Getting excited in PA

[Bir48die]

Not sure what you are seeing in Firecalc, but you are way short of a $75k spend at 95% success rate. I get around $55k (based on a 35 year retirement).

Not sure how you get 100% out of the info we've been given other than inputs that the Dow will go up 25% in the next few years. I think if you change the inputs to a 2-3% growth at best for awhile then it should be eye opening.

Don't want to rain on the parade but we need to make sure that future gains are realistic to past performance.

 

[seraphim]

I’ve not seen mention of long term care considerations - have you long term health insurance? If not, check out the costs of an Alzheimer facility and see what that can do to an investment portfolio.

I have a similar portfolio to yours and spend about 100k a year - but DW and I have a 79k pension so we only withdraw 30k a year. We can also survive nicely without taking withdrawals by not traveling half the year. I would be very nervous in your situation trying to go long term with 75k in expenses for ten years - especially without LT care being covered.

Just my $.03

 

[seraphim]

I’ve not seen mention of long term care considerations - have you long term health insurance? If not, check out the costs of an Alzheimer facility and see what that can do to an investment portfolio.

I have a similar portfolio to yours and spend about 100k a year - but DW and I have a 79k pension so we only withdraw 30k a year. We can also survive nicely without taking withdrawals by not traveling half the year. I would be very nervous in your situation trying to go long term with 75k in expenses for ten years - especially without LT care being covered.

Just my $.03

Correct that to 70k pension

 

[pb4uski]

Here's a quick/dirty view in the ball park of what FIRECalc gets:

Current portfolio = $650k + $85k +$100k + $107k + $255k = $1,197k
Contributions = $75k
Growth at 5% = ($1,197k * 5% * 2)+($75/2*5%*(1.5+0.5)) = $123k
Retirement portfolio = $1,395k

His SS side fund = $2.6k * 12 *(67-53-2) = $374k
Her SS side fund = $1.8k * 12 *(67-55-2) = $216k
Remaining portfolio = $805k

3.5% WR * $805k = $28k
His SS = $31k
Her SS = $22k
Total cash inflow = $81k.... $85k at 4% WR.

 

[baseman250]

Good point. No LTC as of right now. It's available through my benefits package at current employer, but we've been running without it. Any suggestions on providers? ... and thanks for your input!

I’ve not seen mention of long term care considerations - have you long term health insurance? If not, check out the costs of an Alzheimer facility and see what that can do to an investment portfolio.

I have a similar portfolio to yours and spend about 100k a year - but DW and I have a 79k pension so we only withdraw 30k a year. We can also survive nicely without taking withdrawals by not traveling half the year. I would be very nervous in your situation trying to go long term with 75k in expenses for ten years - especially without LT care being covered.

Just my $.03

 

[baseman250]

I was just on healthsherpa.com. Much better....

It looks like no subsidy at $75K income level. I dropped to $65K and things started looking alot better. Motivation to keep below that watermark if possible. Of course, ACA could look a lot different two years from now.

Interesting that you were bothered just from entering info.
I think that between the healthcare.gov and the healthsherpa.com sites, one can receive some decent information.

 

[Dtail]

I was just on healthsherpa.com. Much better....

It looks like no subsidy at $75K income level. I dropped to $65K and things started looking alot better. Motivation to keep below that watermark if possible. Of course, ACA could look a lot different two years from now.

Yes, for a married couple, one needs to stay ~65k. The rule is 4x FPL (Federal Poverty Level) income.
Please note that the rules effectively become a cliff. Thus ~65k one receives tax subsidies, but over 65k one receives NOTHING.

So the key from this angle is to use enough of your Taxable Account or perhaps Roth account as part of your 75k overall spending in order to receive the subsidy.

See below for the rules on what is considered income to be taxed related to
the calculation of MAGI for ACA tax subsidies.

http://laborcenter.berkeley.edu/pdf/2019/magi.pdf

 

[freckles1061]

Here's a quick/dirty view in the ball park of what FIRECalc gets:

Current portfolio = $650k + $85k +$100k + $107k + $255k = $1,197k
Contributions = $75k
Growth at 5% = ($1,197k * 5% * 2)+($75/2*5%*(1.5+0.5)) = $123k
Retirement portfolio = $1,395k

His SS side fund = $2.6k * 12 *(67-53-2) = $374k
Her SS side fund = $1.8k * 12 *(67-55-2) = $216k
Remaining portfolio = $805k

3.5% WR * $805k = $28k
His SS = $31k
Her SS = $22k
Total cash inflow = $81k.... $85k at 4% WR.

