annuity that generated income each year for the duration of the ladder. I set the annual increase in the (nominal) annuity payout equal to my assumed inflation rate given the real return offered by TIPS.
I think this approach will mess up RMD calculations because the TIPS don't show up as retirement assets in PRC.
What's the right way to model TIPS ladders in PRC? (I did search through the manual and forum posts.)
Thanks in advance.
I do what Stuart suggested above. Under Asset Allocation for the Tax Deferred, I have a TIPS asset class and whatever percentage of the IRA TIPS is, I use that percentage. I set my ROR to 2% because that is what my ladder is. For Roth Conversions of other funds in the IRA, I play around with the tax bracket to limit the amount converted since I don't want to convert any of TIPS that have not matured yet.