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Old 09-24-2015, 10:08 AM   #21
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I'm still stuck on your SS numbers. I'm curious about the SS system so I plugged a few number in. First, have you and your DW both earned the absolute maximum payments possible...? You would need to both pretty high earnings records. If you had max earnings and considering your birthday, you number of 70K seems to be off by at least 10K, the main issue being the 31K number you keeping posting for yourself. Are you certain you are including an age deduction for taking at 62, for someone your age it would be at least a 25% reduction.

This brings up another point,you have after tax money of 125K and paid off house and no personally owned cars, where does all your money go? If you both are maximum earners and have both worked the entire marriage you have some money leakage somewhere. Just saying you can live on less money doesn't make it happen...do you have a massive amount of equity tied up in your home? Do you use Quicken or some other method of tracking spending?
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Old 09-24-2015, 03:39 PM   #22
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Originally Posted by ivinsfan View Post
I'm still stuck on your SS numbers. I'm curious about the SS system so I plugged a few number in. First, have you and your DW both earned the absolute maximum payments possible...? You would need to both pretty high earnings records. If you had max earnings and considering your birthday, you number of 70K seems to be off by at least 10K, the main issue being the 31K number you keeping posting for yourself. Are you certain you are including an age deduction for taking at 62, for someone your age it would be at least a 25% reduction.

This brings up another point,you have after tax money of 125K and paid off house and no personally owned cars, where does all your money go? If you both are maximum earners and have both worked the entire marriage you have some money leakage somewhere. Just saying you can live on less money doesn't make it happen...do you have a massive amount of equity tied up in your home? Do you use Quicken or some other method of tracking spending?
Let's start with SS:

This is why I posted this question. Thank you for being stuck with the assumption. I used a online calculator where you put in your FRA benefit and some other assumptions and it does the calculations. Now that I've looked closer at the output, I have your same concern about my side of the SS income. Some of the difference is inflation (cola). The $30K is a 2027 number and I'll be about 66 years old. My SS statement says that at 62 I will get about $20,500/yr. The calculator starts out at $25,000 per year. So I'll have to go back and understand their assumptions better. Thank you.

As for the money we make, yes, we make decent money. However, the last several years, we've spent a lot of money. I wouldn't call it leakage - it's been more like a full on flood. We put one child through college, we bought the other child a house, we've made major improvements to our existing house (basically rebuilt it) and paid off our mortgage, all with current income and no debt. We've also maxed out both our 401k's, taken some nice trips and lived better than we ever hoped. The thing is though that the income and the spending all came within the last ten years. So we remember what it is to live on less and we know we've prepaid a lot of maintenance on the house so living on less really isn't that big of a stretch. Obviously some of the other expenses are also non-recurring.

Again, I appreciate your input. Those are the kind of questions that will highlight something I might be missing. Thank you.
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Old 09-24-2015, 11:55 PM   #23
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Don't consider COLA when looking at SS benefits. Presumably, prices will have also increased so the COLA is just to make-up for inflation.
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Old 09-25-2015, 09:24 AM   #24
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Don't consider COLA when looking at SS benefits. Presumably, prices will have also increased so the COLA is just to make-up for inflation.
+1...only applying COLA to one side of the equation will really not give you a complete picture.


As to your spending, it's your money do what you want with it. You seem to be parents that are very generous with money to adult children. College, pretty common, new house, not so common. Will you be buying houses for all your children now? What about things like wedding expenses and money and funding you might want to give to future grandchildren. I suggest you and your DW have a serious talk about this before you retire and see if you agree on this subject.

I know more then a few friends and family that have good incomes and like to spend on their kids and "fun" stuff. They always tell me, "We spend too much money", "we don't save enough", We need to cutback and add to our savings", but it never happens. Figure out where you fit into this spending model before you actually quit work.

A lot of the points I just mentioned come up for discussion frequently on this website. We have a lot of one question posters who just ask "Can I do it this way" and not "What do I have to do to make this happen" Do yourself a favor and hang around here for the next couple of years.
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Old 09-25-2015, 06:06 PM   #25
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You seem to be parents that are very generous with money to adult children. College, pretty common, new house, not so common. Will you be buying houses for all your children now? What about things like wedding expenses and money and funding you might want to give to future grandchildren.
Wife and I are on the same page. Only two children. One went to college and the other got a house. Both got weddings so that expense is done as well. Grandkids are already here (3 of them) and while we have some interest in helping them with college, we've been telling ourselves that the cost of college is going to be something we share in depending on our financial situation. If we have it, we'll help. If not, they will have to figure it out on their own and with the help of their parents.

For sure, we could have saved more, but we have no regrets. I appreciate the insight on this board and have been reading quite a bit, but the biggest challenge we face is transitioning back to where we were (spending wise) about ten years ago. Thankfully, I don't think it will be that hard. Timing was great in that I made my best money at the time I needed it most for those one time expenditures. We know how to live within our means but I don't minimize the fact that it will be different and a challenge. I look forward to it and think it's a lot better alternative than working longer.
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Old 09-25-2015, 07:57 PM   #26
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You mentioned your wife also has a 401 K .Why isn't that considered in your equation ?
Also what happens if the markets dive when you retire ?
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Old 09-25-2015, 10:28 PM   #27
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You mentioned your wife also has a 401 K .Why isn't that considered in your equation ?
Also what happens if the markets dive when you retire ?
I combined the 401k's in my post. She can draw on hers without depleting them (she has a 401k and an IRA) until I turn 59 1/2 and am able to start drawing on mine.

As for the market, that was part of my request on feedback from the group. By assuming no growth and no loss, I'm assuming I would move to a VERY conservative portfolio.
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Old 10-20-2015, 10:02 PM   #28
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Update

Thanks to the input from this board, I've begun to settle in at around $90K per year instead of $100K. I revisited my SS assumptions and eliminated all COLA assumptions. I've also run FireCalc with these assumptions and things look pretty good. This is complicated and SS is one of the hardest things to get my head around but the input here has helped. Thanks.
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