Age 52 How much do we really need to FIRE?

[momoney]

In my opinion, unless your are very, very smart or very, very lucky in stock holdings, you’ll likely need to work in some capacity until you are 55, so you have 35 years of good earnings which your SS benefit is calculated.

I started at 15. My earnings record shows 36 years (2023 not listed yet) of earnings. Can't say they are all good earnings years.

If I were still employed at the same salary and worked until 67, SS says I'd get another $4152 a year. If I take a low wage job until 67, SS says I'd get an additional $660 a year.

 

[momoney]

Yes- I was thinking the spousal benefit is 50% of the higher earning spouse. SS is very confusing. There are individual benefits and spousal benefits.

I like Toms Book for an overview. And he will answer your question via email if it's not covered in his book. For instance, a familiy member was married to a man-9 years, divorced him, remarried him and he passed 8 months later. He was able to give her advice. He is a former SS employee

https://amzn.to/3rU3AD1

Adjusting SS for me and spouse gives me $1,225,000 in FIREcalc.

$3115 for me and $1557 for spouse.

(I double checked SS site and it's $3115 with no future earnings instead of $3200.)

This exercise really helped me out. Thanks everyone.

 

[Dtail]

Adjusting SS for me and spouse gives me $1,225,000 in FIREcalc.

$3115 for me and $1557 for spouse.

(I double checked SS site and it's $3115 with no future earnings instead of $3200.)

This exercise really helped me out. Thanks everyone.

I just put in the numbers with the assumption of no cola pension and 50% stock holdings and get roughly the same answer as you.

 

[pjigar]

Don't "calculate" your spending. "Find out" your spending. Go back to your credit card/bank statements and see how much you actually spent in last 12 months. Add estimated differed/lumpy expenses (AC, furness, roof, car, etc.). Add future taxes. Add ACA cost. Then you get your "real" expense in retirement. Retirement expense is the most important (and overlooked) number to the retirement calculators.

 

[momoney]

Don't "calculate" your spending. "Find out" your spending. Go back to your credit card/bank statements and see how much you actually spent in last 12 months. Add estimated differed/lumpy expenses (AC, furness, roof, car, etc.). Add future taxes. Add ACA cost. Then you get your "real" expense in retirement. Retirement expense is the most important (and overlooked) number to the retirement calculators.

I looked up as many expenses as I could think of and plugged them into the retirement expenses section on Fidelity.

Wouldn't I keep my emergency fund going for big items like HVAC or a major car repair? That's how I purchased the roof. I used emergency savings and replenished that fund with discretionary.

 

[pb4uski]

I'm not the OP, just the complainer! As I've said, I've ran it plain, $60k income, $1.74M nest egg and 35 yrs, no problem 100% success.
Then I add in the SS and pension on the "Other Income/Spending" Tab.
It doesn't change a thing. Why?

What do you mean by "it doesn't change a thing"? It can't ever get more than 100%. Below are: 1) $60k spending, $1.74m portfolio and 35 years and 2) same but with $50k SS starting in 2036. Both 100% but definitely different.

1) $60k spending, $1.74m portfolio and 35 years

FIRECalc looked at the 118 possible 35 year periods in the available data, starting with a portfolio of $1,740,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 118 cycles. The lowest and highest portfolio balance at the end of your retirement was $17,123 to $17,984,125, with an average at the end of $4,932,376. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 35 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.

2) $60k spending, $1.74m portfolio and 35 years with $50k SS starting in 2036

FIRECalc looked at the 118 possible 35 year periods in the available data, starting with a portfolio of $1,740,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 118 cycles. The lowest and highest portfolio balance at the end of your retirement was $1,740,000 to $21,057,784, with an average at the end of $7,252,404. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 35 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.

 

[Music Lover]

Medical science is constantly changing. I'd rather die with a million in the bank than try to live another 5-10 years destitute and at the will of the state not matter how low that possibility might be.

There's a lot of gray area in between both of your examples. For example, I'd rather live a little more frugally than work 5 more years.

 

[Time2]

What do you mean by "it doesn't change a thing"? It can't ever get more than 100%. Below are: 1) $60k spending, $1.74m portfolio and 35 years and 2) same but with $50k SS starting in 2036. Both 100% but definitely different.

