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sengsational 02-24-2016 05:03 PM

Quote:

Originally Posted by jcretire77 (Post 1700468)
I am probably repeating, so apologies - Looking at NPV of Social Security I found this interesting article - https://www.kitces.com/blog/valuing-...balance-sheet/

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 allocation...it will make me feel better about the money I've been losing in equities, hehe!

Quote:

Originally Posted by hnzw_rui (Post 1700413)
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.

Dcharles 02-24-2016 05:53 PM

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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