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Firecalc pad needed to retiree
Old 08-02-2013, 08:21 PM   #1
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Firecalc pad needed to retiree

Assume all before tax info has been entered into Firecal and a Spending Level has been calculated. Also assume you have a dollar amount estimated for
retirement expenses. After estimating taxes and addng this tax amount to the expense amount a new sum is generated. A ratio of
Spending Level/Sum is made. What is the minimum ratio required for you to feel like you have a sufficient buffer to retire on? For example, a ratio of 1.05 yields a buffer of 5%.
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Old 08-02-2013, 09:19 PM   #2
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Quote:
Originally Posted by engr View Post
Assume all before tax info has been entered into Firecal and a Spending Level has been calculated. Also assume you have a dollar amount estimated for
retirement expenses. After estimating taxes and addng this tax amount to the expense amount a new sum is generated. A ratio of
Spending Level/Sum is made. What is the minimum ratio required for you to feel like you have a sufficient buffer to retire on? For example, a ratio of 1.05 yields a buffer of 5%.
I think this approach may have some challenges, it is a bit like measuring a cube of jello with a micrometer.

The issue, at least for us, would the be flexibility of the Spending Level. I'd want to build a "no kidding bare bones" spending level and a "this is how we want it to be" spending level. If Firecalc gave us a 99% chance of portfolio survival on the "bare bones" spending level and a 90% chance of portfolio survival at the "how we want it to be" spending level, I'd probably be satisfied. But . . . I'd probably still underspend for the first few years just out of an abundance of caution.
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Old 08-02-2013, 09:36 PM   #3
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I'm not sure what you are doing here. When I run Firecalc I include taxes as part of my estimated retirement expenses.

I don't know exactly what you are looking for in terms of a buffer. The expenses that I use for annual spending are those from my projections of the expenses I expect to have with a fair amount of discretionary spending in there.
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