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Hi I'm new here, not really ER but soon, have a Firecalc question
Old 03-15-2014, 11:44 PM   #1
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Hi I'm new here, not really ER but soon, have a Firecalc question

Hi all. I found this wonderful board through the Dave Ramsey boards and I have a Firecalc question as well as the perennial question, do I have enough to retire? My spouse is already retired ( now age 71, retired at 68), already on SS and just took his 1st RMD at the end of December. I am 62 and planning on retiring in 1 year at 63.5 but continuing with some part-time work for a few years ( which will gross $70-77k/year) because I'm not sure we have enough money right now for a hopefully long retirement. We have $1.84 million in combined 401K/IRAs/Roth/Cash/taxable accounts. No debt or mortgage, paid-for cars, house is worth about $500K. We already moved and downsized to our retirement home. We live in a no state income tax state (TX), having moved from the highest taxed state (NY). Annual expenses probably will be $85,000/year while I still have to give my son some support. Hopefully that won't last forever, then I think we can safely live on about $70,000/yr, hopefully less.

Firecalc won't allow for someone already taking their RMD but I am wondering if I put in no income for him except his SS and RMD as an "other" category and just make his age younger if it will give me a reasonable estimation of whether there's enough money for this dream of mine.

BTW our TIAA-CREF and my IFA advisor think we'll be ok.

Thanks!
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Old 03-16-2014, 07:50 AM   #2
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Quote:
Originally Posted by iac1003 View Post
Hi all. I found this wonderful board through the Dave Ramsey boards and I have a Firecalc question as well as the perennial question, do I have enough to retire? My spouse is already retired ( now age 71, retired at 68), already on SS and just took his 1st RMD at the end of December. I am 62 and planning on retiring in 1 year at 63.5 but continuing with some part-time work for a few years ( which will gross $70-77k/year) because I'm not sure we have enough money right now for a hopefully long retirement. We have $1.84 million in combined 401K/IRAs/Roth/Cash/taxable accounts. No debt or mortgage, paid-for cars, house is worth about $500K. We already moved and downsized to our retirement home. We live in a no state income tax state (TX), having moved from the highest taxed state (NY). Annual expenses probably will be $85,000/year while I still have to give my son some support. Hopefully that won't last forever, then I think we can safely live on about $70,000/yr, hopefully less.

Firecalc won't allow for someone already taking their RMD but I am wondering if I put in no income for him except his SS and RMD as an "other" category and just make his age younger if it will give me a reasonable estimation of whether there's enough money for this dream of mine.

BTW our TIAA-CREF and my IFA advisor think we'll be ok.

Thanks!
Hi iac1003,
Welcome to the forum. I RE'd at not-so-early 63.5 last year. You are certainly well suited to this community.

I am not an expert on FireCalc, but I'll give you my thoughts on it. The RMDs are not looked at as income. They are the distributions from your tax deferred savings that you may need to use to make up for income shortfalls, the difference between SS and pensions if you have any and living expenses. There are two components to an RMD: A transfer from tax sheltered accounts to taxable accounts and taxes. You will need to account for the taxes as part of your expenses. Your expenses are then what is used to generate the possible portfolio balances in the FireCalc chart.

For a better picture of RMDs and the associated taxes, I use Quicken's Lifetime Planner which is in Quicken Delux. I also use Optimal Retirement Planner. These tools do not show the variable possibilities of investing, but do give a good view of withdrawals and taxes for the years going forward from your investment accounts based on a chosen investment return and inflation rate.

How much you will actually need will depend on how much income you will receive in retirement from SS and other sources such as a pension which were not included, so it will be difficult to give you a reading on your status for successful retirement.
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Old 03-16-2014, 08:49 AM   #3
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I'm not a FIRECALC expert either but I agree with hermit on RMD. Like hermit said, you should not enter RMD as separate income, it's from your portfolio. As long as your spending is more than the RMD $ amounts, it's accounted for correctly. And accounting for taxes in your spending is important as hermit noted.

However, I think you may still be able to model your situation in FIRECALC.

On the first page you'd enter spending of $85,000*, a portfolio of $1,840,000 and 33 years if you want to plan to age 95 for example.

On Other Income/Spending you'd enter your SS and the year you plan to start (2018-2022?). And your spouses current year SS income starting 2014.

On the Not Retired page, if you plan to work PT for 3 years, enter 2018 (3+ 1 yr FT) and enter $70,000 (PT income) you'll add until full retirement. I realize that may understate the 1 yr of FT work, but you could add the difference as a lump sum on the Portfolio Change page if you like, if it's substantial.
*And if you donate to FIRECALC, you can vary your annual spending throughout retirement to account for your future spending reduction from $85K to $70K.
I tried all these inputs one at a time and it appears FIRECALC accounts for them all. And there are probably other inputs you can tailor to better model your situation, but that's what I'd suggest based on what you've shared. Best of luck...
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