That's a reasonable analysis to do, but given the discrepancy in returns, I assume you were comparing the land against 100% stock in the IRAs. They probably do not have equivalent risk, nor are those returns are not guaranteed. Roth IRAs don't inherently have historical returns. The assets you can choose to hold in them do.I built an Excel spreadsheet with monthly cash flows spanning 40 years. I can adjust inflation (regular and medical separate), SS Cola, portfolio returns (IRA, and brokerage separate), farm returns, farmland appreciation, and overall tax rate. It has a standard monthly budget and separate Medicare, pre-Medicare, travel, and sporadic auto replacement and home expense big ticket items (HVAC, roof). I then spend all my brokerage $ first, then traditional IRA, then Roth IRA in that order. When I modeled it with my current situation I ended up running out of money 6 months shy of 40 years and had a $3.9M farm that could be sold with $500K of capital gains due. When I only change the farm (sell today minus 6% realtor fee and capital gains and stick that in my brokerage account) I now finished the 40 years with a Roth value of $6.2M but no farm.
That’s close to $2.8M gain by selling. Likely because I’m delaying tapping the Roth for several years while it grows at a better rate than the land appreciates. Those assumptions are based on historical data.
Unless my Excel is flawed or I’m using bad assumptions, selling seems clearly better.
Thus, it is not the best approach to compare an asset class to an account type. First decide what asset classes you want to hold and their proportions, and then decide where and how to hold them.
Statistics: Posted by Northern Flicker — Wed Aug 28, 2024 7:46 pm — Replies 40 — Views 3108