Reviewing Plan on a Lazy Sunday

[Flieger]

Finally left my 24/7 responsibility position (end of January) and enjoying no interruptions on the weekend. To that end, I was reviewing planning this morning. There is a pretty big spreadsheet behind the simplified info below (engineer ), but this is how I can get my wife to pay attention for the 20 minutes to run through the plan:

Wife retires next year at 62, I retire in 2028 at 65

• Expected retirement savings of $1.4MM (mix of post-tax and pre-tax, but I determined tax requirement in the expenses).

• Expenses in Retirement (not including one time events)
• - $110,000/yr (includes Fed and State taxes, lots of "niceties")

• Total SS 2028 (when both retired) - $70k/year
• Required savings WR ($'s/%) ~$40k/year or ~3%

Based on 4% ROI of Retirement Savings, ~2.5% increase to WR annually, and then including a switch to required larger WR at RMD time, I am seeing ~ $1MM left in Savings at age 90. I figure this more than accounts for unplanned one time expenses for the 25 years of planned retirement to 90.

Curious as to others thoughts... I am sure others here develop lots of scenarios on days when they are bored.

Flieger

 

[starry night]

Attention span

Your financial analysis looks solid to me….but you might want to plan to stop taking pot-shots at your wife’s attention span. Is it her, or are you just a terribly boring presenter?

 

[rodi]

It looks pretty good to me. I retired with a similar number, lower budget, but kids still under roof. Budget has expanded to match yours, but the nest egg has also expanded, and kids are off the payroll except for health insurance and 529 money (not included in my nest egg calcs). DH has been on SS since we retired... I won't start till 2028-2031ish (FRA or 70... will decide then.)

I'm sure others will suggest it - so I'll be first... Have you run it through Firecalc? (See link at bottom of page.). Spreadsheets are great for deterministic plans (fixed assumptions for ROI, inflation, etc). But not so great at figuring out market volatility. Make sure you click through the tabs to input SS, your asset allocation, etc. Your spending should be all inclusive (taxes & health insurance for example)

I made sure my plan passed firecalc, quicken lifetime planner (deterministic), Fidelity retirement app, etc. Each stress tested the plan in differing ways and made my plan stronger.

 

[Fermion]

Your financial analysis looks solid to me….but you might want to plan to stop taking pot-shots at your wife’s attention span. Is it her, or are you just a terribly boring presenter?

My wife is a software engineer, made most of the money in our accounts, and has ZERO interest in finance. She lets/makes me do almost everything (plus she will not talk on the phone at all).

My eyes glaze over in less than 20 minutes when she describes some database software code.

 

[Flieger]

Your financial analysis looks solid to me….but you might want to plan to stop taking pot-shots at your wife’s attention span. Is it her, or are you just a terribly boring presenter?

Wow. I guess I hit a nerve.

My wife is actually very intelligent (she can actually recognize sarcasm AND chew gum at the same time), she's just not much for going through our finances. I will try spicing up the presentation though to see if that helps!

Flieger

 

[Flieger]

I'm sure others will suggest it - so I'll be first... Have you run it through Firecalc? (See link at bottom of page.).

I made sure my plan passed firecalc, quicken lifetime planner (deterministic), Fidelity retirement app, etc. Each stress tested the plan in differing ways and made my plan stronger.

I have consolidated everything with Fidelity and gone through the retirement planner there (says 108), but will spend some time with Firecalc next. Thanks for the suggestion!

Flieger

 

[cyber888]

$110,000/year. Did you run Firecalc ?

 

[DrRoy]

+1 seems to work.

 

[VanWinkle]

$110,000/year. Did you run Firecalc ?

He only needs 40K per year from his portfolio, 3% withdrawal.

 

[Healthy Lifestyle]

Probably has other income not mentioned such as interest, divy’s, cap gains that will add to income.?

 

[LateToFIRE]

+1 Congrats on slowing down and entering the approach pattern. Looks good to me too. I like to review my plan even when not bored, seeing as I'm kinda new to this FIRE stuff.

I've run every [free] calculator I could get my hands on. The Fidelity calculator is a pretty good one which allowed me to enter a fair amount of detail. It even automatically pulled info from my Fidelity accounts, saving me a bit of effort. I've also used FIRECalc - highly recommended of course. And if you're a super-spreadsheeter, booglehead's RPM may be of interest. They each teach you something new about your plan.

One thing I might point out is that you may want to run some downside scenarios in your spreadsheet to account for SORR. What happens if markets tank just as you retire? What happens if portfolio returns are subpar? What happens if SS benefits are reduced? How much flexibility does your budget contain? What if tax rates go up? What if one of you lives past 90? Stuff like that.

 

[LateToFIRE]

Q: Is your 4% ROI nominal or real (i.e. inflation-adjusted)?

 

[Midpack]

$110,000/year. Did you run Firecalc ?

Any planning tool that uses multiple scenarios (e.g. actual history, Monte Carlo), like FIRECALC, is more useful than 99% of homegrown spreadsheets that assume linear returns, inflation, spending, etc. Linear will NOT happen. The FIRECALC results might give you something to think about...

 

[Jeffman52]

My wife is a software engineer, made most of the money in our accounts, and has ZERO interest in finance. She lets/makes me do almost everything (plus she will not talk on the phone at all).

