I started my plan at the beginning of 2025. I am using the following asset classes using custom rates of return and standard deviations for 2026. I have it set for advanced portfolio managing mode 2. Do these values seem reasonable?
For 2025 I entered my existing asset allocation for my targets since I knew I would slowly balance my portfolio of the course of the year. I now have my account balanced to meet my long term allocation so I plan on updating the targets for 2026.
The first time I ran a test Roth conversion for my newly balanced portfolio the results were way different than I expected compared to 2025. I then made the listed changes to the rates of return and standard deviation and reran it. The results are completely different again.
I now see how much a change to the inputs can make the results change. How does everyone handle this? Do you update the inputs each year?
My real plan was to just fill my 22% tax bracket each year until my RMD's start. I am using the Roth conversion analysis as a high level check to see if my plan makes sense year to year or to see if I should further limit my conversion for IRMAA steps.
My rates of return are nominal and I used 3.5% for inflation and a 2% adder for healthcare costs.
I run the Monte Carlo with correlated rates on and off plus I run historical for a few different scenarios.
The Roth conversion calculator doesn't show
Please see my next post for the ROR and Std dev I'm using.
my cut and paste did no work. Here are the values
Cash - ROR 3.42% - Std Dev 1.0%
US Stock - ROR 9.0% - Std Dev 14.6%
Bonds - ROR 4.5% - Std Dev 5.6%
US SCV - ROR 11.5% - Std Dev 31.6%
Int SCV - ROR 13.3% - Std Dev 14.7%
Int Stocks - ROR 7.75% - Std Dev 15.37%
90 day treasury - ROR 3.65% - Std Dev 3.06%
The Roth conversion calculator doesn't show a gain until near the end of plan but it keeps the RMDs under control if one of us were to pass significantly before the other. It also keeps the taxes on the inheritance to a minimum.
