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Anyone "Pre-spending" SS?
05-31-2016, 08:15 AM
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#1
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2011
Posts: 8,421
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Anyone "Pre-spending" SS?
DW is 58 and has a good sized IRA. For planning purposes, I have always included that amount in our portfolio even if she can't access it for another year and a half.
She plans to take SS at age 62.
I wonder how many of you would already include future SS in today's spending?
Or do you view it as a 'raise' (increase in income) coming in four years from now?
As with her IRA, we just withdraw her future benefit from our available portfolio and I suspect that Firecalc also implies doing the same.
We view her IRA and SS as banked money that is just waiting for the proper time to withdraw from a larger total and as those funds open up, we would lower our portfolio withdrawals. In essence, we'd maintain the same spending level but it would be coming from other sources.
Yes, I'm aware of a certain level of risk (accidental death, etc) but I'm excluding that at this time.
__________________
Living well is the best revenge!
Retired @ 52 in 2005
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05-31-2016, 08:39 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Feb 2012
Posts: 1,495
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Sort of. We just plop all incomes and assets into the FIDO calculator and figure out what max post tax income would be over our lives (with the 90% success) and back off from that to 80% and sleep real well, since we don't even find things worth spending that amount most of the time.
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05-31-2016, 08:49 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2014
Posts: 7,373
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I'm 63 and planning to file for Spousal benefits on a restricted basis at age 66 (I'm old enough that the recent elimination of this provision doesn't apply to me) and for SS on my own record at age 70.
In a way, I'm spending in anticipation of SS being available later, but we're still keeping our withdrawal rate under 4%. I just figure that 3.8% (our average over the 2 years since I retired) is a safer rate because SS kicks in later so that rate will likely decrease in the future.
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05-31-2016, 08:50 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,228
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I know it's not popular but I amortize my SS (75%, predicting cutbacks) and Pension (rounded down, forgot how much, since it's not inflation indexed) and include them in my net worth for purposes of calculating how much I can withdraw. I also do my NW without those numbers and am fine so basically those are a cushion, but I don't plan to increase my spending rate when I start collecting my pension and SS. This method seemed simpler to me than figuring out an uneven withdrawal rate once I'm collecting those.
For an IRA I would definitely include it in your net worth even if you can't withdraw yet. You may also need to have a separate plan for how to bridge to 59.5 if the IRA is a major component. Mine wasn't, but I guess I could see having two plans, one for before, and one for after 59.5.
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05-31-2016, 09:00 AM
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#5
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Full time employment: Posting here.
Join Date: Apr 2014
Location: Houston
Posts: 958
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We set our current yearly allowable expense level by running FireCalc and I-ORP each year and solving for what level allows us to outlive our assets. We include future monies from SS in the calculation. We plan to take SS as early as possible. When I run this calc in future years, I may assume we only get 75% of SS due to the potential for future cuts.
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05-31-2016, 09:17 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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I just look at total retirement funding available year by year and have my own spreadsheet, plus I cross check with the FIDO calculator. I never worry about withdrawal rate in a given year. Our income, expenses and withdrawals will be and have been kind of lumpy. I focus on how much is left at "end of plan" time.
I leave a big buffer for changes like SS cuts, tax increases, LTC and pension cuts.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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06-01-2016, 12:06 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Syracuse
Posts: 3,502
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I have not been, but I just verified that I will be receiving SS Survivor benefits in a couple years so I'm going to starting now. (Thanks Hermit!)
This will also ensure that I can wait till 70 to start regular SS barring no health issues. That should be income enough for a decent life if the portfolio completely bombs.
Reading the How Many Good Years thread has me thinking I might bump the spending even a bit more.
__________________
“No, not rich. I am a poor man with money, which is not the same thing"
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06-01-2016, 12:19 PM
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#8
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Recycles dryer sheets
Join Date: Mar 2014
Posts: 197
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Quote:
Originally Posted by Whisper66
We set our current yearly allowable expense level by running FireCalc and I-ORP each year and solving for what level allows us to outlive our assets. We include future monies from SS in the calculation. We plan to take SS as early as possible. When I run this calc in future years, I may assume we only get 75% of SS due to the potential for future cuts.
