Calculating the financial impact of life's curveballs.
Eleanor inherited a $1.8M Traditional IRA and $450K in taxable accounts after her husband's passing. Her primary concern is the potential need for substantial, unplanned withdrawals from the IRA to cover unexpected healthcare costs or home repairs. Such withdrawals would not only deplete her retirement savings but also trigger significant tax liabilities, impacting her desired estate distribution to her grandchildren.
Using Golden Door Asset’s Absence Percentage Calculator, we quantified the potential percentage of her IRA balance at risk due to these unforeseen events. We stress-tested scenarios with potential withdrawal amounts ranging from $50,000 to $200,000 over a 5-year period. By combining this analysis with the Tax Equivalent Yield calculator to explore alternative investment options in her taxable account, we structured a withdrawal strategy that minimizes the impact on her IRA and estate, projecting a potential increase in her net distributable estate by $150,000.
The Absence Percentage Calculator facilitated scenario planning, while the Tax Equivalent Yield Calculator aided in optimizing asset location and withdrawal sequencing to mitigate tax liabilities. We also utilized the Debt-to-Asset ratio to analyze Eleanor's overall financial health and ensure the sustainability of the chosen strategies.
$150,000 potential increase to the net distributable estate over 5 years through strategic withdrawal planning.
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