I want help double checking a personal cash flow spreadsheet I have created

[RicDee]

Hi
I need help double checking a personal cash flow spreadsheet I have created
You could help make sure I didn’t leave out anything or made incorrect assumptions
I could send it to you
Or we could talk about
Whatever is convenient for you
Please email me
Thanks
Ric

 

[Ed_The_Gypsy]

Why don't you tell us something about yourself first.

You could tell us about your assumptions and so forth and what you want to do. Do you want to link to another financial program? To the net to get daily updates on your investments? To your bank?

 

[RicDee]

I have created a spreadsheet that projects my/our income and expenses from my current age of 68 to age 100
And factors in different inflation rates for each category
My goal is to calculate how much I can spend each year and have my assets equal zero at age 100
I plan on adjusting the variables every six months based on the last 12 months and my expectations of future economic trends and my/our lifestyle
I am willing to share the spreadsheet, but would like to double check it with someone first.
Could you help me double check it?
Thanks,
Ric

 

[rescueme]

My goal is to calculate how much I can spend each year and have my assets equal zero at age 100

Why?

 

[RicDee]

So we can spend all our money before we die

 

[rescueme]

So we can spend all our money before we die

Again, I just don't understand your logic.

I have a very simple saying, "I'd rather die with money than live without it".

That means that I don't have to worry about both sides of the equation (e.g. having enough, having "too much") but can concentrate on the one option that supports my own view.

IMHO, there are too many "aw shi*" situations in life (DW/me have lived through many), where being financially secure (meaning having more assets than needed) is much preferable to not having enough if a financial disaster arises.

And if I die with more money than DW/me needed to cover our retirement wants/desires (hopefully our situation), than there are options that will allow us to bequest that "extra" for the benefit of another person, group, or association, based upon our criteria.

BTW, in our case, our remainder estate will be both used to help cover the needs of our (adult, disabled) "child", with the great majority of our funds going to our named non-profit charities in order to allow them to continue their "good works", but also avoid taxes (at whatever rate) of our substantial tax-deferred holdings.

But everybody is different, and that's why I asked the question.

 

[RicDee]

If we have no one to leave our money to
I think it would be logical to spend it on things we enjoy
rather than let it sit in the bank

 

[haha]

If we have no one to leave our money to
I think it would be logical to spend it on things we enjoy
rather than let it sit in the bank

The only safe way to do this is to buy some sort of fixed immediate annuities, or longevity insurance, or some synthetic version of these things.

They have been discussed from time to time on this board, but they involve complex and for me somewhat tedious concepts that I do not understand well.

Ha

 

[braumeister]

I'm afraid that what you want, RicDee, is impossible.

Consider the following scenario.

You have been diligently following your spreadsheet for a number of years, and you find that you are on track to zero out your accounts by your projected year of death, based on your experience so far.

Suddenly, you contract a life-threatening medical condition. The doctors agree that with specialized treatment, you can be completely cured and continue to live a productive life. Unfortunately, that treatment will cost two-thirds of your remaining assets. You decide to go for it.

At that point, you are reduced to living those remaining years in abject poverty, whereas if you had originally planned for a healthy balance to remain at your death, you would have been fine.

This is ridiculously oversimplified, but the point is that we can't see the future, and the best laid plans of mice and men gang aft agley.

 

[RicDee]

I think a "safer way" would be to put the money in a guaranteed safe place
and withdraw it as per the calculations allow
So I am asking help for help
double check the calculations and method

 

[REWahoo]

You should be able to post your spreadsheet here using the "manage attachments" function of the "Go advanced" reply button. That would allow anyone who was willing to do so to review your formulas and calculations.

You might want to put in fictitious numbers if you have concerns about privacy.

 

[73ss454]

Sounds to me that you should buy an annuity or a gun.

 

[Rustward]

Gee, it's hard to say Ric, but it seems like you might be trying to put way too fine a point on this. It would be nice to spend your last penny when you take your last breath, but I don't think we (me and DW) have ever been able to execute any plan to that level of precision. You might consider using ranges of numbers as targets.

 

[BigNick]

RicDee, I see two possibilities here:

/1/ You do not yet have the financial sophistication to take the kind of decisions which your posts imply. Being able to get Excel to reconcile spending and capital with a percentage for inflation and another for portfolio growth is some considerable way from being sufficient.
or
/2/ You are a troll.

Assuming that /2/ does not apply, trust me, /1/ does. Spend some time here. Learn from people who have FIREd successfully. Learn why FIREcalc, though far from perfect, is already way more sophisticated than any of us - including 30+ year IT veterans *raises hand* - are going to program in Excel any time soon. But don't ask us to check your spreadsheet. If it's wrong, you'll be discouraged, and if it's "right", it still won't be very useful.

