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second set of eyes -check spending level
Old 08-04-2013, 09:59 AM   #1
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second set of eyes -check spending level

I would appreciate your input on my estimated spending level.
I'm from Pennsylvania, no state tax on 401K,IRA,pensions.
My Excel sheet indicates I will have $81K in expenses (retire 2013). For federal tax I'm using the tax table directly (probably worst case) and get 17K. PA state tax is 3% so I'm using 20K for total of fed and state taxes. Property,school,local taxes are already included in original expenses. I'm excluding from portfolio monies for 2 year buffer. This is what I input:

spending level 101K
portfolio value 880k
35 years

DW on disability 18K
DW pension 31.2k
I entered DW as pension of 31.2+18=49.2K with COLA

My SS 20.2K at 2015 (age 62) no cola
Retire 2013 0 additional savings

Model cpi, constant spending model

Port fees 0.18%, total market 1871, 30 yr treasury, 60% equities

Port changes -75K/2013 mortgage -25k/2014 wedding

I get spending level =109K or start portfolio value = 648K

Company offers retiree medical approx. 15K/year essentially COBRA pricing

See any holes or advice? Thanks.

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Old 08-04-2013, 10:18 AM   #2
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Taxes look high. What I would suggest is that you do a trial federal and state tax return using TurboTax with income and deductions that you expect in retirement. If you don't have TurboTax, you can use Taxcaster.

Medical looks high too. After you have your trial tax return done, take your AGI and see what Obamacare subsidies you will be eligible for, if any.

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Old 08-04-2013, 12:46 PM   #3
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With that amount of pension/SS you look to be in great shape. You can always adjust your spending if needed.

Don't see any holes here. Enjoy!
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Old 08-04-2013, 02:51 PM   #4
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The company has retiree medical plan. Depending upon years of service they contribute a percentage but only up to a cap of approx. $900. Any costs after that are on me. Initially, I did not realize there was a cap so I thought it was a good deal. I will be paying 1200 - 1500 per year. Years back my DW had cancer and we had to use her CoBRA since I was not working at the time. When I got back to work the cobra went away. The price I will be paying for medical is right up in that cobra range. I was a little surprised this mega- company didn't provide something better by leveraging (large number of worldwide employees) but it beats nothing. I feel that I need to stay with that plan since anything that Obama offers will most likely be inferior and I can't afford to have second rate medical for my DW condition. Of course the company can terminate this benefit at any time. So much for some feeling of security! I hope to reach the 10% of AGI to get some tax benefit. We'll see.
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Old 08-04-2013, 07:11 PM   #5
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Originally Posted by engr View Post
I feel that I need to stay with that plan since anything that Obama offers will most likely be inferior and I can't afford to have second rate medical for my DW condition.
That assumption, without actually comparing policies and running the numbers in a spreadsheet, could be costing you a lot of money.

What if the ACA plan is better than the one your company is offering? Or has a much lower out of pocket maximum?

Instead of reaching the 10% max for health care costs, I hope to arrange my MAGI to have $100 a month after subsidies ACA health care premiums, and have those deductible as a business expense. But you have to do what works for you.
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Old 08-05-2013, 09:09 AM   #6
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You are saying you need 101k in income with 69.4 k from fixed income streams . That leaves about 31.6 k from your portfolio of 880k. I would be a little leary of anything higher than a 3% withdrawal rate ( 26400) So, I think you'd be pushing it a little. I would not plan on this providing more than 95k in income.

"My SS 20.2K at 2015 (age 62) no cola"

The SS would have a cola .
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Old 08-05-2013, 09:40 AM   #7
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I hate to bring up the negative. But does your wife's pension have spousal coverage if she predeceases you? Disability will go away, also, if she passes before you. I have a lot of cancer in my family and my husband family is full of heart disease risk - so I try to model worst case scenarios for income streams in my retirement planning.

You might consider life insurance to cover the budget gap if those income streams are taken away prematurely.

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