56 yr old ER asset allocation question with pension

respond2u said:
There's a chance OP could be eligible for the "age 55" rule and take money out of the 401K penalty free right now as he's over 55. The Age 55 Rule.


Another retirement calculator is ********. It allows for adding Social Security and pensions (COLA'd or not), and several different asset classes.
Click to expand...

OP here. I can WD without the 10% penalty yes. Cheers.
 
pb4uski said:
True, but most 401ks allow penalty-free withdrawals if you terminate service in the year you turn 55 or later... which seems to apply to the OP.
Click to expand...

OP here. Yes true. I retired at just over 55 yrs old so I'm penalty free for WD's. However from what I can see on the website we don't have an option of having dividends NOT re-invested. Cheers.
 
Re 60/40 guidelines ignoring social security and pensions: on my phone here, tough to give links, but look up
. Trinity study bengen
. Pfau
There's a third author I can't recall.

They do testing with the asset classes of ten year treasuries, s&p. The third author added small cap stocks and cash.
 
They are not ignoring social security and pensions... they would say that what someone can safely spend would be the safe withdrawals that they suggest PLUS pensions and social security... they are just focused on what the portfolio contributes. Earlier, many of us suggested the same thing.. reducing what you need to live by pensions and social security and then calculating a withdrawal rate... same thing.
 
rodi said:
He's less than 59 - so he needs to keep it in his 401k till then if he wants (needs) to make withdrawals. And it sounds like he does need that.

OP - I remember reading a thread on here where someone ran various firecalc scenarios with a range of AA. And the outcome was basically pretty good anywhere from 30/70 to 70/30.... So I'd lower it to 70% equities.

Have you run firecalc - making sure to properly mark your pension as NON COLA.
Click to expand...

OP here. Firecalc and a I are not getting along too well. I've used it many times before my ER and it came up 93% pretty much every time. Now using 735K savings, 30 yr life span, $43K a year pension, $52K expenses, $20K a year SS at 62, etc etc it comes up at 70% success, Ugh.
 
supernova72 said:
OP here. Firecalc and a I are not getting along too well. I've used it many times before my ER and it came up 93% pretty much every time. Now using 735K savings, 30 yr life span, $43K a year pension, $52K expenses, $20K a year SS at 62, etc etc it comes up at 70% success, Ugh.
Click to expand...

Some potential gotcha's. Make sure you're putting 2017 (or later) for the pension/ss/other income fields... It doesn't like looking in the past.

Are you doing constant spending? Or Bernicke's spending... A big difference in results there.
 
rodi said:
Some potential gotcha's. Make sure you're putting 2017 (or later) for the pension/ss/other income fields... It doesn't like looking in the past.

Are you doing constant spending? Or Bernicke's spending... A big difference in results there.
Click to expand...

Very good tip. I must have been using past year vs. 2017. Just re-did it and it came back at 100%. Wow. I using the constant spending method. Cheers.
 
supernova72 said:
Very good tip. I must have been using past year vs. 2017. Just re-did it and it came back at 100%. Wow. I using the constant spending method. Cheers.
Click to expand...

Good news. I've been "bitten" by that "feature" a few times so I've learned....
 
I don't know anything about the history of ********.com, just that it's open source and seems to work well.
 
I've only tried it on my desktop. Might be safari is the problem? It worked for me with Firefox and Chrome.
 
I agree it's frustrating when stuff like that happens. It shouldn't be so hard for stuff to work across different platforms (other than the manufacturers dont want it easy).

It shows the result in a sort of overlayed screen. I wonder if
- there's a setting blocking that sort of thing on your iPad
- what would happen if you asked for the "desktop site" to force safari to act better
- whether it's worth the effort!
 
respond2u said:
I agree it's frustrating when stuff like that happens. It shouldn't be so hard for stuff to work across different platforms (other than the manufacturers dont want it easy).

It shows the result in a sort of overlayed screen. I wonder if
- there's a setting blocking that sort of thing on your iPad
- what would happen if you asked for the "desktop site" to force safari to act better
- whether it's worth the effort!
Click to expand...

