I want to spend as much as possible from 55-70

[corn18]

How can I model this? Right now, all my expenses are in my model and I have 100% Ps. The model says I can spend $25k / year on BTD from 55-70 (I have other inputs for after 70, so let's focus on 55-70). Great. But, If remove the BTD from the model, I can pull out a chunk of money and still maintain 100% Ps on the base model. To illustrate:

$2M portfolio = 100% Ps with $25k / year BTD
$1.5M portfolio = 100% Ps with no BTD

Ok, so now I have $500k to play with and I want to spend it all between 55-70. I will use a variable percent withdrawal (VPW) for this. The VPW worksheet show that I can start with $40k. Then you withdraw the percentage the worksheet says each year. If the portfolio tanks, you withdraw the prescribed % but the dollar amount is less and vice versa. Basically, I want to spend as much as possible as early as possible without risking my base portfolio.

I think I can just model this in my spreadsheet and not have to create a separate account at Fidelity. Makes life simpler.

Does all this make sense? Is it a good idea?

 

[Happyras]

Sounds like a good plan to me, the hard part is really doing the BTD. We can spend a lot more than we do, it is just hard being frugal all your life.

 

[finnski1]

Sounds like a good plan to me, the hard part is really doing the BTD. We can spend a lot more than we do, it is just hard being frugal all your life.

Same here. I will be 62 in May and the wife just turned 65. Gotta find ways to spend over the next 10-15 years!

 

[pb4uski]

What is BTD?

 

[trumpeting_angel]

Blow That Dough, I believe!

 

[bbbamI]

Blow That Dough, I believe!

I hope so....instead of Bite The Dust...

 

[anothercog]

I don't know how to model but I'm assuming the bulk of our spending in retirement will be travel. In our younger years we will hopefully have more adventurous travel in less developed countries that likely won't have us spending too much. We would then ramp up that spending to more comfortable (luxurious) travel in more expensive countries as we get older. By the time I'm 70 I plan to hire a team of beautiful women to sherpa me around on a golden carriage. I'll throw in a few pool boys for DW too.

 

[DawgMan]

How can I model this? Right now, all my expenses are in my model and I have 100% Ps. The model says I can spend $25k / year on BTD from 55-70 (I have other inputs for after 70, so let's focus on 55-70). Great. But, If remove the BTD from the model, I can pull out a chunk of money and still maintain 100% Ps on the base model. To illustrate:

$2M portfolio = 100% Ps with $25k / year BTD
$1.5M portfolio = 100% Ps with no BTD

Ok, so now I have $500k to play with and I want to spend it all between 55-70. I will use a variable percent withdrawal (VPW) for this. The VPW worksheet show that I can start with $40k. Then you withdraw the percentage the worksheet says each year. If the portfolio tanks, you withdraw the prescribed % but the dollar amount is less and vice versa. Basically, I want to spend as much as possible as early as possible without risking my base portfolio.

I think I can just model this in my spreadsheet and not have to create a separate account at Fidelity. Makes life simpler.

Does all this make sense? Is it a good idea?

I cant's say I fully understand the question as you ask "how can I model this" and then you say "the model says...". What are "Ps"? I will take a swag... NewRetirement Planner Plus allows you to model specific one-off withdrawals in any given year allowing you see how it affects the success of your over all plan.

 

[Out-to-Lunch]

Another approach is to use the "Other Income/Spending" tab in Firecalc. The small problem is that those entries last forever, i.e., until you die. You can solve this by setting up additional spending now, and then put in an additional, offsetting "pension" starting when you are 70.

Also, FIcalc allows you to do this directly.

 

[corn18]

The problem I am having is if I include the Blow That Dough (BTD) in the models, it applies the success criteria to the total portfolio. That means if I want to see how much I need for 100% Probability of Success (Ps), I have to include the BTD spending. It's easy to fix that by just leaving out the BTD spending and making sure that is 100% Ps.

But I don't care if I have 100% Ps with the BTD spending. It's play money. I want to spend as much as possible early. If it is included in the model, I can spend $25k from 55-70. With 100% Ps, there is a very high probability I could have spent more. So I want to use VPW to spend that $500k. I start @ $37k and withdraw a predetermined percentage each year. Maybe the market tanks and I get to spend less, but that's how VPW works.

