Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
FIRE Calc and Pension
Old 04-26-2013, 01:25 PM   #1
Recycles dryer sheets
 
Join Date: Feb 2013
Posts: 377
FIRE Calc and Pension

I am assuming that because I have a lifetime pension that my FireCalc would be 100%? There is no other income.
__________________

__________________
LinCella is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-26-2013, 01:42 PM   #2
Recycles dryer sheets
 
Join Date: May 2011
Location: Twin Cities
Posts: 434
Well - Income is half the equation. Are your expenses less than the amount of your pension income and is your pension indexed for inflation?
__________________

__________________
Fishingmn is offline   Reply With Quote
Old 04-26-2013, 01:47 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by linny727 View Post
I am assuming that because I have a lifetime pension that my FireCalc would be 100%? There is no other income.
Not a very good assumption unless your pension easily covers 100% of your planned budget and your pension is cola'd. Even then, you have to assume you'll have no extraordinary expenses pop up and that the cola formula your pension uses tracks your personal rate of inflation very closely.

Is your pension cola'd or not? What is the formula?

Have you plugged the numbers into FireCalc?

You said you have no other income other than your pension. Do you have an investment portfolio of any substance?
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 04-26-2013, 01:55 PM   #4
Recycles dryer sheets
 
Join Date: Feb 2013
Posts: 377
My pension has a COLA of 2% and will cover my expenses and allow for savings and fun. I'll also have an emergency fund of $10k. My medical is 100% paid for by employer. I have a 457 but will be cashing it out to purchase a home, it's small - will be about $75k in June 2014. I'm retiring in June 2014.
__________________
LinCella is offline   Reply With Quote
Old 04-26-2013, 02:47 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,281
Quote:
Originally Posted by linny727 View Post
My pension has a COLA of 2% and will cover my expenses and allow for savings and fun. I'll also have an emergency fund of $10k. My medical is 100% paid for by employer. I have a 457 but will be cashing it out to purchase a home, it's small - will be about $75k in June 2014. I'm retiring in June 2014.

Hmmmm, I don't see any direct way to model a fixed 2% 'COLA-lite' in FIRECALC.

Basically, you have close to zero portfolio, so if long-term inflation exceeds 2% (likely), your spending will need to be adjusted downwards over time. For an early retirement, inflation can be a huge factor. And/or build up some buffer by saving some of it in the early years.

You could enter your pension as non-inflation adjusted starting this year, and then in 13 years enter an amount to show the added 2% compounded, and do it again after 26 years (splitting a 40 year retirement). That's not perfect as it doesn't include the previous 13 years increases, and there are only three entries allowed. You could add some lump-sum additions on the "Portfolio Changes" page to compensate.

Bottom line is, I expect you will need to trim your initial spending significantly lower than the total pension, and save some of that against future inflation.

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 04-26-2013, 02:54 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
braumeister's Avatar
 
Join Date: Feb 2010
Location: Northern Kentucky
Posts: 8,603
I would tend to agree with ERD50. Historically, inflation has averaged around 3.5% so your 2% COLA is going to be OK for only so many years.

Figure how many years your retirement is likely to last, and what your essential expenses actually will be. Only then can you begin to calculate your status.
__________________
braumeister is online now   Reply With Quote
Old 04-26-2013, 03:49 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by linny727 View Post
My pension has a COLA of 2% and will cover my expenses and allow for savings and fun. I'll also have an emergency fund of $10k. My medical is 100% paid for by employer. I have a 457 but will be cashing it out to purchase a home, it's small - will be about $75k in June 2014. I'm retiring in June 2014.
Enter one half of your pension into FireCalc as non-cola'd. Enter the other half as cola'd. That should get you a reasonable swag for how your pension will perform vs. the CPI (at least historical CPI).

Enter you expenses as you've planned them.

Depending on how much your pension exceeds your initial expenses (you said the pension is large enough you'd be saving initially), you'll be OK for some time. Eventually, it's likely that the 2% cola will fall victim to inflation and you'll run out of money. This could be several decades down the road.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 04-26-2013, 07:52 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 5,887
Assuming your pension is taxable (Federal, and state/local if those apply), be sure to consider "taxes" when you add up your retirement expenses.

Amethyst
__________________

__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success to be able to spend your life in your own way. Christopher Morley.
Amethyst is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 08:29 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.