1) $60k spending, $1.74m portfolio and 35 years


2) $60k spending, $1.74m portfolio and 35 years with $50k SS starting in 2036

What I mean is, after adding SS and Pension, I should be able to reduce the Portfolio amount and still get 100%. I can't, after adding SS and pension, if I reduce the portfolio below $1.74M the success rate drops below 100%. It is odd, I don't know what I am missing I have used Fircalc several dozen times and not had any problem.
Another day, I will try again.
OK, maybe I am just expecting to much change with the SS and pension.
First I set Portfolio at $1,250,000 and spending at $60,000 and 35 years.
The result is 72.0%.
Now in the "Other Income/Spending tab, I enter $38,400 and $17,200 SS to start 2036 and $4,440 pension to start 2031 and Highlighting the circle for Pension Income.
Then hit submit, I do get a tiny change up to a 73.7% success.
Now I run to see the minimum portfolio for 100% success with spending at $60k for 35 yrs, I get $1,740,000. Then I add SS of $38,400 and $17,200 in 2036 and pension of $4440 in 2031. I then can reduce the portfolio to $1,703,000 before not having 100% success.
I'm leery that having $60,040 additional income for 20 of the 35 years does not reduce the needed portfolio more.
Still confused, must be me, but I'm trying.

 

[ivinsfan]

I looked up as many expenses as I could think of and plugged them into the retirement expenses section on Fidelity.

Wouldn't I keep my emergency fund going for big items like HVAC or a major car repair? That's how I purchased the roof. I used emergency savings and replenished that fund with discretionary.

You are going to be surprised to find out what Medicare will cost you for 2 people. The main purpose of intense budgeting before retiring is to be sure you haven't overlooked some expenses.

 

[GravitySucks]

I'm not the OP, just the complainer! As I've said, I've ran it plain, $60k income, $1.74M nest egg and 35 yrs, no problem 100% success.
Then I add in the SS and pension on the "Other Income/Spending" Tab.
It doesn't change a thing. Why?

Do you want it to show 120% success?

 

[Fermion]

Do you want it to show 120% success?

It should never show 100% though in my mind. 99.9% because there is always the meteor or something.

 

[Jackietime]

I'm not sure if anyone noted the importance of including taxes with the expenses estimate and the sad fact the social security goes away upon the death of a spouse. Probably an unnecessary reminder for the OP.

 

[Time2]

Do you want it to show 120% success?

Not at all. After I find the minimum portfolio that achieves 100%, I think adding the SS and pension should reduce the minimum portfolio need to achieve 100% success. In my runs, it only reduces the minimum portfolio $37,000. I'm pretty sure it should be a lot more than that.
Could some one run my numbers so I can see where I'm going wrong?
First the simplest run $60k income, $1,740,000 portfolio and 35 years.Please drop the $1,740,000 down to $1,730,000 to verify the success drops below 100%, so we agree that $1,740,000 is the minimum portfolio for 100% success.
Now go to the 'Other Income/Spending' Tab and add $38,400 and $17,200 and the year 2036 to the SS section. Now move down page to pension and highlight the bubble for pension, put in $4440 and the year 2031, uncheck inflation adjust and hit submit. Now go back to portfolio and start reducing that until you no longer hit 100% success, what is the minimum for 100% success now that SS and pension have been added?

 

[Alex The Great]

Before taking SS/pension, it is more about the income than about the net worth. I'd say stable regular income is extremely important during the first years of retirement. To this extent, firecalc and other calculators are useless. For myself, I estimate it by adding up interest from CD/bonds and dividends together along with cash available to cover unexpected expenses. At least it may give some clue what to expect as market is unpredictable and it is hard to rely on capital gain.

 

[Sunset]

OP - Using your number of $53K plus $9K per year.

You will spend $907,800 in today's dollars (actually more with inflation) to go from age 52 to 67.

Note at age 65, Medicare will cost $2K per person/yr plus a supplemental of another $1,200 per person/yr.

Why did you pick age 67 for SS ?

