Reviewing Plan on a Lazy Sunday

[Flieger]

Throwing your numbers in Firecalc and using the Bernicke spending rule to a 100% success rate gives you a spending level of $224K/year. I think you will be fine. Congrats!!!

I had not done that, thanks for the idea! I ran it and put a minimum $500k ending balance at any time, it still came up at ~$197k/year!

Flieger

 

[youbet]

Remember "failure" in Firecalc simply means you insisted on taking 4% when the market was down, so in the end you have to live on SS alone ($70K in your case)

Not really. Failure in FireCalc means your portfolio hits zero before the time period you chose is over. You might be withdrawing 4% or more or less.

 

[pb4uski]

Not the most chipper of topics, but I would take into consideration the reduction in SS if/when one of you passes.

If you still need 110k/year and SS is reduced by half (maybe less), then how will you make up that difference?

Otherwise numbers look good to me.

I do two FIRECalc runs... one for the both of us living long and another for me getting run over by a beer truck tomorrow and using the Investigate tab I look at maximum safe spending at 95% success and then spitball if we/she can thrive on that level of spending.

 

[BlueberryPie]

Sorry I meant you insisted on sticking to whatever % you told Firecalc to use. The point being that very few people are likely to stick with a number when they see they portfolio shrinking year after year.
The other point was that, when you have other income like SS, how terrible is it if you have a 2% chance to run out of money? You might have an end of retirement less epic that it could have been? You'll have to sell the family house? You"ll have to eat rice and beans?
Are you willing to accept a very large chance you'll die richer than you started to avoid as tiny chance of running out? It's a personal choice but looking at more dynamic withdrawal rates gives you options.

 

[Flieger]

I do two FIRECalc runs... one for the both of us living long and another for me getting run over by a beer truck tomorrow and using the Investigate tab I look at maximum safe spending at 95% success and then spitball if we/she can thrive on that level of spending.

Came back to this thread, seems to have died off, but I like this suggestion.

One thing I did find from suggestions here, was the impact of getting hit by the beer truck (as one person put it) on discretionary funds. Change in SS, tax impact etc were a little more (for DW) than I expected. Definitely worth further investigation and planning efforts.

Flieger

 

[Koolau]

Finally left my 24/7 responsibility position (end of January) and enjoying no interruptions on the weekend. To that end, I was reviewing planning this morning. There is a pretty big spreadsheet behind the simplified info below (engineer ), but this is how I can get my wife to pay attention for the 20 minutes to run through the plan:

Wife retires next year at 62, I retire in 2028 at 65

• Expected retirement savings of $1.4MM (mix of post-tax and pre-tax, but I determined tax requirement in the expenses).
• Expenses in Retirement (not including one time events)
• - $110,000/yr (includes Fed and State taxes, lots of "niceties")
• Total SS 2028 (when both retired) - $70k/year
• Required savings WR ($'s/%) ~$40k/year or ~3%

Based on 4% ROI of Retirement Savings, ~2.5% increase to WR annually, and then including a switch to required larger WR at RMD time, I am seeing ~ $1MM left in Savings at age 90. I figure this more than accounts for unplanned one time expenses for the 25 years of planned retirement to 90.

Curious as to others thoughts... I am sure others here develop lots of scenarios on days when they are bored.

Flieger

Much worse a black-swan event than the beer-truck would be both of you spending several years in a nursing home (say, memory care.) At roughly $10K/month each (and rising) that would blow your extra million in 4 years. That's not a high probability event, but it is the kind of thing that I think of.

Both of my parents ended their days in memory care units (at the equivalent of those prices) but they did it at different times. They literally came out "even" (one more month for the last survivor would have wiped them out.) YMMV

 

[Flieger]

Much worse a black-swan event than the beer-truck would be both of you spending several years in a nursing home (say, memory care.) At roughly $10K/month each (and rising) that would blow your extra million in 4 years. That's not a high probability event, but it is the kind of thing that I think of.

I have thought of that one, and I decided I just can't plan for every contingency or I will wind up never retiring. I am trying to hit as many as I can, while still having some time to enjoy some retirement.

Flieger

 

[pb4uski]

+1 You can't plan for every contingency. If we run out of money then there is Medicaid LTC but the likelihood of that is very remote.

 

[Flieger]

+1 You can't plan for every contingency. If we run out of money then there is Medicaid LTC but the likelihood of that is very remote.

Glad I am not the only one!

 

[Koolau]

I agree that you can't cover every contingency. Our "stab" at doing so was to purchase LTC insurance. I wouldn't do it again, but since we bought in our early 50s, the continuing premiums are "affordable" though they have increased. Additionally, we allocate our home value toward LTC if need be. Even then, there are no guarantees, so we all just muddle on and hope for the best so YMMV.

 

[Flieger]

I agree that you can't cover every contingency. Our "stab" at doing so was to purchase LTC insurance. I wouldn't do it again

Interesting. I decided not to do LTC, but curious as to why you say you wouldn't do it again?

Flieger

 

[Koolau]

Interesting. I decided not to do LTC, but curious as to why you say you wouldn't do it again?

Flieger

Better question might be "why keep it?" But, we started at age 51, so we've paid a "lot" up front - over the years, really. I guess that's why I wouldn't do it again. We could have "self insured" due to our assets. Also, the insurance company has raised rates twice (now, nearly double what we paid originally.)

So why keep it? Because we DID pay up front and now the yearly premiums sorta make sense. For the two of us for 3 to 4 years, we pay less than $4K/year.

 

[Flieger]

Better question might be "why keep it?" But, we started at age 51, so we've paid a "lot" up front - over the years, really. I guess that's why I wouldn't do it again. We could have "self insured" due to our assets. Also, the insurance company has raised rates twice (now, nearly double what we paid originally.)

So why keep it? Because we DID pay up front and now the yearly premiums sorta make sense. For the two of us for 3 to 4 years, we pay less than $4K/year.

Ok, yeah, that makes sense.

Flieger