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View Poll Results: Do you personally have a floor income % built into your retirement income plans?
I'm comfortable relying solely on portfolio withdrawals (if you will receive Soc Sec or a pension this is probably not one of your choices). 8 8.99%
I'd want at least 25% floor income for essentials 7 7.87%
I'd want at least 50% floor income for essentials 22 24.72%
I'd want at least 75% floor income for essentials 11 12.36%
I'm shooting for 100% floor income for essentials 24 26.97%
I'm shooting for 100% floor income for essentials and some/all discretionary 17 19.10%
Voters: 89. You may not vote on this poll

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Old 12-30-2013, 01:25 PM   #21
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I have no idea what our SS income might be. We never counted it in any of our scenarios.

No pension either.

Always assumed we would live 100% off investments. Any extra will seem like a windfall.
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Old 12-30-2013, 01:27 PM   #22
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I agree.. The poll is fine as is.... My "current" ER plan does not required a pension or SS to be a 100% success rate for FIRECalc. So my vote that I'm comfortable with pulling all expenses from my investment accounts is the right answer. Of course, this is always subject to change with future events ....
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Old 12-30-2013, 01:32 PM   #23
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I still think of SS as a backstop, in case things get really bad.

If SS gets reduced to nothing, like what happened to pensions in the Soviet block after the fall of the Communism, then there will be a lot of people standing in soup lines, as our portfolio will also get decimated.

Misery loves company. We will be commiserating here in this forum, just like we did during the Great Recession (if we still get internet access that is). It will be fine!
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Old 12-30-2013, 01:34 PM   #24
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I think the "basic vs. target" income concept is very valuable in retirement planning. I first got it from a co-worker 10 years ago and it has always made sense to me.

Our "floor" or "basic" income is Social Security. If my wife starts at 66 and I start at 70, our combined benefit will be $52,000. That covers more than 100% of our basic needs.

We cover(ed) the period from early retirement to social-security-start-date with a combination of a non-cola's pension and assets in CDs and I-bonds.

Any pension or assets we have left after SS starts can go toward "extras".

PS: My observation is that current age matters a lot for poll responses. I'm 66, so SS is pretty "real" to me. Posters who are 45 may ignore SS in their planning.
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Old 12-30-2013, 01:51 PM   #25
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Originally Posted by ABQ2015 View Post
I'm not retired yet (15 months to go) so am not voting.
+1.

I had hard time understanding the question but here it goes.

My SS when it kicks in will only fund 35 - 50% of our yearly target spending, depending on when we start withdrawing from SS. If world economy collapses and SS doesn't, we can live on SS withdrawals.
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Old 12-30-2013, 01:58 PM   #26
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I did not answer because I'm not retired... but DH is in process of figuring out when to give notice to his employers... (this week, next week, 2 months from now... he's trying to figure out if the project he's working on is wrapped up "enough".)

Once the various income sources come online, (small pension at age 55 for me, SS at 62 for both of us, ongoing rental of our granny flat/guest house.) it will cover about 60% of our FULL needs - which include getting our kids launched. It covers 80% of our post kids-college expenses. Since I plan to retire at 55, well before SS age, and kids have 10 years or more before they're done with college, we've got frontloaded expenses.

When just DH is collecting SS - before I qualify - it's a very low percentage of our total budget. This is because of high early expenses (529 funding, teen boy appetites to feed), and low early income.

In hindsight I should have met my husband 10 years sooner, had kids 10 years sooner, and not have to have complicated spreadsheets to see if the nest egg is big enough to fund my early retirement. But... that's not the way life worked out.
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Old 12-30-2013, 02:03 PM   #27
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But... that's not the way life worked out.
As I am sure you've heard
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Old 12-30-2013, 02:29 PM   #28
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I retired with 3 private non COLA pensions covering 70% of planned spending, and over the 1st 15 years of retirement plan on 4 more pensions/SS to come on line to maintain at least 70 % of expenses covered by secure income sources.
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Old 12-30-2013, 02:31 PM   #29
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I have a survivor's pension & SS . SO has SS . Between that we would be able to cover all regular expenses but forget travel or big home projects .I feel like I have already passed a test since I retired in 2008 and immediately saw a drastic drop in my portfolio and since I use percentage of portfolio yearly as my guide 2009 was slightly lean.
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Old 12-30-2013, 02:43 PM   #30
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In hindsight I should have met my husband 10 years sooner, had kids 10 years sooner, and not have to have complicated spreadsheets to see if the nest egg is big enough to fund my early retirement. But... that's not the way life worked out.
Just a thought, but semi-retiring before our kids finish college hasn't been half bad for us because of now qualifying for financial aid, ACA subsidies, tax credits and reduced income and SS taxes. We just have to be careful to have the assets kept in exempt asset classes for financial aid and plan out our income and taxes due year by year.
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Old 12-30-2013, 03:55 PM   #31
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I've retired but my wife is still working. So, our floor income is her salary which is about 60% of our necessary expenses. When we're both on SS (our only floor since I took my pension as a lump sum) that'll cover 90% of necessary expenses. I've set aside money in ultra-safe investments to cover this gap till I'm 90 (kind of a floor, I guess). The rest of our portfolio is invested for moderate growth and will provide for our 'wants'.

