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On the subject of "one more year"...
Old 02-28-2013, 07:58 AM   #1
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On the subject of "one more year"...

I just put a bunch of scenarios into a table, which shows how much I can withdraw per year, for any given year that I choose to retire. Now, it might be a bit optimistic, as I included full social security benefits, a non-Cola'd pension of ~$4,000 per year I get at age 65, and saving an additional $20,000 per year until I retire. I also wanted the portfolio to last until age 100. I'm currently 42, but might as well say 43, as my birthday is in April. Oh, and i wanted at least a 95% success rate. Anyway, here's the numbers:

2013, age 43: $30,000 per year (I could actually do this if I put my mind to it, but it would be bare-bones)
2014, age 44: $35K
2016, age 46: $40K (this is kinda where I want to go out, but as 2016 draws nearer, I find myself getting cold feet)
2018, age 48: $45K
2020, age 50: $50K
2021, age 51: $55K
2022, age 52: $60K
2023, age 53: $65K
2025, age 55: $70K
2026, age 56, $75K
2027, age 57, $80K (so if I sacrifice just 11 more years, I can double my withdrawals)
2028, age 58, $90K
2029, age 59, $100K

Interestingly, if I take social security and my pension out of the equation completely, it only pushes me back by 1-3 years. For instance, I'd be able to do $40K per year at 48, $80K per year at 58, and $100K per year at 62. Dunno why the $80K threshold only got pushed back 1 year, maybe it hit some sort of sweet spot in the FireCalc formula?

Anyway, sometimes I wish I hadn't made this table. For one thing, it shows that I could really bail on the workforce right now if I truly wanted to. But it also shows the effect of "One More Year" (or in some cases "Two More Years")

While I'm sure I'd be happy on $40K per year, especially once the mortgage is paid off, I can see the temptation to stick it out just a bit longer. Even if I retired at 55, that's still pretty early. And at that point I'd be able to do $70K per year.
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Old 02-28-2013, 08:19 AM   #2
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Great example of how we can make more money but at the price of sacrificing what we can't make more of - time. Good luck in finding your "sweet spot".
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Old 02-28-2013, 09:29 AM   #3
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Are those withdrawal numbers in nominal or in constant 2013 dollars?

In my case every work year increases net worth by ~3% from wages minus income taxes, so it's easier to decline OMY. At ~10% per year I'd probably want another couple of years even though it's adding surplus that I'm unlikely to ever spend. This is for a job that I enjoy mostly and assuming no significant changes.
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Old 02-28-2013, 09:32 AM   #4
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Interesting table.
Did you use the same withdrawal rate for all ages? What was it?

I should do something similar. I'm a decade older than you - and trying to find that sweet spot now. Could probably retire... but want to pay off the mortgage first and put in a buffer. (Mortgage due to be paid off with accelerated payments next January.)

Did you modify the SS estimates with each year worked/not worked?
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Old 02-28-2013, 09:55 AM   #5
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Are those withdrawal numbers in nominal or in constant 2013 dollars?

They're constant 2013 dollars. At least, I'm presuming they are...doesn't FireCalc take inflation into account? If they're nominal dollars, then I might be a bit screwed!

Did you use the same withdrawal rate for all ages? What was it?


Actually, I didn't shoot for a withdrawal rate, but instead just plugged in all the fields, so I could see what my chances were of retiring in year X, and withdrawing Y amount of dollars. For the most part though, in playing around with Firecalc, I've noticed that a withdrawal rate of 3.5% gives a me a 98.8% chance of success to age 100.

As for SS estimates, yeah, I modified them for each year. If I went out now, I'd get about $11,496 per year according to the SS site's quick calculator. It's interesting how diminishing the return of each extra year is. For instance, holding off until 2014, versus now, the SS benefit rises 3.86%. But going out at 60, instead of 59, only bumps it up 0.42%.

Is there any way to post images to this site? Or do I have to upload it somewhere else, and then reference the link?
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Old 02-28-2013, 11:31 AM   #6
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Since I took a relatively large pay cut after the big firing layoff offshoring downsizing, the amount I now save for FIRE is not enough to really move the needle much. So, the primary benefit of w*rking longer is to get closer to SS, with other lesser benefits being slightly increased pension benefit, and fewer years needed for the portfolio to survive.

But the bucket is getting pretty full...
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Old 02-28-2013, 12:10 PM   #7
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Wow - thanks for that table ! To think w*rking one more year and only saving another 20k means you can have 5k more per year for life ! Scary and it makes OMY harder to turn down for me. "If I w*rk OMY then I can play and extra round of golf every week and spend an extra day at the zoo every week for the rest of my life !!"
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Old 02-28-2013, 01:08 PM   #8
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Quote:
Originally Posted by Andre1969 View Post
Is there any way to post images to this site? Or do I have to upload it somewhere else, and then reference the link?
You can attach them (paperclip icon) to a post.

Have you acounted for add'l future contingency expenditures like vacations, vehicles, HI, LTC, moving/relocating, or any of those other little monkey wrenches life is wont to through into our plans?
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Old 02-28-2013, 01:28 PM   #9
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You can attach them (paperclip icon) to a post.

Cool, thanks for that tip! I couldn't find the paperclip icon at first, but then thought to hit "go advanced", and found it. Anyway, the tables are attached, hope they make sense.

The upper table assumes I get full SS at 62 and my ~$4,000 per year non-cola'd pension at 65. The lower table assumes I get neither. If a given scenario had less than an 80 percent chance of success, I colored the field red. 80-95% was yellow, and 95% and above was green. A bunch of the red fields simply have "N/A" in them because if one scenario was below 80%, then the rest would be as well so I didn't bother to calculate them. Similarly, once I hit 100%, anything above that I also just filled in as 100%.

Have you acounted for add'l future contingency expenditures like vacations, vehicles, HI, LTC, moving/relocating, or any of those other little monkey wrenches life is wont to through into our plans?

Unfortunately, no, I didn't think it that far through. And because of that, I'm probably going to err on the side of caution, and keep a little set aside for those rainy days.
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