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I hope we do not outlive our assets.
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06-01-2016, 12:23 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,154
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We never counted SS because we retired quite young. Now we see it as mostly going to cover Medicare and income taxes. There will be so little left over, we don't count it as money available for spending, even if we each wait until 70.
__________________
Retired since summer 1999.
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Anyone "Pre-spending" SS?
06-01-2016, 12:35 PM
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#10
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Recycles dryer sheets
Join Date: Nov 2013
Posts: 475
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Anyone "Pre-spending" SS?
Mistake post
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06-01-2016, 12:46 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Oct 2012
Location: Colorado Mountains
Posts: 3,165
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I call it "income smoothing". I withdraw enough from 401k each year to bump my current SS and pension income up to what I will get when I switch from the late DW's SS account to my account at 70. It doesn't impact the tax bracket now or in the future for me and is under 3%. I don't think I will have a problem figuring out how to spend the extra cash!
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06-01-2016, 12:48 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Oct 2012
Location: Colorado Mountains
Posts: 3,165
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Quote:
Originally Posted by GravitySucks
I have not been, but I just verified that I will be receiving SS Survivor benefits in a couple years so I'm going to starting now. (Thanks Hermit!)
This will also ensure that I can wait till 70 to start regular SS barring no health issues. That should be income enough for a decent life if the portfolio completely bombs.
Reading the How Many Good Years thread has me thinking I might bump the spending even a bit more.
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I'm not sure what I said, but you're welcome!
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06-01-2016, 12:53 PM
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#13
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Southern Cal
Posts: 4,032
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I count it when it comes. On my spreadsheet, I list my husband's age and my age and the column goes to 110(Hey, I'm optimistic), so I list the amount when I expect to take it.
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06-01-2016, 01:15 PM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2015
Location: Michigan
Posts: 5,003
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I am planning to RE next year at 57 and do not count SS at all. If it is still there, I would defer until age 70 anyway and consider it a raise or one time COLA.
__________________
"The mountains are calling, and I must go." John Muir
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06-01-2016, 01:59 PM
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#15
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Thinks s/he gets paid by the post
Join Date: Aug 2013
Posts: 1,660
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I just calculate flat spending based on all income sources expected in the future. This includes social security, paychecks, pensions, ROI, etc.
Although at any given time a flat spending level is calculated, it really is/will be a variable income as the inputs continually change.
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06-01-2016, 02:19 PM
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#16
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
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I am planning on it being an addition. Sort of like inflation protection.
From 56 to 62, I plan on spending 100% rental income. It should be more than enough all by itself. And still save just a bit.
At 62, I will add in some dividends to the spending. Hopefully adding another $3K a month. Probably hire out more labor.
At 65, I will add in my Mega Corp pension, ~$1,260
At 67, the DGF pension will kick in, ~$800
At 70, I will add in my SS. ~$3K
At 74, the DGF's SS will kick in.
At 80, I am going to buy a strip joint.
At some point, ~age 62, I am going to start selling rentals. I am not 100% sure if I will do a 1031 or just a sell. If I sell outright, they may be converted to a bond fund.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
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06-01-2016, 02:22 PM
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#17
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Thinks s/he gets paid by the post
Join Date: Dec 2014
Posts: 2,511
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it is just another hypothetical income stream planned for the future. I don't think of anything being like pre-spending SS
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06-01-2016, 03:17 PM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 17,099
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I don't count SS as I don't collect it yet, and still don't know when we will.
Basically I don't count my chickens until they hatch, so we only take out $$$ from available sources.
Once we are old enough to take out IRA's for spending, we will, until then its just regular old money..
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06-01-2016, 03:33 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Syracuse
Posts: 3,502
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Quote:
Originally Posted by Hermit
I'm not sure what I said, but you're welcome!
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You posted about getting survivor benefits, and answered a PM question I sent you. I had no idea I would be eligible.
__________________
“No, not rich. I am a poor man with money, which is not the same thing"
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06-01-2016, 03:44 PM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2016
Posts: 8,968
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I signed up for survivor benes on my deceased wife's account as soon as I could, age 60. I will medicare on those too and then sign up on my own account after FRA.
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