Holy Cow--We Hit 100% for 30 Years!!

[SoReadyToRetire]

I'm beside myself. I just did a little more "figgering", and FireCalc gives us a 100% for 30 years (taking me to age 92) if I retire next year at age 62 and my hubby retires 4 years from now when he's 62!

To figure this, I assumed just what our 401k's are worth today ($760K) and used $38K/year for spending, because that's what we spent in ALL of 2018. That year's spending included vacations, loans to family, charitable donations, and financial gifts, plus all our usual household expenses, eating out, my personal training at the gym, my "extravagances" such as haircuts, pedicures, etc. (In other words, we're comfortable and spend pretty much what we want but we don't do anything outrageous.)

Then to that I added both of us starting SS at age 62, so I used the lowest estimates of what our monthly SS checks would be. I didn't put in ANY additional money being added to our savings for the next 16 months until I retire, even though I'll be adding another $30K or so. And I didn't include my husband's investments in pot stocks--if those ever pay off, that'll all be gravy.

Our home has been paid off for years, btw. We figure we'll sell this one and buy a comparable (or cheaper) one elsewhere if/when we decide to move.

My goal was to try to come up with a "worst case" scenario by doing it this way. I know I haven't included costs of LTC or medical catastrophes.

Thoughts on this? Are we really that close to being able to retire and continue to live a similar lifestyle to what we live now?!?!?

 

[joeea]

Our home has been paid off for years, btw. We figure we'll sell this one and buy a comparable (or cheaper) one elsewhere if/when we decide to move.

Have you priced comparable homes in wherever you want to live recently?

I know I haven't included costs of LTC or medical catastrophes.

Okay. So I'd assume you have no LTC insurance?

Are we really that close to being able to retire and continue to live a similar lifestyle to what we live now?!?!?

Sounds like you might well be, depending on how your assumptions hold up.

Your expenses seem very low. But perhaps you are comfortable living on that going forward.

Congratulations!

 

[Sunset]

Sounds great, but I'm going to toss cold water as I'd rather you get disappointed than starve.

Does your 38K per year include income taxes ?
I find that number pretty low for a couple, owning a house, did you amortize home repairs as maybe you didn't have any this year, but one year you will replace the furnace, A/C, roof and each of those costs run 2K -> 10K (so I always figure $1,500 for house repairs per year, so add that to your budget).

How many years have you tracked your spending, and do you track EVERY penny spent ?

 

[pb4uski]

You might run a trial with only 77% of your social security... assuming a 23% haircut in benefits beginning in 2034.

 

[SoReadyToRetire]

Loving the feedback so far!

Joeea, yup, we've priced homes in possible retirement spots. We have too much home right now for two people--3 BR, full basement, deck, pool, 3-bay garage (hubby used to have lots of toys, but he's slowly selling those off). So we should be ok there. You're right--we have no LTC insurance.

Sunset, that $38K is just what came out of our checking account in 2018--but that's the only place from which we spend money, so it covers everything we spent, yes. And we even spent $3000 for tin for the garage roof last year, so that covers an average outlay for household repairs. (We have new furnace/AC, and we put a tin roof on a couple of years ago, so we're good for those things.)

I did NOT, however, include income taxes in this scenario, as I'm used to those just coming out of our paychecks--DUH.

 

[SoReadyToRetire]

You might run a trial with only 77% of your social security... assuming a 23% haircut in benefits beginning in 2034.

OK, pb--will do that. (I once saw a license plate PB4UGO when I was on a cross-country trip and it cracked me up. )

 

[Aerides]

not to be too damp, but how many % success did you add in the first 3.5 months of this year alone? We've had a fantastic bullish few months.

If you were above 95% on 12/28 as well, then congrats.

Have you looked at expenses for maybe 2016 and 17 as well? It helps to look at more than one year, even if it "felt" like a good example.

 

[TNBigfoot]

Your medical insurance will be a significant expense that should be included especially with a few years before Medicare eligibility. For me, $38K sounds like something’s missing?

 

[SoReadyToRetire]

I left all the defaults in FireCalc. I only entered these on first tab:

Current portfolio value $760K
Annual spend $38K
30 years

... and these on the "Other Income/Spending" and "Spending Models" tabs:
Minimal SS (because I chose starting at age 62 for both of us)
Constant Rate of Spending as model

I wasn't sure what to pick on other tabs, so I just kept the defaults.

 

[Lewis Clark]

I did NOT, however, include income taxes in this scenario, as I'm used to those just coming out of our paychecks--DUH.

Do you have any other payroll deductions, in addition to taxes, that you will have to write a check for in retirement? Medical/dental insurance premiums?

How about cash spending that does not flow through the checking account?

 

[SoReadyToRetire]

Your medical insurance will be a significant expense that should be included especially with a few years before Medicare eligibility. For me, $38K sounds like something’s missing?

My husband continuing to work for the next 4 years will take care of my health insurance until I'm 65. Benefits of marrying a younger man.

I know, something could happen to him so he can't work that long ... so I should just raise my yearly spend to accommodate that, correct?