Anyway, the easy answer is just to pull the $500k for BTD out of my model and track it separately. I've done that and it's good to go. The next problem I need to solve is tracking withdrawals. Out of plan withdrawals are less easy to track.

 

[davebarnes]

I have $500k to play with and I want to spend it all between 55-70

I will PM you with my ACH information.
Feel free to send me the entire $500K.

 

[corn18]

I will PM you with my ACH information.
Feel free to send me the entire $500K.

AHHHHHHH!!!!!

I figured it out. I just needed to run 2 parallel models: one for the base budget and one for the base budget + VPW BTD.

The scary thing is I just reviewed this change of modeling with my wife. All she heard was "we have $500k to spend on whatever we want."

I do like how this turned out. It is nice being able to have the base budget @ 100% Ps no matter what happens to that $500k.

 

[Midpack]

I totally get the rationale and I’d love to plan on a 15 year BTD spending plan early in retirement while I can still enjoy it. But uncertainty about potentially (much) higher medical expenses later in life prevent me from doing it. I hope to be one of the lucky ones but I’m not confident we can count on spending less overall later in life... YMMV

 

[Huston55]

The problem I am having is if I include the Blow That Dough (BTD) in the models, it applies the success criteria to the total portfolio. That means if I want to see how much I need for 100% Probability of Success (Ps), I have to include the BTD spending. It's easy to fix that by just leaving out the BTD spending and making sure that is 100% Ps.

My understanding of VPW is that you're supposed to include the whole portfolio in the annual evaluation to calculate acceptable annual spend. So, why wouldn't you just use the amount VPW gives you and subtract your expenses to get your annual BTD amount?

 

[corn18]

My understanding of VPW is that you're supposed to include the whole portfolio in the annual evaluation to calculate acceptable annual spend. So, why wouldn't you just use the amount VPW gives you and subtract your expenses to get your annual BTD amount?

I don't like VPW for my base budget. I like starting with 100% Ps for my base budget in firecalc and run with that. My base budget is just that, a base. I never want to spend more or less than that unless I make changes. VPW goes up and down. That won't work for my base budget.

 

[zekeboz]

AHHHHHHH!!!!!

I figured it out. I just needed to run 2 parallel models: one for the base budget and one for the base budget + VPW BTD.

The scary thing is I just reviewed this change of modeling with my wife. All she heard was "we have $500k to spend on whatever we want."

I do like how this turned out. It is nice being able to have the base budget @ 100% Ps no matter what happens to that $500k.

@corn18

Try the following modeling program from The Flexible Retirement Planner - https://www.flexibleretirementplanner.com/wp/

Similar in nature to FIRECALC but has a number of advantages in terms of setting granular expense / income events. I have used the downloaded version for a couple of years and like it over other platforms for the reasons above.

 

[corn18]

@corn18

Try the following modeling program from The Flexible Retirement Planner - https://www.flexibleretirementplanner.com/wp/

Similar in nature to FIRECALC but has a number of advantages in terms of setting granular expense / income events. I have used the downloaded version for a couple of years and like it over other platforms for the reasons above.

I have used the flexible retirement planner (FRP) extensively. I got tired of keeping up inputs to both firecalc and FRP, so I just incorporated them in my spreadsheet.

 

[corn18]

Interesting result. The Ps with the $40k / year included in the base budget is 90% in firecalc. Ps of just the base budget is 100%.

 

[iloveyoga]

I retired at 54 so I am halfway to 70 already, how can that be? I guess I need to do more BTD.

 

[corn18]

Just wanted to post an update.

If I put all my BTD into the 100% Ps model, I have $28k / year of BTD from 55-70. That's pretty good since we were planning on $25k / year.

If I put none of my BTD into the 100% Ps model, I have $39k / year of BTD from 55-70.

While I like the idea of being able to spend more, I am also attracted to the less risky aspect of putting it all in the 100% Ps model.

Regardless, the exercise has been very useful. We'll leave the BTD budget @ $25k / year. If we want to splurge on something, we know we have a good buffer to be able to do that. And if we hit bad SORR, we can flex easily.