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Old 01-18-2021, 11:30 AM   #41
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I guess a lot depends on how much you hate your job. I never did. Another consideration is how spartan you need to live prior to retirement. For me, the answer was not at all. I enjoyed a high standard of living before retirement and I still enjoy a high standard of living.
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Old 01-18-2021, 12:12 PM   #42
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Hmmm, I guess I factored it in to the extent that I believed it would cover my Medicare costs; and I had hoped it would give me an additional monthly stipend after taxes were withheld.

And yes, I did consider that an additional year's work, would be an additional contribution to SS; especially since I entered the work force late due to having children.

And I had factored-in that there would be a cut due to the statements that SS has been sending for years.

What I did not factor -in was that my SS would take yet another haircut simply based upon me turning 60 in 2020.

Am I going to work longer due to that - no. There are/ will be other income sources.
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Old 01-18-2021, 01:17 PM   #43
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Oh for goodness sake. The conservative assumptions layered on top of conservative assumptions can prevent people from landing on perfectly adequate retirements. I just deleted several paragraphs detailing how (very engineer like) I made such calculations. While my goal was FI, not necessarily ER, when the BS bucket got full I left and now have solid pension I never expected, SS taken at 70, bunch of money because kids got scholarships didn't expect, and IRA/457 that will cost as much in MRD taxes as a frugal couple could retire on. And I'm still looking at the FIDO calculator assuming worst case with a portfolio almost twice when I retired in 2011.

My point is, in retrospect for me and in a lot of posts on this board, I see so much nail biting and conservative assumptions that it can get in the way of achieving goals such as a a pleasant retirement. Which is damn funny coming from me, who has generally followed a pessimistic and financially conservative path. Now I'm trying damn hard to join Robbie and blow some of the bountiful dough that such a philosophy built up. Don't be like me. FWIW, if I were to make a prediction on SS I'd guess FRA might be adjusted and they'd tax it all. As far as I"m concerned...meh.
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The only conservative assumption I make is my rate of return on my retirement assets. I was going to wait until age 70 to take my social security then my wife got an unexpected retirement offer from her company. I did the math and realized we could live off of our combined social security (Me at 66.5 and her at 63.5) and use retirement funds for extras (like vacations) or let it grow for the really small probability that our benefits will be cut in the future.

Her (and thus my) happiness has improved tremendously by her retiring early (the BS bucket was overflowing...) which is worth a hell of a lot more than the extra money we would get had she kept working and I waited to 70. Money was never going to be the sole consideration. Our health and happiness (which can't be whittled down to a number) was always a part of the equation.

Our goal has never been more for the sake of more. Our goal has always been "enough" (plus a cushion). What is enough? It depends on your lifestyle and your propensity to spend. Our lifestyle is modest and our propensity to spend is on the lower end of the spectrum so our combined social security payments are enough. For some people there is no upper bound on enough. YMMV.
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Old 01-18-2021, 04:26 PM   #44
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Those who might think Congress will allow any significant cuts in SS benefits (even for those YET to receive it) might ask some of us who lived through the time(s) when SS was "saved" (forever!). I guess "forever" is a few election cycles but YMMV.
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Old 01-18-2021, 05:06 PM   #45
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Allowing social security benefits to be cut is a political decision, not an economic one.

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Old 01-18-2021, 05:09 PM   #46
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I don't discount our SS benefits...they will be low for both of us in any case.
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Old 01-18-2021, 05:23 PM   #47
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Allowing social security benefits to be cut is a political decision, not an economic one.

Very true. But if you want to get elected, you won't want to F with the old people.
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Old 01-18-2021, 06:26 PM   #48
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I don't consider any changes to SS. I'll deal with them after they happen. If they happen.
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Old 01-18-2021, 06:59 PM   #49
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For those who plan to FIRE:
1) Some are wealthy enough to do it with only their portfolios.
2) Some have generous pensions, too.
3) Some have generous pensions instead of portfolios.
4) Some need to factor in the federal government’s most popular program, SS, to make the numbers work.
5) Some will continue to do a little work for a while, because the income makes the numbers work and they enjoy it more than their prior full time job.
6) Some might choose to include a future home downsize in their plan, realizing their some of their home equity, or renting out their paid off house.
7) Etc., etc., etc.

For those who plan to FIRE, there are many paths to Rome, many levers to pull and Your Mileage May Vary from others’ preferences.
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Old 01-18-2021, 08:03 PM   #50
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Appreciate the insight.