 

[Lemonade]

Not at all. After I find the minimum portfolio that achieves 100%, I think adding the SS and pension should reduce the minimum portfolio need to achieve 100% success. In my runs, it only reduces the minimum portfolio $37,000. I'm pretty sure it should be a lot more than that.
Cwhat is the minimum for 100% success now that SS and pension have been added?

I ran your numbers and get a minimum portfolio value of $1,064,628 as the starting portfolio balance with both SS and the pension added in.

One of those SS numbers should probably have an end date (unless they both expire on the same day!), but I did not make that change.

 

[Time2]

I ran your numbers and get a minimum portfolio value of $1,064,628 as the starting portfolio balance with both SS and the pension added in.

One of those SS numbers should probably have an end date (unless they both expire on the same day!), but I did not make that change.

Well that is the more reduction in the needed portfolio that I would expect.
Did you use the 2036 and 2031 years for starting SS and the pension respectively?
Am I right when you say and "end date" that you mean one SS check will stop when someone dies?
Still don't know why I can't get a reasonable output on Firecalc. Later I'll try on my sons computer.
Thanks for running that for me.
The OP was not really clear that he had $1,750,000 as his starting portfolio or if that is just what he found he needed to spend $62,000 a year. (I had for some reason used $60,000 a year) By adding in the SS and pension he does not need that much, as you have found.
(but, I can't )

 

[pjigar]

I looked up as many expenses as I could think of and plugged them into the retirement expenses section on Fidelity.

Wouldn't I keep my emergency fund going for big items like HVAC or a major car repair? That's how I purchased the roof. I used emergency savings and replenished that fund with discretionary.

If you are OK replenishing your emergency fund from discretionary expenses then it's fine but know that you are going to take a cut on some other expenses. Are you OK with that? Is your discretionary expenses large enough to pay for all lumpy expenses that will come along?

 

[momoney]

The OP was not really clear that he had $1,750,000 as his starting portfolio or if that is just what he found he needed to spend $62,000 a year. (I had for some reason used $60,000 a year) By adding in the SS and pension he does not need that much, as you have found.
(but, I can't )

Correct. I only stated what my expenses were. The $1,750,000 was what I thought I needed to generate $62K. But I clearly made a mistake and I'm thankful for the help in pointing that out.

 

[momoney]

Why did you pick age 67 for SS ?

I picked it because I have easy access to that number on my SS statement. What is the best way to find the optimum claiming age? Get SS amounts for each age and plug them into FIREcalc?

 

[momoney]

Note at age 65, Medicare will cost $2K per person/yr plus a supplemental of another $1,200 per person/yr.

Ok, that's less than what I'm currently budgeting for ACA.

 

[latexman]

I picked it because I have easy access to that number on my SS statement. What is the best way to find the optimum claiming age?

Try opensocialsecurity.com

 

[momoney]

If you are OK replenishing your emergency fund from discretionary expenses then it's fine but know that you are going to take a cut on some other expenses. Are you OK with that? Is your discretionary expenses large enough to pay for all lumpy expenses that will come along?

It probably would be tight, but doable. My purpose of this exercise was figuring out what the minimum nest egg amount was that I could live off of if I truly had to. I'm not taking into account other options like moving to a lower cost/tax area or the possibility for a small inheritance.

 

[Sunset]

Correct. I only stated what my expenses were. The $1,750,000 was what I thought I needed to generate $62K. But I clearly made a mistake and I'm thankful for the help in pointing that out.

You will spend $907,800 in today's dollars (actually more with inflation) to go from age 52 to 67.

So how much more do you feel you need at age 67 when SS is being collected.
Realize that when one of you dies, the survivor does NOT get both SS, they get the larger amount, so basically a cut in income.

Living just on SS is not really fun, I know a fella that does and I can't say it's fun.

 

[Time2]

Glad to say I am having success using FireCalc today. I have no idea what was wrong. At one point I thought is was commas, because I removed the commas in 38,400 and suddenly I got 100%, then just to verify, I put the commas back in and nothing changed. Stumped!



I tried running a scenario as close to what info momoney gave us.

His SS $38,400, hers $17,200, both starting in 2036 and the pension of

$4,440 starting 2031 and I did assume it is inflation adjusted.
I get the minimum he should have as $1,050,000 for a 35 year retirement.


Momoney have you tried putting your info into Firecalc?