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What is ‘good enough’ when it comes to Planner success rates?
Old 07-12-2014, 10:07 AM   #1
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What is ‘good enough’ when it comes to Planner success rates?

I see a lot of people’s assets on here and I think ‘That’s a no-brainer, retire’, but when it comes to me, it’s somehow different.

I have use Fidelity Retirement Income Planner, FireCalc, Flexible Retirement Planner, Quicken Lifetime Planner, AARP calculator, MarketWatch planner, my own spreadsheets, you name it. I have used literally 100’s of them in the past year. All seem to be 100% success.

I even discount rental income by at least 20% and increase personal expenses by 100%, just in case, and they all still work. I plan for $100K in spending, and I do not spend $40K now. But I do want to travel the USA a bit with an RV (5th wheel) that I still need to purchase. Trust me; I have no love for my job. It’s easy, and great money, but I would take a severance in a heartbeat.

But I still think I need to go until 7/1/2016 at my ‘real’ job, just to be sure. Part of the hesitation are the many ‘what ifs’. What if the market performs way worse? What if inflation is extreme? What if my expenses are a lot more? What if taxes go up a lot? What if a polar bear (or asteroid) comes through my house and it somehow impacts me negatively?

Rental income is not as sure as a pension or Social Security. But I have $297K in gross income today, with just at $100K going to the large expenses of mortgages, taxes and association dues. Much of the rental income is offset by depreciation, and there are many other business write-offs, so my tax bill should be lower too.

So there should be at least $100K there for the foreseeable future, until any small pensions (~$14K) and Social Security (close to max) and I start at my investment accounts ($1M now). BUT, I still have hesitation.

Of course I am not calculating into the picture “what if my expiration date is closer than I think”. It’s also a real mental game for me to picture myself actually drawing from any retirement account, not adding to it, as I have been squirreling money away for so long. I will want to save some no matter what, because that’s just what you do.

So, when you did your retirement budgeting and planning exercises, what success rate in the planners did you feel was good enough? And did you discount any income streams or add to any expenses ‘just in case’?

Did you ever wish you would have worked longer as you did not have enough income in retirement? (Not those of you who go back for fun). Or actually had to pick up a minimal wage job because you needed the money?
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Old 07-12-2014, 10:19 AM   #2
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Sounds to me like you are not mentally ready to retire yet. No harm in working another year if it makes you feel better.
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Old 07-12-2014, 10:32 AM   #3
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Don't know if this is what your are looking for, but here goes.

I used a spending number that is 66% of my annual income from pensions, SS, and savings. Now this 66% spending number was padded. My actual spending, including travel and health spending is about 44% of our annual income. So this leaves about 22% of allocated spending that is not spent each year. However, I plan on spending part, or maybe all of this on home upgrades/repairs, auto replacement, boat, and 'who know's what'. That still leaves 34% not allocated to anything! Have I missed something? Maybe, but we are living better in retirement than we ever did working! Part of that is the fact that the house is paid for, and the kids are visitors not residents.

Only regret is not going sooner!
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Old 07-12-2014, 10:35 AM   #4
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Before retirement I used 95%-100% in the various calculators and planners, and I calculated both with and without social security.

So far, retirement has involved a booming market and other fortunate financial events. I do not wish that I had worked any longer.
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Old 07-12-2014, 10:53 AM   #5
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Senator,
I used dozens of planners. The only two I put any faith in were Fidelity RIP, and Firecalc. I've learned here there are some others that are good too.

Yes I intentionally overestimated some things, health care, some miscellaneous expenses, and underestimated SS. I did a OMY and a half. Eventually I realized the stress from a j*b that I had grown to despise was killing me.

A final review with my Fidelity rep, was the epiphany. I was ready to transfer my 401k to Fidelity, when the rep suggested looking at my 401k for the 55 and separated from service clause. It's there so I'm taking 2% withdrawls from that till 59.5. No sense dying sooner with more than we needed.

My VP offered me a opportunity to consult after retirement. We were both shocked with my immediate 'hell no, you can't make me stay' response.
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Old 07-12-2014, 11:01 AM   #6
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"Good enough" is whatever results give you the confidence to retire. That number is different for almost every individual - what works for me probably won't work for you and vice versa.

OMY can be a good thing - or it can be a sad loss of opportunity. Only you can make the call.
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Old 07-12-2014, 11:10 AM   #7
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Mr. Senator,

Unless you shortchanged you life expectancy estimate, financially you should be well set for the retirement opportunities which lie ahead.