 

[Independent]

I have created a spreadsheet that projects my/our income and expenses from my current age of 68 to age 100
And factors in different inflation rates for each category
My goal is to calculate how much I can spend each year and have my assets equal zero at age 100
I plan on adjusting the variables every six months based on the last 12 months and my expectations of future economic trends and my/our lifestyle
I am willing to share the spreadsheet, but would like to double check it with someone first.
Could you help me double check it?
Thanks,
Ric

Sure, it seems pretty straightforward.

Unlike others here, I think this is a sensible exercise.

 

[Midpack]

I have created a spreadsheet that projects my/our income and expenses from my current age of 68 to age 100
I am willing to share the spreadsheet, but would like to double check it with someone first.
Could you help me double check it?
Thanks,
Ric

Just attach it to a post here. If it's Excel, most if not all of us can take a look. What you describe is a simple spreadsheet, it would be easy to critique, and nothing wrong with the exercise.

If you don't know how, create or edit a post, and note the "Additional Options" section below the box where you create your post text. There is a section/button for "Manage Attachments." Click on it and follow the instructions, you'll probably be browsing to find your XLS to attach. Easy peasy...

 

[rescueme]

including 30+ year IT veterans *raises hand*

My hand is raised (1965-2007 in the field).

IMHO, it's not the spreadsheet, but rather the idea of what is trying to be accomplished in the scenerio.

I believe that is the "problem" with those that dissent (including me).

There needs to be a bit more of context in what is trying to be acertained, IMHO.

Hey, what do I know (I spent tooooooo many years in IT ).

 

[Nords]

I plan on adjusting the variables every six months based on the last 12 months and my expectations of future economic trends and my/our lifestyle

Sounds like Bud Hebeler's "Analyze Now!" system.

Not that I expect we'll be hearing from Ric anytime soon...

 

[Purron]

If we have no one to leave our money to
I think it would be logical to spend it on things we enjoy
rather than let it sit in the bank

RicDee: as others have pointed out, it's impossible to devise a plan where you'll spend your estate down to zero. Too mary variables. Why not look at what you need to have a comforable and enjoyable life while providing a healthy cushion for the unexpected?

If you are worried about having no one to leave your money to, why not select a charity to benefit from any assets you leave?

 

[Nords]

RicDee: as others have pointed out, it's impossible to devise a plan where you'll spend your estate down to zero.

Upon further reflection, one way to do that would be to put every penny of your assets in an annuity.

 

[Purron]

Upon further reflection, one way to do that would be to put every penny of your assets in an annuity.

Good point Nords. Not such a good time to purchase annuities though. If I were inclined to take this path, I'd wait a while before investing my entire nest egg in an annuity.

 

[GregLee]

Good point Nords.

Not such a good point. An annuity is a conceptual solution to the problem of putting all your money to work to achieve your end of supporting yourself to end of life. The problem, IMO, is that it isn't a quantitative solution. You could find that the annuity costs you more, for a given level of support, than that cash flow spreadsheet says you'd get, even if it were extended from 100 out to 200 years. It wouldn't be surprising to me if it turned out that way, because annuities have to be purchased from insurance companies which will be doing their best to maximize their profits at your expense. Their profits will be part of the price you pay for the annuity.

Still, the price of an annuity with payments equal to the withdrawals is something to look at, as a sanity check on what your spreadsheet is telling you. If an annuity would give you a better return, then you've got a problem.

(Disclaimer: I have a profound distrust of insurance companies.)

 

[Meadbh]

If you knew exactly when you were going to die, you would have some chance of solving this puzzle, but you don't, unless you are on death row. Anyhow, you could still be off by a wide margin since it is impossible to predict financial and political events with such precision. If, on the other hand, your objective is to have $0 in the bank on the day you die, there are only two surefire options to achieve it.
1. Spend all your savings on an annuity or
2. Spend all your money, and when it runs out, kill yourself.
Your money, your life, your choice.

 

[arebelspy]

Not such a good point. An annuity is a conceptual solution to the problem of putting all your money to work to achieve your end of supporting yourself to end of life. The problem, IMO, is that it isn't a quantitative solution. You could find that the annuity costs you more, for a given level of support, than that cash flow spreadsheet says you'd get, even if it were extended from 100 out to 200 years. It wouldn't be surprising to me if it turned out that way, because annuities have to be purchased from insurance companies which will be doing their best to maximize their profits at your expense. Their profits will be part of the price you pay for the annuity.

Irrelevant.

The problem in question is to fully use all of one's assets and have none left at death. Maybe a spreadsheet shows you can get more than with an annuity, but even if that's the case, you may have some left at death (especially if, as you say, you extended it from 100 to 200 years).

Now maybe the OP would, upon reflection, rather have some left at death and get more every month (as opposed to getting less every month, and having none at death), but how much the annuity pays out is irrelevant to it being a solution of having nothing left at death.

 

[RicDee]

Spreadsheet

Thanks for the tip on
Bud Hebeler's "Analyze Now!" system