My biggest hold up currently is cost of healthcare if paying privately.
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Old 01-19-2021, 05:37 AM   #51
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I include it. Retiring in 69 days @ age 55. Planning on the full amount ($60k) starting @ age 70. We're @ 99% Ps with it, 81% Ps without it. Why the hell would I work another 5 years to mitigate a low probability risk? If you think SS is going away any time soon, then keep on working. I'll buy you a beer with my SS check if we ever meet.
I like this approach. When I tried it with my numbers, I was 100% Ps with the full SS benefit (deferring to age 70) and 99.1% Ps with the SS benefit reduced to 79% of the full amount.
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Old 01-22-2021, 05:22 PM   #52
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Since the SS amount is based on the "top 35" earning years with each year indexed for inflation, if you retire before you have 35 years of great income then it should definitely be discounted.
But SS was NEVER meant to be the only income in retirement - it is more of a safety net. So plan FIRE as if you were not going to get any SS and when you do, it's just extra money.
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Old 01-22-2021, 05:38 PM   #53
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Since the SS amount is based on the "top 35" earning years with each year indexed for inflation, if you retire before you have 35 years of great income then it should definitely be discounted.
....
I'm confused by this. If you assume that, for you, social security is immune to political changes, why would you discount your P.I.A. just because you didn't max out for 35 years? DW and I were both well past the second bend point, and working more years at more than the max social wage rate wouldn't have made a significant impact in either P.I.A. As noted above, we don't count social, but not having 35 years of max isn't a factor for us in that analysis.
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Old 01-22-2021, 08:26 PM   #54
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I count it 100% because I will draw it in five years. The trust fund will still be flush then. My wife and I will get $75,000 based on the government's own estimates. That's hard to ignore. But even if it's nothing my safe withdrawal rate will be about 2%, so who cares?
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Old 01-22-2021, 08:30 PM   #55
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I'm confused by this. If you assume that, for you, social security is immune to political changes, why would you discount your P.I.A. just because you didn't max out for 35 years?

The estimates for SS benefit assume that you continue to work until you retire at your current income. So, if you retire early before you have 35 years of income, you may have some zero years in the calculation (when the SS assumed income) or years of income at a lower amount (say you retire but work PT at a much lower income). For either scenario, it will mean the the estimate of SS benefit at 62, FRA, or age 70 (ssa.gov, "my SS" page) wil be higher than your actual benefit will be.
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Old 01-22-2021, 08:39 PM   #56
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I'm confused by this. If you assume that, for you, social security is immune to political changes, why would you discount your P.I.A. just because you didn't max out for 35 years?
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The estimates for SS benefit assume that you continue to work until you retire at your current income. So, if you retire early before you have 35 years of income, you may have some zero years in the calculation (when the SS assumed income) or years of income at a lower amount (say you retire but work PT at a much lower income). For either scenario, it will mean the the estimate of SS benefit at 62, FRA, or age 70 (ssa.gov, "my SS" page) wil be higher than your actual benefit will be.
And yet, not a zero payout, so wouldn’t it be smarter and more accurate to figure out what that payout amount actually is and include it in one’s income projections rather than assuming zero dollars? It might well mean fewer years of w*rk, which is kind of the mission of this whole forum.
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Old 01-22-2021, 11:45 PM   #57
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How much should I discount Social Security in my FIRE calculations?

I've been using about 30% the SSA estimate in my calculations and plans, is that too aggressive? Too conservative?

Me & DW both 49 years old

Annual expenses are about 4% of total savings all of which is in retirement accounts so I'm starting to consider firing my employer. Thinking best to wait and see what the incoming political climate will be for healthcare since we will need to fund our own.
Retiring at 49 , means a very long retired life, and (IMHO) a withdrawal rate of 4% is too high and not safe.
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Old 01-23-2021, 08:35 PM   #58
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It depends.....

If... I was depending on it for a barebones budget with little discretionary in order to retire, I would assume a 25% cut on SS to play it safe, even though that seems unlikely, because there's not much margin for error with a tight budget.

But... my other retirement stash/income will pay all my barebones expenses and more, so I estimate my SS benefits based on what the SS offline calculator gives me with no discount because I think that is the most likely scenario, so I'm wanting the most accurate output. I have enough of a buffer that I'll be OK, either way.

If... you were a higher income worker over your 35 highest earning years, I think you're more likely to see a benefit cut than a more middle income worker.

Note, if you're not collecting SS for a while, it would be safest to figure that you will pay tax on 85% of your SS income because the 85% taxable threshold has not been increased for inflation since it was put into place, so eventually, as benefits increase over time along with other inflation adjusted income, more and more SS income will be taxed at the 85% rate every year if the government doesn't address the problem. More on that here:
https://www.early-retirement.org/for...ml#post2546965
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Old 01-23-2021, 09:07 PM   #59
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Yes, I don't consider that SS has a 15% tax advantage over ordinary income, and more in many states. That is one of the conservatisms in my model.
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Old 01-24-2021, 06:20 AM   #60
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The estimates for SS benefit assume that you continue to work until you retire at your current income. So, if you retire early before you have 35 years of income, you may have some zero years in the calculation (when the SS assumed income) or years of income at a lower amount (say you retire but work PT at a much lower income). For either scenario, it will mean the the estimate of SS benefit at 62, FRA, or age 70 (ssa.gov, "my SS" page) wil be higher than your actual benefit will be.
Oh. I never thought anyone would rely on that projection if seriously looking at early retirement. So yes, postulating such a case, those numbers would be inaccurate.
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