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Old 02-24-2016, 05:03 PM   #141
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Originally Posted by jcretire77 View Post
I am probably repeating, so apologies - Looking at NPV of Social Security I found this interesting article -
It sounds like Kitces is saying that Social Security is similar to a government TIPS bond that will start paying in the future. I don't include it in my asset allocation, but I think I will add the NPV of my SS to calculate an "including SS" asset will make me feel better about the money I've been losing in equities, hehe!

Originally Posted by hnzw_rui View Post
Given I can't rebalance between SS/pension and my portfolio and there are age restrictions to when you can access those funds, instead of using NPV of SS/pension, I just reduce expenditures by the expected SS/pension benefit (adjusted by some safety factor). My planned WR is then based on that reduced amount.
I agree that you can't reduce the fraction of your assets that Social Security creates. If you buy Kitces idea that SS is like a TIPS bond, it would be part of your current asset allocation calculation and you could reduce your current bond holdings to a certain point, anyway.

The idea of reducing the spending in your model by the amount you receive as Social Security sounds like it will work. For me, having a model where expenses suddenly stepped-down seems kind of weird. But it's one way to model it, I suppose.
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Old 02-24-2016, 05:53 PM   #142
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Thanks for everyone's input on this topic. It has helped me feel more secure in our plan to draw 5% in our case before SS and see where things go. I fired 2 years ago and I am glad I did! It is hard to put a price tag on your time and freedom from the daily commut, email management, phone calls, employee reviews, company programs, new software, more restrictions and less control. That is how I can justify a slightly higher withdrawal rate of 5 % Until SS kicks in 3 years from now. My grand kids still want me to become their bus driver!!! Guess that wouldn't be the end of the world if we needed the extra income. Ha! I a, still pinching myself when I reflect on the mega Corp office environment. Now a have a beer and rejoice in the freedom!

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