I tried it again on a desktop and it worked so it has to be Safari, but I don't understand the results. For the same information put into 3 other calculators I use, one being Firecalc, this one returns wildly different results.
 
COcheesehead said:
I tried it again on a desktop and it worked so it has to be Safari, but I don't understand the results. For the same information put into 3 other calculators I use, one being Firecalc, this one returns wildly different results.
Click to expand...

******** and firecalc are fairly close when I tweak both so that the inputs matched closer (I used the "display (hide).input data" link in firecalc to see what it was assuming, and then changed things as I could). E.g., ******** only supports s&p500 as a stock allocation, whereas FireCalc defaults to a mix of different caps.

As for the result output, it took me a while to understand FireCalc's :).

As near as I can tell, they're graphing the same data, just in a different way.

Both calculate backtests of portfolio balances assuming an historical start date.

******** chart shows you each retirement starting on the historical date, so you'll get a line from 1871 to 1901 (for a 30 year retirement), another for 1872 to 1902, etc.

FireCalc seems to create the same lines, but plots them from year 1 to year 30. You don't see the period for which the portfolio is being backtested.

Firecalc gives some stats in the prose above the chart. ******** gives stats in tables below chart.
 
respond2u said:
******** and firecalc are fairly close when I tweak both so that the inputs matched closer (I used the "display (hide).input data" link in firecalc to see what it was assuming, and then changed things as I could). E.g., ******** only supports s&p500 as a stock allocation, whereas FireCalc defaults to a mix of different caps.

As for the result output, it took me a while to understand FireCalc's :).

As near as I can tell, they're graphing the same data, just in a different way.

Both calculate backtests of portfolio balances assuming an historical start date.

******** chart shows you each retirement starting on the historical date, so you'll get a line from 1871 to 1901 (for a 30 year retirement), another for 1872 to 1902, etc.

FireCalc seems to create the same lines, but plots them from year 1 to year 30. You don't see the period for which the portfolio is being backtested.

Firecalc gives some stats in the prose above the chart. ******** gives stats in tables below chart.
Click to expand...
Maybe I made a mistake, I'll try it again, but it was showing a several million dollar difference from my other 3 models.
 
Ok, operator error. I got it finally to be inline with the other 3 calculators. The results page isn't as friendly, but it is interesting.
 
I have a high equity allocation (100%) because of a generous pension. If I notionally capitalize my pension my AA would be about 64/36. I am comfortable with this.

Seems to me that ignoring a pension in your AA is not optimal as a pension does 2 things, firstly it reduces the cash required to fund your retirement, but just as important it provides a RISK FREE cash flow source. This risk reduction in cash flow allows for higher risk in cash flow elsewhere. At least that my opinion. Agree that there is considerable opinion going the other way. Probably, in the end, it comes down to your risk tolerance. Those that have a higher to.erance will naturally gravitate to the "take your pension into account" camp while those with a lower tolerance will likely ignore any pension.
 
Last edited:
Danmar said:
I have a high equity allocation (100%) because of a generous pension. If I notionally capitalize my pension my AA would be about 64/36. I am comfortable with this.

Seems to me that ignoring a pension in your AA is not optimal as a pension does 2 things, firstly it reduces the cash required to fund your retirement, but just as important it provides a RISK FREE cash flow source. This risk reduction in cash flow allows for higher risk in cash flow elsewhere. At least that my opinion. Agree that there is considerable opinion going the other way. Probably, in the end, it comes down to your risk tolerance. Those that have a higher to.erance will naturally gravitate to the "take your pension into account" camp while those with a lower tolerance will likely ignore any pension.
Click to expand...

Thanks! OP here. One thing I should have mentioned in my post is that I'm not a huge risk taker. Yes I rode out the 2008 downturn and stayed the course but seeing a 30% dip was not a lot of fun. Having 20% in a stable value fund is not super exciting but lets me sleep at night. There is another 12% in bonds (balanced fund actually) so now I'm at 68%/32%.

Pension covers 80% of my expenses so probably not as favorable as you (but I'm grateful to have it).

I'm OK when the market rockets up 1% in one day that I don't benefit from all of that. Kudo's to you for going "all in"!!
 
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