Make sure your retirement expenses include those new retirement expenses (e.g. Healthcare, travel, etc). With all the steps you took to buffer expense estimates, you have deleveraged many financial risks.

Just make sure nothing else is holding you back mentally from retiring and focus on retiring to something.

CUinFL
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Old 07-12-2014, 11:17 AM   #8
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The way I got past my fear was the reality that, yes, all of those things, and many more that I haven't thought of could happen. But the reality is they won't. But say they do, well if something that catastrophic occurred the reality is that even then you would be in a great position compared to the rest of the population.

Another way to look at it is imagine "I" wrote your post. What would 'You' tell me? Detach yourself from it and I think the answer will come to you.

Good luck as it is indeed a personal journey.
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Old 07-12-2014, 11:23 AM   #9
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Senator,

I feel your pain.

When I joined the board 2 years ago, I pronounced I was ready just about any time. And I think I am. But as you can see it is now TMY. And I'm thinking it will be another TMY (three this time).

My wild card? Life expectancy of both my father, myself and DW. Dad is living longer than anyone in our entire family. I have rafts of great uncles who never made it past 30. DW's family is living long. Looks like smoking killed most of the past generation. We don't have that issue.

I never counted on an inheritance. But now I realize Dad could live another 7 years or more, at which time me and my siblings will be *paying* for his care. That possibility has added an OMY to my list.

Now for me and DW, I'm thinking we need to plan for 100. Although... after watching the end years of my dad's life, I'm not sure I want to make it past 85.
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Old 07-12-2014, 12:10 PM   #10
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I always plan for 100 when I plan. Or 40 years, depending on how the planner works. Both parents have passed.

For me, it's more of a confidence thing. I always wanted to retire early, and now it's here. Sort of like a dog chasing a car.

I will manage my properties and do my HOA duties, including being a (lightly) paid property manager for the HOA. But it will be down to 40 hours per month, rather than 50 hours per week.

There are always ways to make the planners fail, and I always wonder of I will be the 1% that fails. Or a situation that has never occurred occurs.

I will not go more than two years; 7/1/2016 would be the latest. But it is a bit of an experience thinking about FIRE actually coming to fruition.
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Old 07-12-2014, 12:16 PM   #11
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I enjoyed my career although it was not particularly well paid. I went through all the various income planners that I could find and they all said I was in good shape to retire. Two things finally encouraged me to retire: my wife came home one day and said she handed in her resignation. She had enough and was not going to continue the insanity of administrators in public schools anymore. Her time left was more important and she was going to make the most of it. (She is a very active person) and the second was a serious back injury that left me with hardware in my back, chronic pain and minor loss of some motor control in one leg. Unfortunately most of the retirement plans then went south. No backpacking across Europe, camping, rock climbing, bike riding, or doing all the active things I was accustom to. Strangely enough riding a motorcycle with a back rest doesn't present much of a problem. So I still have that, travel, my garden, and beer/wine.

I didn't retire because I hated my job. I didn't have much of a choice. If I had known what my future condition would be I would have retired earlier to enjoy the time I had. The plus side is that we now will have more than enough to last. Something to consider if you already have enough.

Cheers!
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Old 07-12-2014, 01:06 PM   #12
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It is hard.

I was ready financially but not sure that I was ready emotionally. The enjoyment had mostly gone from my job at megacorp. Then, along came a new executive and I was downsized. The severance package and my pension did it for me. I suddenly realized that based on my lifestyle we could live and travel on the severance for 3-4 years-and then take an unreduced pension. My attitude changed completely.

My advice...with all the downsizing suss out whether you may be in line for a downsize w/a golden handshake. Nothing like it to my way of thinking. Makes the decision for you and gives you some extra financial cushion. I laid people off for years and always envied the packages. My turn finally came.....and in the end I was more than ready for it.
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Old 07-12-2014, 01:44 PM   #13
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Originally Posted by JoeWras View Post

... Dad is living longer than anyone in our entire family. I have rafts of great uncles who never made it past 30....

Now for me and DW, I'm thinking we need to plan for 100...
You may have a shot at a 100--as long as you stay off of rafts.
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Old 07-12-2014, 01:46 PM   #14
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Hmmm - I've posted this many times before but the short version goes like this.

I was layed off at age 49 with a planned retirement of age 63. Ballpark 25% of the nest egg I planned to accumulate.

I was an 'unemployed slacker' until I got an 'official' retirement check at age 55. In short I kept an under the radar low profile until I was externally anointed as early retired.

