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How much would YOU spend?
05-04-2019, 11:47 AM
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#1
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Recycles dryer sheets
Join Date: Mar 2013
Posts: 115
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How much would YOU spend?
What would you feel comfortable spending annually if you were in the following situation and retiring in 6 months? We have no children so have no need leave any legacy. We also have no LTC coverage so plan on paying those expenses from assets if necessary.
DH 62
DW 57
Invested assets:
2,500,000 total at Vanguard or equivalent broken down as:
1,586,000 retirement
860,000 nonretirement
55,000 Roth
Current allocation across all accounts 65/27/8 stock/bond/cash. While writing this out, I realize I have more in stock than I am comfortable with. I plan on reducing stock allocation to approx 55%.
SS and Pension:
Planning on taking his SS at 70 = 40k per year
Current pension = 9k per year until 2nd death, not inflation adjusted
Buckets:
Of the investment total, I am thinking to carve out $300,000 for a SS “bucket” allow 40k spending from age 62.5 to age 70 when his SS actually kicks in. I am taking my SS at 62 but not including it in retirement calculations as it will be only 12k per year. To be honest, his health is not great and at 62 he has already outlived his parents and sister. Assuming I outlive him, whatever I get will be some “frosting” and I don’t want to count on it.
Additionally, I am holding out a $100,000k bucket for a new car in the next couple of years and 1 or 2 years of unusually high out of pocket health costs or random lumpy expenses.
I have run scenarios thru Firecalc and know what it says, but that isn’t what I am looking for. What would YOU spend if this was your situation?
Summary:
$2,100,000 invested assets
+40k SS (or equivalent)
+9k Pension
Every opinion welcome!
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05-04-2019, 11:57 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
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$120 - $130K, including taxes.
__________________
Numbers is hard
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05-04-2019, 12:01 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,866
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Here's how I would look at it:
$300k carve out for DH SS bridge
$60k carve out for DW SS bridge
$250k carve out for LTC
That totals $610k. From your $2.1m, that leaves $1.5m in round numbers (assume your carveouts earn $10k in interest or dividends somehow over the next 5-7 years if you're worried about the rounding there).
Since you're around 60 and your DH isn't in good health, I would plan on spending a full 4% of that $1.5m, which is $60k. Add back in the $40k SS for DH, $12k SS for DW, and $9k pension, that would total $121k all in.
When he dies, you'll lose the $12k SS and be in a worse tax situation. But by that point maybe you won't feel like or need to spend the whole $121k, and your expenses will drop a little when there's just one of you, so I don't think that's a big deal.
So I'd probably say about $120k per year - remember that's everything, including taxes.
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"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
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05-04-2019, 12:13 PM
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#4
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,474
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Quote:
Originally Posted by SecondCor521
[...]
So I'd probably say about $120k per year - remember that's everything, including taxes.
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+1 I think you would be fine spending $120K per year.
But I'd only spend that much if I felt I was enjoying the results and getting some value out of it. To me that's an awful lot to spend.
In reality I'd probably end up spending $60K or so just because that's the type of lifestyle I am used to living.
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05-04-2019, 12:27 PM
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#5
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Recycles dryer sheets
Join Date: Mar 2013
Posts: 115
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Yes, I am definitely including taxes in the total amount.
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05-04-2019, 12:28 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,233
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My calculations are at the 115k - 120k yearly.
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TGIM
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05-04-2019, 12:32 PM
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#7
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Recycles dryer sheets
Join Date: Mar 2013
Posts: 115
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Quote:
Originally Posted by SecondCor521
Here's how I would look at it:
$300k carve out for DH SS bridge
$60k carve out for DW SS bridge
$250k carve out for LTC
That totals $610k. From your $2.1m, that leaves $1.5m in round numbers (assume your carveouts earn $10k in interest or dividends somehow over the next 5-7 years if you're worried about the rounding there).
Since you're around 60 and your DH isn't in good health, I would plan on spending a full 4% of that $1.5m, which is $60k. Add back in the $40k SS for DH, $12k SS for DW, and $9k pension, that would total $121k all in.
When he dies, you'll lose the $12k SS and be in a worse tax situation. But by that point maybe you won't feel like or need to spend the whole $121k, and your expenses will drop a little when there's just one of you, so I don't think that's a big deal.
So I'd probably say about $120k per year - remember that's everything, including taxes.
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The 2.1 million already takes the 300k SS carve out into account, plus 100k more for a car (current investments are $2,500,000) and I am not including my SS at all.
You carved out an additional 250k for LTC tho, hmmmm....interesting. I will
think about that.
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05-04-2019, 03:25 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Jul 2015
Location: Beaverton
Posts: 1,382
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I'm in agreement for the most part but why on earth would you spend $100k for a car?
