Retirement Strategy Simulator

Model your Roth ladder and visualize withdrawals year by year.

Initial Setup

Annual Strategy

Economic Assumptions

Tax Settings

Current Age

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Annual Expenses

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Total Taxes Paid

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With Roth Ladder Strategy

How the Roth Ladder Strategy Works

What is the Roth Ladder Strategy?

The Roth ladder is a tax-efficient strategy that allows you to access retirement funds before age 59.5 without penalties. It works by systematically converting money from pre-tax accounts (like Traditional 401k) to a Roth IRA, waiting 5 years for each conversion to "season," then withdrawing the converted principal tax-free and penalty-free.

Why Use This Strategy?
  • • Access retirement funds before 59.5 without penalties
  • • Pay taxes at potentially lower rates during early retirement
  • • Convert tax-deferred growth to tax-free growth
  • • Reduce future Required Minimum Distributions (RMDs)

How This Calculator Works

This simulator models your financial situation year by year, showing exactly how money flows between accounts and when you can access converted funds. Here's what happens each year:

1. Market Growth

All accounts grow at your specified rate. Personal Savings growth is optional to avoid tax complications.

2. Roth Conversion

Money is moved from Traditional 401k to a "locked" conversion bucket. You pay income tax on this amount. The conversion must wait 5 years before becoming accessible.

3. Living Expenses

Money is withdrawn in this priority order: Personal Savings → Roth IRA Principal → Roth IRA Gains → Traditional 401k (emergency). Taxes and penalties are calculated automatically.

3a. Post-59.5 Tax Optimization

After age 59.5, the withdrawal order changes to minimize taxes: it first uses Traditional 401(k) funds up to your deduction limit (tax-free), then Personal Savings, then the Roth IRA, before taking taxable 401(k) withdrawals.

4. Conversions Mature

After 5 years, locked conversions become available as Roth IRA principal, which can be withdrawn tax-free and penalty-free.

Important Rules Modeled

Roth IRA Withdrawals
  • • Principal: Always tax-free and penalty-free
  • • Gains: Tax-free after 59.5, otherwise taxed + 10% penalty
  • • Conversions: Tax-free after 5-year seasoning period
Personal Savings
  • • Withdrawals are prorated between principal and gains
  • • Gains portion is taxed at capital gains rate
  • • Used first to preserve retirement accounts
Traditional 401k
  • • All withdrawals taxed as ordinary income
  • • 10% penalty if under 59.5
  • • Used only as emergency source
Tax Calculations
  • • Conversions are taxable income
  • • Deductions reduce taxable amount
  • • All values adjust for inflation

Understanding the Visualization

Blue: Principal (contributions, conversions)
Light Blue: Gains (investment growth)
Indigo: Traditional 401k (all taxable)
▲ Green arrows show money coming in (growth, unlocked conversions)
▼ Red arrows show money going out (withdrawals, conversions)

Getting Started

  1. Set your starting balances and age
  2. Configure your annual living expenses
  3. Choose conversion strategy (match expenses or custom amount)
  4. Set growth rate, inflation, and tax assumptions
  5. Click "Start/Reset" to begin the simulation
  6. Use "Next Year" to step through each year and see the cash flows

Activity Log

Start the simulation to see a detailed log.