Sorry I'm a bit slow on the math but why are you subtracting His/Her SS side fund from Retirement Portfolio and calculating withdrawal on Remaining Portfolio? Every time I think I'm catching on I get stumped again lol! thanks

 

[Al18]

For SS budgeting purposes, most users reduce the SS estimate by 25% to account for the projected shortfall in the SS system. It's better to be conservative for budgeting.


Overall, you plan looks close. You may want to consider working to age 56 for a bit more money.


It may be more difficult to get an auto loan once you no longer have a paycheck. You may want to replace one of your cars with a new one while you're still working.

 

[Dtail]

Sorry I'm a bit slow on the math but why are you subtracting His/Her SS side fund from Retirement Portfolio and calculating withdrawal on Remaining Portfolio? Every time I think I'm catching on I get stumped again lol! thanks

Because until they receive their SS payments, they will effectively be using their portfolio as a proxy substitute for those payments.
So in effect, PB is calculating the total withdrawals before taking SS, then the effective net WR% once they are taking SS.

 

[baseman250]

I actually mentioned replacing one of the vehicles to the DW just the other day! Thanks.

For SS budgeting purposes, most users reduce the SS estimate by 25% to account for the projected shortfall in the SS system. It's better to be conservative for budgeting.


Overall, you plan looks close. You may want to consider working to age 56 for a bit more money.


It may be more difficult to get an auto loan once you no longer have a paycheck. You may want to replace one of your cars with a new one while you're still working.

 

[baseman250]

What about the AA of 60/30/10 (stock/bond/mm)?

The Roth IRAs have a bit of $$ sitting in the VG-MM (a little over $100K total) as I can't decide what to do in the current political/market environment.

Maybe this is a good thing

 

[baseman250]

So in our situation, withdrawals from the Roth IRAs would NOT be counted towards MAGI. Everything else would. Correct?

Yes, for a married couple, one needs to stay ~65k. The rule is 4x FPL (Federal Poverty Level) income.
Please note that the rules effectively become a cliff. Thus ~65k one receives tax subsidies, but over 65k one receives NOTHING.

So the key from this angle is to use enough of your Taxable Account or perhaps Roth account as part of your 75k overall spending in order to receive the subsidy.

See below for the rules on what is considered income to be taxed related to
the calculation of MAGI for ACA tax subsidies.

http://laborcenter.berkeley.edu/pdf/2019/magi.pdf

 

[Dtail]

So in our situation, withdrawals from the Roth IRAs would NOT be counted towards MAGI. Everything else would. Correct?

In addition to your Roth a/c, you could use your brokerage account at Vanguard.
I assume by brokerage account that this is after tax monies which would also not count towards MAGI, but any dividends generated would count towards MAGI.

Most folks trying to manage their MAGI tend to use their brokerage/Taxable accounts before using the Roth account.
Thus the Roth account can continue to generate tax free growth.

 

[PartIrish]

The plan is to hold off until at least 67 for social security:

Me (at 67) - $2,600/month
Her (at 67) - $1,800/month


Baseman250, do these SS estimates take into account that you will not be working until age 67? If not, recalculate using the anypia calculator from social security or this one for a more accurate estimate: https://socialsecurity.tools/app.html

Best of luck to you--looks very close to "go."

 

[baseman250]

Yes. We both have required credits.

The plan is to hold off until at least 67 for social security:

Me (at 67) - $2,600/month
Her (at 67) - $1,800/month


Baseman250, do these SS estimates take into account that you will not be working until age 67? If not, recalculate using the anypia calculator from social security or this one for a more accurate estimate: https://socialsecurity.tools/app.html

Best of luck to you--looks very close to "go."

 

[PartIrish]

Yes. We both have required credits.

Actually my point was to not use the social security estimates that you see in your online account. Those estimates assume you will work up to full retirement age.

 

[baseman250]

Hmmm. How would I calculate a proper estimate then?

