Age 52 How much do we really need to FIRE?

[Music Lover]

Because you can't have greater than a 100% chance of success?

But...but what about all the athletes that say they give 110%?

 

[Time2]

Because you can't have greater than a 100% chance of success?

Ya


To quote part of my response in post #33,
"What I mean is, after adding SS and Pension, I should be able to reduce the Portfolio amount and still get 100%. I can't, after adding SS and pension, if I reduce the portfolio below $1.74M the success rate drops below 100%."
To reiterate, after adding SS and pension I should be able to reduce portfolio amount and still get 100%.


I have revisited the comma issue in the 'Other Income /Spending' Tab, 38,400 vs 38400 and I'm find that does make a difference. I believe that was my trouble all along.

 

[F.I.R.E User]

I lost my job and the job search is not going very well. (That's for another thread )

We have no debt.

I've calculated our expenses at:

$53,000 essential (with ACA healthcare).
$9,000 discretionary expenses.

Social security at 67:
Me: $3200
Wife: $900

$370 month pension at 62

FIREcalc is showing $1,750,000 has a 100% success for a 35 year retirement.

What if you live beyond 35 years?

 

[Time2]

Did you go to the first page & reduce your starting portfolio value?
.

Yes, that is exactly what I did.
The solution the problem I was having was to eliminate commas.

 

[momoney]

What if you live beyond 35 years?

If I extend it out another 5 years to 40...

Looks like if you take SS at 62 you have a 99.1% success rate

@67 it's 97.1% success rate.

And no one has mentioned selling the house? That's another source of potential income to tap into. I know you need a place to live, but you could sell and rent or do a reverse mortgage?

 

[F.I.R.E User]

If I extend it out another 5 years to 40...

Looks like if you take SS at 62 you have a 99.1% success rate

@67 it's 97.1% success rate.

So you are good there.

 

[Fermion]

Curious why taking SS later would lower your chance of success?

 

[momoney]

Curious why taking SS later would lower your chance of success?

You need a lower starting balance at 62. I ran both of them with the same starting portfolio instead of adjusting age 62 with a smaller balance.

 

[Fermion]

You need a lower starting balance at 62. I ran both of them with the same starting portfolio instead of adjusting age 62 with a smaller balance.

I guess I see. I imagine Firecalc can be broken with certain numbers. Say you told it you needed $40k for expenses and were retiring at age 62 with $80k. Social security at age 62 would give you $32k but taking it at 67 would give you $40k. Firecalc would show portfolio failure if you took SS at 67 but success if you took it at 62.

(I made these numbers up but I bet there are numbers where the above is true).

 

[Fermion]

Ok, I broke firecalc with real world numbers taken from SS earnings.

62 and 1 month in 2024 $2,336.00 28,032 annually
67 in 2029 $3,317.00 39,804 annually


I put in a portfolio of $300,000 with a annual spend of $39,804, retirement for 30 years.

If you take SS at 62 you get a 90% success rate

If you take SS at 67 you get a 0% success rate

This isn't right, because I know that you can make $300,000 last 5 years and after that point SS is generating ALL of your annual spend.

 

[pb4uski]

Ok, I broke firecalc with real world numbers taken from SS earnings.

62 and 1 month in 2024 $2,336.00 28,032 annually
67 in 2029 $3,317.00 39,804 annually


I put in a portfolio of $300,000 with a annual spend of $39,804, retirement for 30 years.

If you take SS at 62 you get a 90% success rate

If you take SS at 67 you get a 0% success rate

This isn't right, because I know that you can make $300,000 last 5 years and after that point SS is generating ALL of your annual spend.

You're doing something wrong.

With $28,032 SS annually starting in 2024:

FIRECalc looked at the 123 possible 30 year periods in the available data, starting with a portfolio of $300,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 123 cycles. The lowest and highest portfolio balance at the end of your retirement was $-248,664 to $1,504,556, with an average at the end of $439,636. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 12 cycles failed, for a success rate of 90.2%.

Same as your 90%

With $39,804 of SS starting in 2029:

FIRECalc looked at the 123 possible 30 year periods in the available data, starting with a portfolio of $300,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 123 cycles. The lowest and highest portfolio balance at the end of your retirement was $-237,420 to $1,332,069, with an average at the end of $442,063. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 4 cycles failed, for a success rate of 96.7%.

I'm guessing that when you input the $39,804 in SS that you included a comma and should not have included a comma.

 

[Fermion]

You're doing something wrong.

With $28,032 SS annually starting in 2024:

Same as your 90%

With $39,804 of SS starting in 2029:


I'm guessing that when you input the $39,804 in SS that you included a comma and should not have included a comma.

