Does FIRECalc take into account SS numbers I put in?

[fh2000]

Hi,

I am currently 54, and my wife is 49. We plan to receive SS at age 62 for both of us. I plan to retire when I am 58 when new health plan takes effect, and the annual expense will be 65K. We have no pension.

When I enter those data for SS in FIRECalc, does it therefore make the following calculation assumption?

1. When I am 58 to 62, we will withdraw 65K from our savings.
2. When I am 62 to 67, we will withdraw 47K from saving and receive 18K from my SS, total still 65:
3. When I am 67 and wife 62, we will withdraw 29K from saving, receiving 36K total from SS for both of us, and total still 65K.
4. When I am about 90 (if I am still alive), we will run out of money and receive only 36K SS. We still have our house though...

Am I assuming right?
Thanks

[REWahoo]

Yes, you are correct.

One way to test the logic of the calculator is run it with and without your SS. You should see a lower success rate when you exclude that source of income.

[ERD50]

Quote:

Originally Posted by fh2000 4. When I am about 90 (if I am still alive), we will run out of money and receive only 36K SS. We still have our house though... Am I assuming right? Thanks

It looks correct except for #4.

FIRECALC cannot tell you that you 'run out of money' at 90. If your FIRECALC output shows a 95% success factor to age 90, that means that historically you would have run out of money at or before 90 in 5 out of 100 scenarios. The other 95% of the time, you have money left, often much more than you started with, even factoring in inflation. You might even end up with a lot of money, look at the FIRECALC output charts.

-ERD50

[fh2000]

ERD50,

Thank you for pointing that out. I am using 65K annual spending for a current port of 1.3M + both of our SS money, and I have a 100% success rate. The graph never touched the bottom $0 line, though there are two lines that are very close to it at the end. So, I assume that the worse case is at my age of 90, I might run out of money for 2 cycles. We plan to work 3-4 more years to gain extra level of safety.

I do have another thought: my annual spending of 65K is based on a family 4 for the average of the last 3 years. I know that 15 years into retirement, both my wife and I will likely not need that much annually since we will be less mobile and kids will be on their own. Is it reasonable to do a calculation scenario with "averaged" annual spending? By that, I mean, I can see that my average 35 retirement year spending might not be 65K, rather 60K or even 55K. If I use those lower numbers, I could retire sooner, and not need to extra safety.

Thoughts?