Optimal Retirement Planner

[spncity]

I realize this is not the ORP support forum - but if you're familiar with it - Retirement Calculator - here's my question:

The default inflation percent is 3.5%. I don't really have a problem with it projecting future dollars needed in this manner.

But it seems like it makes the future Social Security payments pretty "rich".

Do projected Social Security payments really go up 3.5% every year between now and the time I turn 70 - as well as every year after that?

Thanks for input.

spncity

 

[donheff]

Do projected Social Security payments really go up 3.5% every year between now and the time I turn 70 - as well as every year after that?

No, but they go up a lot. Here are the raises since 1975 from the SSA site:
July 1975 -- 8.0%
July 1976 -- 6.4%
July 1977 -- 5.9%
July 1978 -- 6.5%
July 1979 -- 9.9%
July 1980 -- 14.3%
July 1981 -- 11.2%
July 1982 -- 7.4%
January 1984 -- 3.5%
January 1985 -- 3.5%
January 1986 -- 3.1%
January 1987 -- 1.3%
January 1988 -- 4.2%
January 1989 -- 4.0%
January 1990 -- 4.7%
January 1991 -- 5.4% January 1992 -- 3.7%
January 1993 -- 3.0%
January 1994 -- 2.6%
January 1995 -- 2.8%
January 1996 -- 2.6%
January 1997 -- 2.9%
January 1998 -- 2.1%
January 1999 -- 1.3%
January 2000 -- 2.5%(1)
January 2001 -- 3.5%
January 2002 -- 2.6%
January 2003 -- 1.4%
January 2004 -- 2.1%
January 2005 -- 2.7%
January 2006 -- 4.1%
January 2007 -- 3.3%

 

[cute fuzzy bunny]

First, be aware that ORP appears to not have been updated in a while. I dont believe it has current tax rates or tax law in it.

IIRC, SS benefits are adjusted by wage indexing until a year or two before you start taking benefits, then by CPI after that.

 

[spncity]

Very helpful, thank you.

CFB - when you say hasn't been updated "in awhile" - is that something like not updated for 3-5 years - or 10+ years ago?

Just trying to estimate what sort of factor to apply to the resulting projected income. If you were guessing, what would you guess?

Thanx!

 

[cute fuzzy bunny]

According to the 'whats new' area of the orp web site, the last updates were made in 2000. A number of people have complained that it doesnt have the latest tax rates or 0/5/15% capital gains/qualified dividend tax rates.

Perhaps they've updated the product and not the release notes. I havent run it in a while. Even with slightly out of whack tax rules its a rather unique tool and I think it still has some value/benefits. Moreso for a traditional aged retiree than an early retiree.

 

[spncity]

OK - thanx. I will take that into consideration. I have a tendancy to project pretty conservative growth in these calculators.

Would rather be surprised about having "more" resources than projected in the future as opposed to being surprised about having "less" than I thought I'd have.