When I tried deterministic Consumption Smoothing, it said:
No solution possible.
See the user manual for details.
Screenshot is attached.
The manual says,
In rare cases, no solution may be found that achieves the goal. For the Deterministic solution in
particular, a very small change (a few cents) in the consumption-smoothed spending amount will
increase a taxable withdrawal just enough to trigger a tax or IRMAA ‘cliff’ in one or more years.
How do I go about finding the offending "cliff"?
Suggestions on how to work around this will be appreciated.
I run into this quite a bit lately, but end up just using a "specified expenses only" a little bit lower than the break point. I don't take the time to trace the culprit, but creating two scenarios each $1000 income apart from the break point $93,938 and comparing the Expenses/tax screen would be my first move.
The program could give you the largest spending amount that it found that did not go below zero along with the note about why it cannot quite match zero. That seems a bit more useful answer than just telling you that it failed.
If you want to find the pinch point, turn off the smoother and specify an expense of the $93937 that was just under the trigger, then copy the scenario. In the copy, increase the specified expenses at $93938 and see what got triggered. Once you find the pinch point, you may think about ways around it - maybe lower the cash floor, make a Roth or HSA withdrawal that year, etc.
Thanks for your answers.
Deterministic Consumption Smoothing started working again and I don't know why.
If I ever get the "No solution possible" again, I will read your answers again.
@ricke That is exactly the approach I would have suggested and have used myself in the past to track down the culprit (IRMAA in the case I saw). The goal-seeking algorithm does not know what the cause it....it just knows that X spending yields something like $30,000 final savings and X +/- $1 yields - $20,000 savings or similar.
This is very dependent on other income and expense items and 'all the stars aligning' in some year to cause Medicare MAGI to cross-over an IRMAA income limit.