My eyes glaze over in less than 20 minutes when she describes some database software code.

Its similar in my household. My wife has always made more money than I do. She is a Sr Project Manager in IT for a multi-billion dollar corporation. Super smart, super detailed. But if I break out the financial spreadsheets I lose her in less than 5 minutes. I have just learned to stay out of the weeds and go high level. That is hard for me because I spent so much time building it, its exciting to me to show her my spreadsheets and how we get to these numbers and what it all means.

 

[wmc1000]

Wow. I guess I hit a nerve.

My wife is actually very intelligent (she can actually recognize sarcasm AND chew gum at the same time), she's just not much for going through our finances. I will try spicing up the presentation though to see if that helps!

Flieger

+1

DW was not a high wage earner and left the workforce at age 55. She has no interest in our finances other than I don't place and spending limits on her and she is very frugal to start with. I usually have to tell her don't worry what something costs just get it if you want it. Always tell her don't look at the prices on restaurant menus just order!

 

[Flieger]

$110,000/year. Did you run Firecalc ?

That's my expenses, yes.

Income is as stated to cover that (SS and withdrawal from Retirement Savings). Is there a question or something I am missing?

Flieger

 

[Flieger]

Probably has other income not mentioned such as interest, divy’s, cap gains that will add to income.?

Income is as stated in 1st post: $70k from SS (which will adjust based on COLA), and remaining $40k from Retirement Savings.

Flieger

 

[Flieger]

One thing I might point out is that you may want to run some downside scenarios in your spreadsheet to account for SORR. What happens if markets tank just as you retire? What happens if portfolio returns are subpar? What happens if SS benefits are reduced? How much flexibility does your budget contain? What if tax rates go up? What if one of you lives past 90? Stuff like that.

Good points! I also found the Fidelity planner to be fairly comprehensive, once you get inside the tool. A Fidelity advisor that worked with my previous company showed me inputs that I had not found on my own there!

One thing I did not say in original post (other than saying the $110k expenses includes "niceties") is that niceties means about $30k annually of discretionary that I can adjust for bad times. Also, I am not concerned about leaving a big inheritance, so I feel like the $1MM remaining at age 90 (even with $110k expenses) seemed like it would cover a lot of SORR or other things.

Flieger

 

[Flieger]

Q: Is your 4% ROI nominal or real (i.e. inflation-adjusted)?

This was nominal. I am assuming about 6-7% return, and 2-3% inflation over this time period (I know that is not what is being seen now, but I am expecting a return to "normal").

Flieger

 

[Flieger]

Any planning tool that uses multiple scenarios (e.g. actual history, Monte Carlo), like FIRECALC, is more useful than 99% of homegrown spreadsheets that assume linear returns, inflation, spending, etc. Linear will NOT happen. The FIRECALC results might give you something to think about...

Went back and ran Firecalc with my inputs for portfolio, etc it showed 100% passing with lowest ending balance for the analysis of $754k.

I really liked the highest ending balance at something like $8MM though!

Flieger

 

[tulak]

• Total SS 2028 (when both retired) - $70k/year

Not the most chipper of topics, but I would take into consideration the reduction in SS if/when one of you passes.

If you still need 110k/year and SS is reduced by half (maybe less), then how will you make up that difference?

Otherwise numbers look good to me.

 

[Flieger]

Not the most chipper of topics, but I would take into consideration the reduction in SS if/when one of you passes.

If you still need 110k/year and SS is reduced by half (maybe less), then how will you make up that difference?

Otherwise numbers look good to me.

Good thought. I will look into that. I think she would get $47k in SS going forward, I'll see how that impacts the plan. She might have to cut back on the niceties, or find someone to help out.

Flieger

 

[BlueberryPie]

I really liked the highest ending balance at something like $8MM though!

I don't. My situation is similar-ish to yours, but I'd rather take extra trips or upgrade the RV early in retirement rather than die with too much. That's what I'm working to figure out. I'm worried about getting SORR too much.
Remember "failure" in Firecalc simply means you insisted on taking 4% when the market was down, so in the end you have to live on SS alone ($70K in your case)

What were the "secret" inputs to the Fidelity tool you discovered?

Do look at what happens when one of you dies, will the other one be happy with what they have to live with?

 

[Flieger]

I don't. My situation is similar-ish to yours, but I'd rather take extra trips or upgrade the RV early in retirement rather than die with too much. That's what I'm working to figure out. I'm worried about getting SORR too much.
Remember "failure" in Firecalc simply means you insisted on taking 4% when the market was down, so in the end you have to live on SS alone ($70K in your case)

What were the "secret" inputs to the Fidelity tool you discovered?

Do look at what happens when one of you dies, will the other one be happy with what they have to live with?

I agree with you on the "richest guy in the cemetery", and if I see it growing like that I will increase the niceties in the plan for sure!

There weren't really "secret" inputs necessarily, but I didn't know to open deeper in the planning box to input factors. Primarily I edited Spending details. At someone else's suggetion, I went in and adjusted down the SS to see what impact as well (although I personally believe the self-preservation nature of politicians will kick in prior to that change coming.

 

[NanoSour]

Throwing your numbers in Firecalc and using the Bernicke spending rule to a 100% success rate gives you a spending level of $224K/year. I think you will be fine. Congrats!!!