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Too many scenarios!!!! Help!
Old 05-17-2015, 06:34 PM   #1
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Too many scenarios!!!! Help!

My DW and I are planning on calling it quits in about 3-5yrs. We are 52 and 55, respectively now.

Each of us has a pension, and we each have great (for us) 401K amounts, nearly equal in all cases. I am saying this to indicate that neither of us has to worry about "leaving something" for the other one. All pensions, for example, are fine with us at single-life, etc. We can each claim the pensions starting now at different rates if we defer.

We have about 25-30% in taxable investments as well.

So, we can take pensions early upon retirement in, e.g., 2018 (me 58, DW 55) to keep from drawing too much from the investments prior to 59-1/2. Lump sum options also available. SS can be taken at 62 or 67 (don't need, and not willing, to go to 70).

Anyway, in planning, there are just too many different options! Nearly all of the firecalc scenarious come out at 100% if I include full SS, etc.

We are not adamant about leaving anything behind.

How do I "measure" best outcomes since firecalc always shows 100%? (we have meager cost of living plans by most accounts)

Should I use the maximum end-of-life amount (minimum always shows our starting amount), or the average balance reported, during the 50 years I input, as a measure of which claiming method for pension and SS starts is best? Just keep re-running it over and over with different SS starting dates, etc., and looking at the graphs?

Is there anything easier for this situation?

Thanks in advance,
R
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Old 05-17-2015, 06:56 PM   #2
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I love the "We've got so much that we're not sure what to do with all of it" dilemma. It's fun to imagine that.

If I had multiple choices with 100% survival, and didn't want/need to leave anything behind, I'd look at:

1) The plan that maximizes current income. Why not? Spend it while I can.

OR, better yet

2) I'd take dollars off the table at the beginning (eg set aside some of that 401k money) then run the plans with the remaining assets. I'd target 100% survival at some "comfortable" income level, which probably isn't the maximum that I found in (1).

When I've found the maximum amount I can set aside and still have 100% for my comfortable lifestyle, I'd say the money set aside is "fun money" that I can spend however I like, whenever I like. If I blow it all on a round-the-world cruise in the first year, fine, I still have enough left for a "comfortable" retirement.

Then, I would do stuff I enjoy.
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Old 05-17-2015, 07:08 PM   #3
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Thanks, Indie.

When I look at the scenarios, it appears that the STARTING amount has the most effect. A 5 or 10% difference in that starting amount as tremendous consequences 40 years later (as one would expect).

Quote:
Originally Posted by Independent View Post
I love the "We've got so much that we're not sure what to do with all of it" dilemma. It's fun to imagine that.
This sounds a bit over-dramatic than our reality. Our annual expenses will be less than $60K, all-up, for 40-50 years (barring a catastrophe).

Again, it's not about survivability for us, it just wanting to find a metric that shows that we are maximizing the choices we have and not giving them back to the gub-ment.

Thanks,
R
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Old 05-17-2015, 09:52 PM   #4
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Congratulations!

Hopefully all parents are either really rich/really insured or dead.
Plus neither of you have siblings.
I mention this as you are either willing to refuse to assist relatives in dire straits or should perhaps consider that 5% of your stash could be sucked up by unexpected assistance requests.
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Old 05-17-2015, 10:06 PM   #5
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Congratulations!

Hopefully all parents are either really rich/really insured or dead.
Plus neither of you have siblings.
I mention this as you are either willing to refuse to assist relatives in dire straits or should perhaps consider that 5% of your stash could be sucked up by unexpected assistance requests.
I can't imagine where this is coming from.
Lots of people post here all the time, it would be tiresome to grill all of them on their plans for sharing with other family members ("Your plan looks good, but you'd better plan to support your siblings, too!"). And why a 5% limit--seems a bit tight-fisted in the face of unknown requirements. How could anyone quit work when there are needy people out there.
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Old 05-17-2015, 10:22 PM   #6
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You might consider putting your situation into i-orp and trying various things like starting SS early or late, various times to sell illiquid assets, with or without Roth conversions, etc. The more options you work through, the more comfortable you might get with all of the scenarios, and which ones stand above the rest.

i-orp takes your current status, what you want to leave behind, and it should give you steady spending across the plan. i-orp tells you what you can spend, which is a somewhat unique feature in retirement planning tools.
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Old 05-18-2015, 05:52 AM   #7
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Originally Posted by sengsational View Post
You might consider putting your situation into i-orp and trying various things like starting SS early or late, various times to sell illiquid assets, with or without Roth conversions, etc. The more options you work through, the more comfortable you might get with all of the scenarios, and which ones stand above the rest.

i-orp takes your current status, what you want to leave behind, and it should give you steady spending across the plan. i-orp tells you what you can spend, which is a somewhat unique feature in retirement planning tools.
Thanks!! Looks like just what I was looking for!
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Old 05-18-2015, 06:14 AM   #8
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I haven't tried i-orp, but sounds similar to ESPlanner(www.esplanner.com). So, OP might be interested in checking that one out as well.
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Old 05-18-2015, 06:28 AM   #9
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You might try reading this thread about Variable Percentage Withdrawal. It should be a good option for those who don't want to leave a large nestegg behind.

VPW - Best Withdrawal Calculator I've seen to date.....
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Old 05-18-2015, 09:14 AM   #10
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Originally Posted by FIREmenow View Post
This sounds a bit over-dramatic than our reality. Our annual expenses will be less than $60K, all-up, for 40-50 years (barring a catastrophe).
Sorry, I was being a little to flippant there.
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Old 05-18-2015, 09:50 AM   #11
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Originally Posted by Homebrew View Post
I haven't tried i-orp, but sounds similar to ESPlanner(www.esplanner.com). So, OP might be interested in checking that one out as well.
I have experience with both esplanner and i-orp. For me, esplanner didn't work because it did not take into consideration the Obamacare cliff, and also didn't allow pulling from 401k at age 55. That put me into a "borrowing constrained" situation unnecessarily. So it wouldn't optimize in my case, but YMMV. You are right, though, that both take the reality of the current situation, some parameters for growth and inflation, and prescribe a plan for level spending.

Quote:
Originally Posted by Fishingmn
You might try reading this thread about Variable Percentage Withdrawal.
i-orp offers several spending scenarios. "level spending" (indexed for inflation, of course), is the simplest, but maybe not the most realistic. There is also "reality retirement planning" based on Ty Bernicke research, "changing consumption" based on David Blanchett research, and "lifecycle of spending" based on S. Katherine Roy research. I've only used level spending.
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