Hindsight says the mental adjustment was overdone - some temp work, selling off the rental (duplex) and my overly aggressive cheap atitude toward toward expenses made it easy.

Note that the original Dory36 posting - 33% That's My Story got me hooked on this forum in the first place.

heh heh heh - yep the mental adjustment seemed the hardest and was the easiest using good old hindsight.
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Old 07-12-2014, 01:48 PM   #15
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You may have a shot at a 100--as long as you stay off of rafts.


I need to stop using archaic language.
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Old 07-12-2014, 01:56 PM   #16
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I never really had any misgivings.... or regrets. I went through probably a dozen or so planners - Vanguard's financial planners, Financial Engines, FireCalc, Quicken Lifetime Planner and many others - and each gave me a green light (95% success was good enough for me).

I liked my job and the people I worked with. I made a lot and didn't have to work all that hard, but I was constantly "on call" and often worked odd hours coordinating with Asia and other parts of the world.

In the end, i concluded that continuing to work was simply increasing my kid's inheritance and that I had enough and had had enough - so I resigned. best decision I ever made.

So, why not NOW? Why not yer end 2014? or 7/1/15? You'll never get the time back.
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Old 07-12-2014, 02:04 PM   #17
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I went back and read the 33% post. I have actually figured out that 52% of my gross is what I actually need to be 'even'.

110,000 Gross
8,415 FICA
23,000 401K
4,231 Purchased vacation
16,836 P&I from Mortgage I no longer have)
57,518 Total
52.28%


In reality, I save quite a chunk of that too, at least $20K of it. That would only be 34%, which is about what Dory36 post said.

I guess it's just thinking about jumping in the 'deep' end and taking the plunge that make me nervous.

This forum is definitely a help. When you want to be a millionaire, talk to a millionaire. When you want to retire, talk to people that are retired.
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Old 07-12-2014, 02:12 PM   #18
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Planners have a lot of assumptions built in. But very few of them have any sensitivity analysis for those assumptions. For planners like FIRECalc, once you are in the high 90's there are only a very few cases remaining that bring you to 100. Because the numbers of cases are so small, it's hard to say that the likelihood of a 1930's type depression is just as likely now as it was in the past (for which records are available) or do all the changes between then and now (technology, communication, etc) change the odds appreciably. And what about the unknown unknowns, such as pandemic, alien contact, terrorism, or something else we didn't even think of. Surely those are worth a few percentage points of uncertainty, even in 100% scenarios.

So above mid-90% my expectation is that I am trying to indirectly measure margin of safety in the plan. Planners do not seem to be very good with that. That is the ability to adapt to an unexpected adverse chain of events. For me, the most likely such events seem to be health related because even though I an in good health and take good care, there's no guarantee against disease, accidents, strokes, cancer, etc, which would drastically alter my retirement scenarios. But there are plenty of other political, economic and environmental issues that are not accounted for in any planner I know of. So at some point under 100% it's probably as far as the planner can actually predict.
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Old 07-12-2014, 03:20 PM   #19
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... What if a polar bear (or asteroid) comes through my house and it somehow impacts me negatively? ...
When it comes to the extreme scenarios (which can't be ruled out), I figure that another 10-20% NW isn't going to make much difference, we're screwed.

But when it comes to having something more probable occur, causing expenses to be 10-20% higher than expected, then 10-20% higher NW covers it.

So I put in buffers, and that's it. If you try to plan for everything, you will work until you die. No thanks.

-ERD50
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Old 07-12-2014, 03:35 PM   #20
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Not having to work is nice. We would have semi-retired years ago if we had known how low stress and enjoyable it would be. A few years ago now we looked at the Consumer Expenditure Survey and realized we could live better than a normal, middle class life on what we had already saved, plus pensions and SS, and decided not to work full time any more.

We live near a lot of really nice parks. One has fountains and pretty mountain views. We sit in a Zen spot in the park many nights near a little fountain and stream and talk about how this sure beats working. Best of all it is free and in our area there are literally thousands of things like that to do that are free or low cost.

Our goal is to try to figure out how to live well and be happy in our retirement, also on less than half our retirement income. We have planned for 100% in the Fidelity RIP, with not drawing down principal, except for the college years.

One good resource for me was the book, What Happy People Know, by a director at the Canyon Ranch. He sees all sorts of fabulously wealthy people, and they all seem to think the same:

"No matter how much money people have, almost all of us want just a little bit more. But it never makes us happier. This is the failure of success."
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