Poll:What kind of adjustments do you make?

[Midpack]

I made pessimistic adjustments, but it’s because I may be retired for 40 years. If our portfolio suffers worse losses than past history, we’ll be fine. If money piles up in our portfolio, we’ll definitely adjust spending up in the decades ahead. It would be more painful to curtail spending when we’re much older, than it is today. Of course deciding when to spend more and how much is an open question, no easy answers.

Fortunately we’re completely comfortable with what we’re spending, so no need to spend more - even if we can afford it according to any retirement calculator or what success rate others plan on.

[audreyh1]

Some of these adjustments I don't consider pessimistic, but rather factual. Retiring 10 years before 65? Well assuming 40 year instead of 30 years is just the facts. Social security 25 or more years in the future? What can you safely assume about the availability so far ahead? That is definitely more of an assumption, but seems reasonable rather than pessimistic per se. Assuming it is going to be exactly the same as present seems a bit optimistic to me, especially with an impending shortfall where adjustments are going to be required.

[Lsbcal]

I use VPW with age to depletion of 110 and a retirement year of 1966. I find that in the worst case year of 1982 the portfolio does not go much below 40% of the inflation adjusted starting value. The idea is to always feel the cliff edge is far away.

It turns out that such assumptions work out well for our current spending. If I had to cut back on spending with these assumptions would I modify the assumptions? Hmmm...

Is this optimistic or pessimistic? Not sure about the wording of the OP.

[SecondCor521]

Quote:

Originally Posted by audreyh1 Some of these adjustments I don't consider pessimistic, but rather factual. Retiring 10 years before 65? Well assuming 40 year instead of 30 years is just the facts. Social security 25 or more years in the future? What can you safely assume about the availability so far ahead? That is definitely more of an assumption, but seems reasonable rather than pessimistic per se. Assuming it is going to be exactly the same as present seems a bit optimistic to me, especially with an impending shortfall where adjustments are going to be required.

Sure. Each person and situation is different, and what each of us considers optimistic/neutral/pessimistic can vary.

What I'm looking for is the kind of adjustment where one says, "Well, I expect Social Security to be there for me with a haircut...but just to be safe I'm going to ignore it altogether." So it's relative to what you consider neutral.

As I thought, most here make pessimistic adjustments. The ones I don't particularly understand are those who make adjustments both ways. I guess it is a search for more accurate predictions.

[ncbill]

Only pessimistic.

I also choose "significantly worse than average" market returns on Fidelity's retirement planner.

[kcowan]

When I managed the planning group for Megacorp, I always asked my planners to do a plus/minus 20% case and give conditions/assumptions for each case. We would spend most of the review on questioning the assumptions to establish a revised estimate.

I did the same thing when building the retirement plan. The plan has delivered on the positive side for 15 years (with a 2 year hiatus). We had built up enough buffer that that blip still stayed above the plan.

[Dtail]

Quote:

Originally Posted by ncbill Only pessimistic. I also choose "significantly worse than average" market returns on Fidelity's retirement planner.

Interesting.I answered the question more so from any adjustment on the expense side. I also use the above module for Fidelity, but don't think of it as pessimistic (despite the title) due to its success rate concept of 90% is comparable to the "normal" 95% success rate of Firecalc.

[daylatedollarshort]

Our retirement plan is to spend < (Social Security + pensions + TIPS interest (or equivalent)). This includes a mortgage that will be paid off so that gives us some buffer /more discretionary spending down the road. Plan B would be to spend principal, downsize or move some place cheaper. We don't use Firecalc, just my own spreadsheets crosscheck that with the Fidelity planner. We should have about the same net worth as we do today in inflation adjusted dollars no matter what age we live to, less long term care or other extraordinary expenses.

[Badger]

When making financial decisions for retirement I was a belt and suspenders kind of guy. First and foremost was to make sure that if anything was to happen to me then my wife would be well taken care of and not have to worry about having decent food to eat, medical care, or a roof over her head in a safe place to live.


Now that we are retired I feel I can relax and am confident this has been achieved. Suspenders have been retired too.



Cheers!