 

[TNBigfoot]

My husband continuing to work for the next 4 years will take care of my health insurance until I'm 65. Benefits of marrying a younger man.



I know, something could happen to him so he can't work that long ... so I should just raise my yearly spend to accommodate that, correct?

You will have Medicare premiums to pay after age 65 that should be factored in. Your medical out of pocket expenses (deductibles, copays) should be included and will likely increase in your “golden years”.

 

[SoReadyToRetire]

I just ran it again with my yearly spend upped to $45K from $38K, and still--100%.

Since I didn't include the $$$ both hubby and I will be adding to our 401k's over the next 16 months until I retire, and I didn't include the $100K that we have in non-retirement accounts right now, I'm thinking that gives me a little wiggle room.

I'm sure feeling a lot better about 62 at this point! Now to just make it through the 460+ days until then ... must continue to count my blessings that my job is flexible, pays well, and my boss is great, to get me through until that time.

 

[bingybear]

It's just a warm fuzzy.. not a law. Take it as a nice check, but not written in law.

 

[Dtail]

The default Firecalc Equity % is 75%. Most retirees have a lower %. What are your numbers if you plug in your actual equity %, unless it is actually 75%?

 

[sheehs1]

The default Firecalc Equity % is 75%. Most retirees have a lower %. What are your numbers if you plug in your actual equity %, unless it is actually 75%?

I was going to mention this as well. Look at the lines on the investment page for how you are invested and the numbers for CPI, etc.

 

[ckelly78z]

Everything you described monetarily sounds almost identical to what my situation will be at 62(at 62 years old, I am only 54 right now) I hope I can see the kind of 100% figure that you got...congrats !

 

[mrfeh]

I just ran it again with my yearly spend upped to $45K from $38K, and still--100%.

Since I didn't include the $$$ both hubby and I will be adding to our 401k's over the next 16 months until I retire, and I didn't include the $100K that we have in non-retirement accounts right now, I'm thinking that gives me a little wiggle room.

I'm sure feeling a lot better about 62 at this point! Now to just make it through the 460+ days until then ... must continue to count my blessings that my job is flexible, pays well, and my boss is great, to get me through until that time.

I suggest you spend a little more time analyzing the situation.

On the income side:

• enter all assets that you'll have available to you (money you'll be contributing the next couple years, and the $ in non-retirement accounts)
• verify firecalc is using your actual asset allocation

On the expenses side:

• examine your expenses in detail; don't use whatever number came out of your checking account last year
• out-of-pocket health expenses
• health insurance (medicare does not mean $0)
• taxes
• infrequent large expenses (vehicles, home repairs, vacations)

 

[mountainsoft]

I just did a little more "figgering", and FireCalc gives us a 100% for 30 years (taking me to age 92) if I retire next year at age 62 and my hubby retires 4 years from now when he's 62!

I recommend trying other calculators for a second opinion. My favorite is the Flexible Retirement Planner https://www.flexibleretirementplanner.com/wp/download/

When you run your estimates, try to be as conservative as possible. For example:

3.2% for the inflation rate

Your highest tax rates you could expect (I use 12% since we expect to stay well within that tax bracket). You may want to use higher tax rates if you think taxes will increase in the future.

Use conservative returns for your investments. I use a 6% return with an 8% deviation, but you might want to use 4%, 5%, or lower returns if you really want to be safe.

Use a higher annual expense than you think you'll need. For example, we currently live on less than $39K per year, but I'm planning for $41K per year.

For your social security estimate, assume you will only receive 75% of that estimate in case SS isn't fixed before the trust fund runs out in 2034. Also, assume 85% of your social security will be taxed.

Remember to account for expenses that currently come out of your paycheck, taxes, healthcare, life insurance, etc. Decide whether you will still need life insurance once you retire.

Visit your state's Obamacare health exchange and run some numbers to see what your health care expenses might be. Remember to allow for copays, deductables, and prescription costs.

Remember to plan for large one time expenses, a new car, replacing the roof on your house, water heater, funeral costs, etc.

Factor in vacation and recreation expenses you think you might have. That doesn't have to be cruise around the world, it could just be a few local trips throughout the year. Also, you might eat out or go see movies more once you have the time you used to spend at work.

Assume full price for things you might get reductions for once you retire, car insurance, property taxes, etc.

On the opposite side, remember you will probably no longer be paying union dues, parking fees, work clothing, or contributing to retirement plans.

Finally, run the numbers for when one of you dies. You'll lose one social security check, your pension may decrease, your taxes my increase as a single filer, etc.

 

[Rianne]

The 100% is a great feeling! I always push the envelope and think up worse case scenarios just to be emotionally ready in case. There's the tab "portfolio changes",to the right. I typically throw in a $20K disaster spending year to see what happens.

For a different viewpoint, check out i-orp.com. This gives you amount you can safely spend for the next 30 years with nothing left. It includes 15% tax rate and the SS haircut. I like examining both firecalc and i-orp.

 

[dtbach]

$38K seems pretty frugal to me but if it meets your needs, I think you are good to go.

 

[albireo13]

Also, what happens if you live longer than 30 yrs? Try looking 35yrs out