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05-04-2019, 04:00 PM
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#9
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Dryer sheet aficionado
Join Date: May 2013
Posts: 44
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If your DH is in poor health, do you want to wait till 70 for SS? Can you do spousal benefit?
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05-04-2019, 04:15 PM
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#10
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gone traveling
Join Date: Dec 2015
Location: Berkeley, Denver, CO, USA
Posts: 1,406
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I would:
1. Leave stock at 65%.
2. Take SS at age 62.
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05-04-2019, 04:24 PM
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#11
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Moderator
Join Date: Jul 2017
Posts: 5,664
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Me, I'd max out at 100k.
Take my SS at 62; and his at 70 to maximize survivor benefits.
With the cash set asides, I would not drop my stock allocation below 60%.
Even though no legacy needs, I would not aim on spending down to zero as should you need long term care - you want really GOOD long term care.
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Use it up, wear it out, make it do or do without.
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05-04-2019, 04:29 PM
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#12
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Moderator
Join Date: Jul 2017
Posts: 5,664
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Quote:
Originally Posted by Bir48die
I'm in agreement for the most part but why on earth would you spend $100k for a car?
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OP was also including some health related expenses in that set-aside.
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Use it up, wear it out, make it do or do without.
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05-04-2019, 04:38 PM
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#13
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Thinks s/he gets paid by the post
Join Date: Jan 2007
Location: Minneapolis
Posts: 1,172
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Quote:
Originally Posted by davebarnes
I would:
1. Leave stock at 65%.
2. Take SS at age 62.
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And at their age, most experts would say age in Bonds... I agree with SS at age 70 and age in Bonds.
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05-04-2019, 04:46 PM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,202
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Most of the numbers seem high to me. I roughly value the SS+pension at about $500K. That equates to $3M net worth. I'd probably go 3.5% WR, for $105K spending, reduced when SS & pension kick in such that the total is still $105K inflation adjusted. Maybe my calcs are off.
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05-04-2019, 07:39 PM
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#15
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Recycles dryer sheets
Join Date: Mar 2013
Posts: 115
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Quote:
Originally Posted by MarieIG
OP was also including some health related expenses in that set-aside.
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Yes, that 100k was for a car, unusually high health exp and other random lumpy items
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05-04-2019, 07:45 PM
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#16
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Recycles dryer sheets
Join Date: Mar 2013
Posts: 115
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Quote:
Originally Posted by NH Hiker
If your DH is in poor health, do you want to wait till 70 for SS? Can you do spousal benefit?
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I don’t think there is ever a point where the spousal is higher than my own benefit. I think we are a classic SS scenario: younger, lower earner wife, older higher earner husband. The calculators I have tried have me going at 62, and him at 70. I sure hope he will live to 70, and then at some point I would have the inflation adjusted survivor benefit. I just am ignoring my benefit as it isn’t that much in the big picture
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05-04-2019, 07:47 PM
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#17
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Recycles dryer sheets
Join Date: Mar 2013
Posts: 115
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Quote:
Originally Posted by davebarnes
I would:
1. Leave stock at 65%.
2. Take SS at age 62.
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2. Mine (as planned) or his?
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05-04-2019, 07:51 PM
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#18
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Recycles dryer sheets
Join Date: Mar 2013
Posts: 115
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Quote:
Originally Posted by MarieIG
Me, I'd max out at 100k.
Take my SS at 62; and his at 70 to maximize survivor benefits.
With the cash set asides, I would not drop my stock allocation below 60%.
Even though no legacy needs, I would not aim on spending down to zero as should you need long term care - you want really GOOD long term care.
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Definitely not to zero. I do want to have options. One long term plan is to look for a CCRC. I worry though that he would not qualify by the time we would want to join one. I don’t know how strict their requirements are, and I don’t want to move to one when I am in my early or mid 60’s.
Thanks for your comments!
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05-04-2019, 07:52 PM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2016
Posts: 9,423
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^ I would do the same and that would be for both of you.
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05-04-2019, 08:23 PM
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#20
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Recycles dryer sheets
Join Date: Mar 2013
Posts: 115
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Quote:
Originally Posted by RunningBum
Most of the numbers seem high to me. I roughly value the SS+pension at about $500K. That equates to $3M net worth. I'd probably go 3.5% WR, for $105K spending, reduced when SS & pension kick in such that the total is still $105K inflation adjusted. Maybe my calcs are off.
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SS and Pension together are 49k. At 3.5% that would be 1,400k equivalent. Added to my “after carve out” balance of 2,100k that would be 3500k NW, so pretty close to the 3000k you mentioned. 105 would come out to 3% of 3500k, but I definitely think that would make lots of people more comfortable than 4%.
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