I voted "100% floor income" as that seemed the closest.
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Old 12-30-2013, 04:00 PM   #32
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I voted but after reading all the posts not sure I should have. I'm retired, as of this month but my husband is not. That said, I still plan for us to live on his income and my passive income, taking nothing away from investments in the foreseeable future. This will allow us to pay for all essentials, discretionary and then some (saving still) . Neither are we applying for SSN for at least another 5 years since we are 58 yrs old (if then).
What is guaranteed at that point should be both of our SSN's + passive income which will still cover 100% essentials and discretionary without having to go into our investments.

For the picture to change, drastic things would have to happen. Doesn't mean it can't happen but is not likely.
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Old 12-30-2013, 04:04 PM   #33
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In hindsight I should have met my husband 10 years sooner, had kids 10 years sooner, and not have to have complicated spreadsheets to see if the nest egg is big enough to fund my early retirement. But... that's not the way life worked out.
You and me both. Of course, think of my poor DH. When he and I started dating, his youngest daughter was in her second year of college. I'm sure he was starting to think that he would soon be free of child related needs (he had 3 children). But, I had never been married and wanted kids. He was actually OK with it...but it has led to him now being 66 and our youngest child just graduating from high school... And, yes, it does complicate the retirement scenarios...
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Old 12-30-2013, 04:20 PM   #34
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We had our first born when we were 29. I thought we were a bit late, and it was, compared to our parents who had children in their early 20s.

Yet, now we are just 57, our children are already 24 and 28 and fully independent. Of course we were financially independent when we were 20. Oh, how things have changed. People live longer, and so they also take longer to mature.
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Old 12-30-2013, 05:29 PM   #35
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You and me both. Of course, think of my poor DH. When he and I started dating, his youngest daughter was in her second year of college. I'm sure he was starting to think that he would soon be free of child related needs (he had 3 children). But, I had never been married and wanted kids. He was actually OK with it...but it has led to him now being 66 and our youngest child just graduating from high school... And, yes, it does complicate the retirement scenarios...
Gotcha beat - youngest will graduate when DH is 69.
I'll be 59.

I have to thank you again for the tip you gave me way back when I first joined about kids and SS. That made a big difference in our complex spreadsheet planning. I was clueless about it till you pointed it out to me. You rock, Katsmeow!
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Old 12-30-2013, 05:43 PM   #36
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Basically correct, understanding that losing everything is historically unheard of.
Unfortunately, there are ways of loosing everything. Like risky non-diversified investments, scams, "un-neccessary" (per HI) medical expenses of complex chronic illness, gambling/drug/alcohol problems, becoming target of an aggressive tort-claims lawyer, etc.
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Old 12-30-2013, 06:22 PM   #37
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We will have two main sources, my pension (DW gets 70% of that when I kick the bucket) and SS. Oh, and there's some life insurance on me. I told DW she has to wear black for a year before she starts partying with the pool boy.

I have not yet applied for SS but probably will somewhere around 65. That keeps DW comfortable if not a luxury world traveler. Much as I dislike the idea I'll wait until RMD's kick in on the 457 account as that's partially there to tide DW over to her SS FRA if I should be so inconsiderate as to die before then.
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Old 12-30-2013, 06:54 PM   #38
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I can't seem to find the article but I think it was by Wade Pfau. The point of the article was that in retirement, people didn't usually think that much about their necessary expenses versus discretionary expenses. That is, most people don't want to retire if they can only cover necessary expenses and - in practice - they actually see their "discretionary" expenses as being necessary to their happiness.

If I look at our budget when I'm 66. With DH's SS (he took at 62) and let's say I took at 65 then about 80% of our desired expenses would be covered by SS. Over 100% of our necessary expenses would be covered but I for sure really wouldn't want to only be able to afford those.
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Old 12-30-2013, 11:11 PM   #39
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I found it hard as well (in fact I didn't answer). While I do have SS and a small pension, I don't necessarily yearn for a certain percentage of our living expenses to be from highly reliable sources like SS and pensions. Yet, the reality is that once all of these are online, they will cover about 60% of our living costs and we could not be retired if we didn't have them. But if it was lower that would be fine with me as long as we have enough considering all sources available to me.
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Old 12-31-2013, 01:43 AM   #40
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Not sure how you would categorize a rising stream of relatively " safe" divs. 0bviously not guaranteed but maybe half of these could be compared to other more stable sources of income? If so we are at about 75% as divs are about 50% of our income with our private pensions being the rest. Gov't sponsored pension yet to come not even a rounding error.
Basic needs are pretty hard to define for us. Things we would call "necessities " might be otherwise for most other people. Hopefully we never need to change our definition.
We are lucking indeed.
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