It can't take commas

I still want to dig into this more but gotta get working on house today.

 

[Time2]

It can't take commas

I still want to dig into this more but gotta get working on house today.

It can be commas!

 

[pb4uski]

Yeaf, it looks like perhaps it can take commas. Not sure what he did then. but the success ratio does improve if you add SS with all else held constant.

 

[BlueberryPie]

By default firecal doesn't calculate the starting portfolio. You tell it what you have it tells you success rate. If success rate is 100% then adding more .into through SS still will be 100%

Reduce the starting portfolio in the initial screen and see how it impacts success.

Now there are some exploratory features in FC that will plot different success rate over a range of conditions, etc... is that the feature you're using?

 

[zippy2020]

I'm just curious (and you don't have to answer) what you are calculating for medical expenses as you age. What's the size of your emergency fund? Will you be regularly adding to it through retirement?

As has been published many times, the average cost for retiree medical expenses NOT covered by Medicare totals over $280K/per person, lifetime, and medical costs increase faster than inflation, historically.

 

[momoney]

I'm just curious (and you don't have to answer) what you are calculating for medical expenses as you age. What's the size of your emergency fund? Will you be regularly adding to it through retirement?

As has been published many times, the average cost for retiree medical expenses NOT covered by Medicare totals over $280K/per person, lifetime, and medical costs increase faster than inflation, historically.

I used Fidelity's expense calculator and it says this:
We assume a general average annual inflation rate of 2.5%, with the exception of health care costs. The inflation rate for those is based on a schedule of rates that starts at 4.9% and gradually declines until it matches the general inflation rate.

I estimated my healthcare costs at $9600 a year. But according to Fermion's post you can get it a lot cheaper in early retirement if you adjust your income.


If you include Fidelity's 6 year estimate of long term care @ $113717 per year, I think this fails.

 

[zippy2020]

>>If you include Fidelity's 6 year estimate of long term care @ $113717 per year, I think this fails.>>

Well...it would be interesting to see what Fidelity includes as its parameters of LTC. There are so many variables it's difficult to make a "one size fits all" estimate, anyway - which, yes, adds to the great uncertainty that faces ALL of us as we age.

They might be assuming that perhaps half of that is 'stay at home' care, which is impossible to estimate accurately in advance - leaving the other 3 yrs as institutional/Skilled Care Nursing facility living. Unless Fidelity explains, we don't know if their #s can be relied upon or not.

You might live in a HCOL area, or a LCOL area. You might be thinking of hiring 'gray labor' (under the table) healthcare aides, rather than a bonded/licensed/insured agency. You might have great genes and family history, or really lousy ones (Spouse and I raise our hands, LOL).

What I can tell you is that SCN in our HCOL area is estimated at roughly $150K/yr, and every July 1st every single facility in the state raises its rates. Some years ago we researched full-care senior facilities and they all adhered to the July 1st increase, no exceptions.

Whether you are a resident or a new admittance, that compounded increase gets applied. At the time we looked, the increases were in the 2-4% range, but of course with the higher inflation lately the increases were probably higher, especially as there were a couple of bumps in the local minimum wage in our county.

BTW, home healthcare on a 24/7 basis actually costs more than a professional facility. And home services assume you can get by with minimal medical help. If you have any serious condition that requires an RN, the costs go up dramatically. In certain cases, home healthcare is prohibited and you MUST go into a facility for 24/7 monitoring, for whatever period your doctor recommends.

 

[Fermion]

Seattle enacted a $0.05 tax on my LTC solution

 

[Exchme]

Assuming the spouse still gets 50% if taken at 62:

Reduced SS $26,316/yr =2033
Reduced SS $13,158/yr =2034

No COLA pension $4440/yr = 2033

$1,151,900 for 35 years = 100% success

$73,100 less than if taken at 67.

Not sure it's worth it if the spouse were to die early, the survivor will take a bigger hit on SS?

The lower earner does not get 50% of the larger earner PIA if the lower earner claims early (it's more complex than that) and only gets their own benefit, not the spousal benefit before the higher earner claims.

Go to opensocialsecurity.com, enter your birthdates, and PIAs and let it show you what is best. If you want to play around with the assumptions (life expectancies, rate of return), click the box at the top.

When you get results, scroll all the way to the bottom and look at the graph, which shows the combination of claim ages. If you click on any pixel on the graph it will show you the difference in the benefit and lifetime result for that choice.

We've heard reports that even the SS offices will refer people to this tool because it optimizes the combination of benefits.

It generally recommends the lower earner claim at 62 and the higher earner at 70 as only the larger benefit survives the first death. So the lower earner's claim date is a bet on the first to pass, the larger earner is a bet on the last to pass, so you get different answers.