Optimizing retirement income amidst changing circumstances.
Eleanor inherited a $1.8M Traditional IRA and has $450K in taxable accounts. Recently widowed, she's grappling with determining a sustainable withdrawal rate from her IRA to cover living expenses while ensuring the longevity of her assets. She's also unsure how much of any potential surplus income she should save versus spend, impacting her estate planning.
By using the MPS Calculator, we analyzed Eleanor's spending habits and desired lifestyle. Inputting various income scenarios (different IRA withdrawal rates), we calculated her Marginal Propensity to Save (MPS). We determined an optimal annual IRA withdrawal of $85,000, projecting a 15% MPS, allowing her to save an additional $12,750 annually in her taxable accounts, contributing to her estate planning goals.
The MPS Calculator helped quantify the impact of different income strategies on Eleanor's savings rate. By running multiple scenarios, we identified the withdrawal amount that maximized both her current income and long-term savings potential.
$12,750 additional savings annually, enhancing Eleanor's estate value and providing a buffer against unforeseen expenses.
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