Is there a single sequence to run optimizations (including e.g. Roth conversions; consumption smoothing; withdrawal order; earliest retirement date; social security start ages; Update active analysis) that doesn't require (or minimizes) looping back? I'm not sure how dependencies flow between optimization inputs and outputs, so am not sure whether running one optimization requires re-doing a different one.
Hans,
Bottom line: Most of these things are interdependent and I'll submit that you should let your priorities be your guide in establishing the sequence that's best for you. Regardless, there's probably no way to avoid iteration. With that said, I'll try to simplify this a bit. "Update Active Analysis" simply uses the current set of inputs and runs either a Monte Carlo or Historical analysis to provide an update on the expected range of outcomes. So, it's an information-only activity rather than an optimization activity. Consumption smoothing calculates how much additional spending your plan can support but it's not really an optimization activity either. In my mind, it's an information-only activity and I'd put it last in the sequence. Roth conversions, withdrawal order, earliest retirement date and SS start ages are where the real trade-offs lie. Roth conversions can potentially reduce your long-term tax burden and, therefore, boost your long-term savings, but they'll increase taxes in the near term and that'll consume money that could conceivably pay for something else, such as an early retirement. Selection of the earliest retirement date is a quality of life and peace of mind trade-off which is probably counter to maximizing long-term savings. Withdrawal order is only relevant in periods of negative cash flow, so I'm assuming it's predominantly a retirement timeframe concern. Therefore, maybe we can put it behind earliest retirement date in terms of priority. SS Start Age Optimization is all about maximizing long-term savings, but there's a trade-off between opting for the earliest safe retirement date and maximizing long-term savings. Additionally, starting SS benefits while Roth conversions are occurring will increase near-term taxes. So, again, I think it boils down to priorities.
In my own case, leaving my high-stress career was top priority, so I figured out my earliest safe retirement date while assuming no Roth conversions and starting SS at our full retirement ages and made the decision to retire. That one decision greatly simplified the remaining trades.
Stuart
