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Off Chart Spending...Am I Entering This Correctly?
Old 01-21-2019, 08:30 AM   #1
Confused about dryer sheets
 
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Off Chart Spending...Am I Entering This Correctly?

I have been a bit wondering whether I'm entering the following retirement scenario correctly into FireCalc.

I am 58 and single. In two years (in January 2021), I plan to begin phasing into my retirement by transitioning from a full time employee (40 hr/wk) to part time (29 hr/wk) in my current job.

I'm electing to work part time for two primary reasons -- (1) to pay the bills so that I don't have to touch my retirement funds until I fully retire and (2) to maintain my company's health benefits. I plan to work part time for three years (until January 2024), at which point I'll be eligible for 18 months of Cobra benefits from my company which will carry me until I'm eligible for Medicare benefits at age 65.

* While I'm working full time, I will continue to add $24500 annually to my portfolio up through January 2021. (Once I begin working part time, my income will drop and it will be enough to cover my expenses, but not enough to contribute to my portfolio.)
* My mortgage will be paid off in January 2026. Annual mortgage payments are $25200.

On the Other Income/Spending tab, this is how I've entered the two above spending changes (one as positive, one as negative):
-- Selected "Off Chart Spending", entered $24500, year = 2021, unchecked the "Inflation adj" box.
-- Selected "Off Chart Spending", entered $-25200, year = 2026, unchecked the "Inflation adj" box.

On the Not Retired tab:
-- Entered 2024 as my retirement year, entered $24500 as my annual portfolio contribution.

On the Spending Models tab:
-- Selected "Constant Spending Power".

Is this correct?

If not, how do I enter this scenario into FireCalc? (I am a supporter, so I could make use of the Manual Entry feature on the Spending Models tab if necessary.)
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Old 01-21-2019, 08:59 AM   #2
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normalcy: looks good to me but is the 25100 for mortgage P&I only or does that include taxes? If so the reduction will be less than 25200. Also what about the income drop when you stop working?
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Old 01-21-2019, 09:16 AM   #3
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Hi normalcy, welcome to the Forum.

I don't think your model is quite working the way you want. Primarily, FIRECalc only applies Off Chart spending beginning with your retirement year or later, and it stops portfolio additions at your retirement year as well.

I think the best way to model your situation is to set your retirement year as 2021 with $24500 under "How much will you add...". It will automatically stop at 2021.

Since you are a supporter, I think your best bet is to manually enter zero spending in years 3, 4 and 5 (I think that would be 2021/2022/2023. All FIRECalc cares about is "retirement" spending.

Lastly, be careful about your mortgage - does it not include taxes and insurance? Or is that just the PI amount? TI continues, so your reduction may not be the full $25K.
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Old 01-22-2019, 02:31 AM   #4
Confused about dryer sheets
 
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Thank you for the replies. I will revise my entries in FireCalc per your advice.

Yes, the mortgage amount is P&I only, so I will update my estimates to account for the taxes and insurance separately.
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Old 01-30-2019, 07:44 AM   #5
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PS you can contribute 25k in 2019 per the IRS
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