Actually my point was to not use the social security estimates that you see in your online account. Those estimates assume you will work up to full retirement age.

 

[PartIrish]

You use this tool:

https://socialsecurity.tools/app.html

But to use it, you must go to your Social Security account online (ssa.gov) and copy your SS earnings record. This is easy to do--just highlight the whole earnings record, and right-click "copy." Then paste that earnings record into the tool (it is useful to have two different browser windows open to do this; one for SS and the other with the SS tool page). This tool does not keep any information after you close out the browser window, so only you see the results. Once you have your earnings record in the tool, it will allow you to choose your final year of work, and it will then calculate what your actual social security payment will be. The estimate will be very close to your actual payment, in current dollars.

One last note: Social Security is based on your highest average monthly earnings for 35 years (which is 420 months). If you have fewer than 35 years of earnings, any missing years will be averaged in as "0". Thus if you have 30 years of earnings, your social security average will have 5 years of 0. That will impact your ultimate benefit.

 

[Dtail]

You use this tool:

https://socialsecurity.tools/app.html

But to use it, you must go to your Social Security account online (ssa.gov) and copy your SS earnings record. This is easy to do--just highlight the whole earnings record, and right-click "copy." Then paste that earnings record into the tool (it is useful to have two different browser windows open to do this; one for SS and the other with the SS tool page). This tool does not keep any information after you close out the browser window, so only you see the results. Once you have your earnings record in the tool, it will allow you to choose your final year of work, and it will then calculate what your actual social security payment will be. The estimate will be very close to your actual payment, in current dollars.

One last note: Social Security is based on your highest average monthly earnings for 35 years (which is 420 months). If you have fewer than 35 years of earnings, any missing years will be averaged in as "0". Thus if you have 30 years of earnings, your social security average will have 5 years of 0. That will impact your ultimate benefit.

The below site from the Social Security site is also used by some members of this site.
https://www.ssa.gov/benefits/retirement/estimator.html

One nitpicking point is that the 35 years of highest earnings is inflation adjusted.
Thus for example, 60k earned 25 years ago would be inflation weighted higher than 70k earned currently.

 

[PartIrish]

The below site from the Social Security site is also used by some members of this site.
https://www.ssa.gov/benefits/retirement/estimator.html

One nitpicking point is that the 35 years of highest earnings is inflation adjusted.
Thus for example, 60k earned 25 years ago would be inflation weighted higher than 70k earned currently.

Thank you for that friendly amendment, Dtail. You are correct, and I almost added that to my reply, but didn't want to get too far into the weeds. In fact, my own earnings record shows that my 1980 income of $15K is now inflation adjusted to $50K--a little more than tripled!

 

[baseman250]

Good to know. Thanks!

You use this tool:

https://socialsecurity.tools/app.html

But to use it, you must go to your Social Security account online (ssa.gov) and copy your SS earnings record. This is easy to do--just highlight the whole earnings record, and right-click "copy." Then paste that earnings record into the tool (it is useful to have two different browser windows open to do this; one for SS and the other with the SS tool page). This tool does not keep any information after you close out the browser window, so only you see the results. Once you have your earnings record in the tool, it will allow you to choose your final year of work, and it will then calculate what your actual social security payment will be. The estimate will be very close to your actual payment, in current dollars.

One last note: Social Security is based on your highest average monthly earnings for 35 years (which is 420 months). If you have fewer than 35 years of earnings, any missing years will be averaged in as "0". Thus if you have 30 years of earnings, your social security average will have 5 years of 0. That will impact your ultimate benefit.

 

[baseman250]

Using the tool at this site:

https://socialsecurity.tools/app.html

I determined that SS at 67 for me would be $2400/month, not $2600/month if I only work two more years. I'll run the DW's numbers, but I assume the delta will be about the same. Doesn't completely derail the possibility, but very good to know. This is an awesome resource. Thanks all!

 

[PartIrish]

You're welcome, baseman250. Good luck in your planning and eventual retirement!

 

[SpinDoctorTX]

Welcome to the forum, baseman250!

I can add nothing more of value than any of my predecessors, who are by and large smarter than I. We ERd on a lot less than you guys (in a locl area), and are 2 ridiculously happy campers. I'll look forward to hearing updates as you work your way to the finish line!