Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Am I Thinking about this Right?
Old 02-19-2011, 03:54 AM   #1
Thinks s/he gets paid by the post
kyounge1956's Avatar
Join Date: Sep 2008
Posts: 2,172
Am I Thinking about this Right?

I'm still trying to decide whether to take a lump sum + reduced benefit or the full benefit with no lump sum when I retire, so I ran some FIRECalc comparisons, but I'm not sure I'm drawing the right conclusion from my results. I ran a variety of scenarios using either the full benefit or the reduced pension plus an SPIA bought with the lump sum.

Either portfolio survives the original plan, loss of pension COLA, a 50% portfolio loss immediately after retirement, or a 25% SS cut, in 97 out of 97 43-year sequences. Then I wanted to look at really drastic scenarios—the "double whammy" of no pension COLA plus a 25% SS cut, or a complete failure of the pension fund. I used the "investigate" tab to see what spending level would survive all sequences under those conditions, and I'm not sure I am looking at the results correctly. Would I be right to conclude that, if the portfolio survives a calamity at the beginning of the sequence, that it would also survive the same thing occurring years, or even decades later? Can I draw conclusions about what kind of spending cuts would be required in the event of a real disaster? For example, the spending level that survives all runs with SS and portfolio alone is less than half of that for the basic "no lump sum" scenario. Does that mean, if I decide on the straight benefit and my pension blows up, I'd have to live on half my previous income? Does the fact that the spending level for reduced pension + SPIA +portfolio + half SS, and that for SPIA + portfolio + all of SS are essentially equal mean anything at all that's useful for decision-making purposes?
kyounge1956 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
39 and thinking..... panhead Hi, I am... 18 01-28-2010 12:23 AM
59 and Thinking potto0213 Hi, I am... 2 01-25-2010 10:46 AM
61-1/2 and thinking about it gray_jay Hi, I am... 10 07-17-2006 03:56 PM
Been thinking lately brewer12345 Life after FIRE 79 07-18-2005 12:38 PM
Thinking of RE Surfs_Up Hi, I am... 38 09-26-2004 11:48 AM


All times are GMT -6. The time now is 07:40 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.