Quote:
Originally Posted by jcretire77
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It sounds like Kitces is saying that Social Security is similar to a government TIPS bond that will start paying in the future. I don't include it in my asset allocation, but I think I will add the NPV of my SS to calculate an "including SS" asset allocation...it will make me feel better about the money I've been losing in equities, hehe!
Quote:
Originally Posted by hnzw_rui
Given I can't rebalance between SS/pension and my portfolio and there are age restrictions to when you can access those funds, instead of using NPV of SS/pension, I just reduce expenditures by the expected SS/pension benefit (adjusted by some safety factor). My planned WR is then based on that reduced amount.
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I agree that you can't reduce the fraction of your assets that Social Security creates. If you buy Kitces idea that SS is like a TIPS bond, it would be part of your current asset allocation calculation and you could reduce your current bond holdings to a certain point, anyway.
The idea of reducing the spending in your model by the amount you receive as Social Security sounds like it will work. For me, having a model where expenses suddenly stepped-down seems kind of weird. But it's one way to model it, I suppose.
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