Being that this is a new year I have updated my FIRE xls and have been reviewing assumptions I am making about my FIRE plans. For me my xls or the FIRECALC calculator is only as good as the assumptions I am making. I strive to be as reasonably pessimistic as possible and I am listing them so I can hear feedback on them, especially if they sound too close to the medium or optimistic expectations and not pessimistic enough for my standards.
1) Long term inflation is 3.5% versus the 2%-2.5% over the last couple of decades
2) Medicare does not kick in until we are 67 and not 65 as today.
3) Medicare premiums twice as expensive in 2014 dollars as today.
4) Social Security benefits will pay out 70% of today's projections and will be fully taxed as opposed to 85% taxed as today.
5) No LTC insurance so I expect to pay $60K a year for myself and DW beyond what Medicare will pay in LTC starting when I am 75 then rising to $110K a year when I am 85.
6) When our 3 year old DS goes to college he will attend an expensive university (I used Yale since I went there) in 2029-2033 and cost $77K a year in 2014 dollars (as opposed to $58K a year in 2014 dollars as today)
7) Tax structure will not change other than the various brackets being indexed to inflation. (This might be too optimistic but it is hard to guess what the tax brackets/laws will be decades from now)
8) All investments including IRAs return 1% beyond inflation every year. Likely allocation being 50/45/5.
9) While our DS is attending elementary and middle school, budget $17K in 2014 dollars, for various classes/activities outside of school, especially summer camp.
10) $12k in 2014 dollars spending a year on various house and car maintenance costs.
11) Once DS is in college and we no longer need to stay in a good school district, move to Florida where state income taxes are zero.
12) Vacation budget of $20K in 2014 dollars per year up to when we need LTC which is when I am around 75.
13) The $250K Obamacare tax floor which is NOT adjusted to inflation will be linked to inflation in the future when it reaches $175K in 2014 dollars just like what happen to the AMT. This might be too optimistic but with my high inflation assumptions it will seem absurd that in the future people pay this 3.8% tax even if their income are not considered high.
14) Our medical costs before Medicare are just the cost of a Platinum Plan plus Max Out of Pocket Costs of said Platinum Plan in NY and then FL.
1) Long term inflation is 3.5% versus the 2%-2.5% over the last couple of decades
2) Medicare does not kick in until we are 67 and not 65 as today.
3) Medicare premiums twice as expensive in 2014 dollars as today.
4) Social Security benefits will pay out 70% of today's projections and will be fully taxed as opposed to 85% taxed as today.
5) No LTC insurance so I expect to pay $60K a year for myself and DW beyond what Medicare will pay in LTC starting when I am 75 then rising to $110K a year when I am 85.
6) When our 3 year old DS goes to college he will attend an expensive university (I used Yale since I went there) in 2029-2033 and cost $77K a year in 2014 dollars (as opposed to $58K a year in 2014 dollars as today)
7) Tax structure will not change other than the various brackets being indexed to inflation. (This might be too optimistic but it is hard to guess what the tax brackets/laws will be decades from now)
8) All investments including IRAs return 1% beyond inflation every year. Likely allocation being 50/45/5.
9) While our DS is attending elementary and middle school, budget $17K in 2014 dollars, for various classes/activities outside of school, especially summer camp.
10) $12k in 2014 dollars spending a year on various house and car maintenance costs.
11) Once DS is in college and we no longer need to stay in a good school district, move to Florida where state income taxes are zero.
12) Vacation budget of $20K in 2014 dollars per year up to when we need LTC which is when I am around 75.
13) The $250K Obamacare tax floor which is NOT adjusted to inflation will be linked to inflation in the future when it reaches $175K in 2014 dollars just like what happen to the AMT. This might be too optimistic but with my high inflation assumptions it will seem absurd that in the future people pay this 3.8% tax even if their income are not considered high.
14) Our medical costs before Medicare are just the cost of a Platinum Plan plus Max Out of Pocket Costs of said Platinum Plan in NY and then FL.