Retirement income.....how did you do it?

[tallguy]

Jan 23, 2023 22:16:14 GMT -5 svwashout said:

Jan 23, 2023 14:50:43 GMT -5 azucena said:

Didn't realize that we had some many FIRE folks here but I guess that makes sense amongst savers. Would love to hear your magic FIRE numbers if you don't mind sharing. I know there are lots of variables that go along with that number but I'd love to hear the number all the same.

I never had a pension so my magic FIRE target was a portfolio market value of 33x annual living expenses excluding income taxes, and that happened in 2003. My job situation improved around that time, so I stayed on at work. Last year's layoff round caught me by surprise, but I've been ready for it financially all these years. I am starting to see how retirement readiness involves more than just financial preparation, though.

No doubt.  I could have gone earlier than I did, but wasn't really psychologically ready to pull the plug.  I finally decided to go part-time at 56.5 with the idea of coasting to 62.  Circumstances changed, and I left at 58.  Don't regret it for a minute.

[seriousthistime]

Q1.  I didn't have a detailed budget, but for the last 5 years I worked, I was saving a pretty hefty amount in the 401(k), money market account, and adding to investments.  When I sketched out my retirement, I took my net income from all sources, subtracted out what I'd been saving because I knew I could meet my ongoing expenses on what was left after that, and then tallied up the income I expected to have in retirement.  When I saw the two numbers were about the same, I retired.  It's been two years, and I haven't had to take money from retirement savings, so I guess I have no budget contingency for a down market at this point. 

That sounds a little confusing.  So, for example, if I had a net income of $100K, and saved $25K, I knew I could live on $75K.  When my expected retirement income from all sources except RMDs hit $75K, I retired. 

Q2. I retired at age 69.

Q3. The age at which I started to collect SS is complicated. My FRA was 66.  When I turned 66, I started collected half of XH#1's SS benefit. I continued to do that until age 70, then switched to my own benefit. (I don't believe this option is available to people who were born in 1954 or later.) 

I'm guessing it covers 2/3 or so of my annual expenses.  

I have three sources of income, one of which I'm trying to save so that if/when it ends I won't miss it so much and will have a tidy sum built up to soften the blow.  That source is 44% of total income.  SS and my own pension are 56%.  Not counting the first source, SS is about 66% of my expenses, which includes smaller amounts I'm saving here and there.  If I count true expenses (fixed and discretionary) and no additional savings, SS is probably about 70% of it. 

Q4.  In all of my accounts, prior to the recent setback, my retirement fund AA was roughly 60% stocks, 40% bonds. Now it's more like 50-50. It is about 95% tax deferred, 5% Roth.  I haven't needed to withdraw any funds yet, and I haven't hit the age for mandatory RMDs. 

I did make a major life change last year and moved to a MCOL area, which is close to my DS, DDIL, and DGS (who has disabilities). I sold my condo in a VHCOL and with the sale proceeds I was able to pay cash for a nice enough, big enough SF one story home in the MCOL area, with some left over to stash away for home improvements.  That reduced my $1,670 mortgage (principal and interest) to $0.  Property taxes are about the same, insurance on a SFH is more than a condo (but car insurance is lower so it's a wash), and instead of the monthly HOA fee I pay a roughly equal amount to hire out lawn service, snow removal, gardening, etc.  The new MCOL area is also in a state with no income tax. 

[Deleted]

Jan 24, 2023 8:33:51 GMT -5 seriousthistime said:

Q3. The age at which I started to collect SS is complicated. My FRA was 66.  When I turned 66, I started collected half of XH#1's SS benefit. I continued to do that until age 70, then switched to my own benefit. (I don't believe this option is available to people who were born in 1954 or later.) 

Oh, yeah- File and Suspend. One financial writer publicized it and wrote a book and every other financial news site repeated the info as if they'd discovered it themselves.

So of course the gubmint slammed that window down for future applicants.

DH died before I reached FRA or I would have been eligible. I'm glad I didn't file for Spousal at age 62 after retiring at 61 since it would have made me ineligible for that benefit and I would have just gotten the Survivor Benefit of DH's SS after he died in 2016. Instead I was able to wait to collect my own till age 69. (Yeah, I would have gotten more at 70 but I got impatient.)

This, BTW, is a good example of something that should be factored into the work outside the home vs. SAHM decision. Typically it's the wife who's the survivor and if she has high future income potential she may be giving up a lot of SS income. It's more than a question of how current cash flow is affected.

[minnesotapaintlady]

Jan 22, 2023 20:37:52 GMT -5 jerseygirl said:

We’re very unusual Jerseyguy retired around 52 from an extremely stressful job ( his replacement died of heart attack after 1 year). I officially retired when company I worked for was bought (61) . But after a year at full salary I was bored and took consulting jobs. Consulting was very lucrative and enjoyable for me! Last year I decided to finally stop - I’m 80 today! Consulting jobs still contact me and tempting but finally stopped mostly due to poor health of Jerseyguy

Have to say I hope that I'm as on top of everything at 80 that you seem to be!

[tskeeter]

Budget:
    100% of current gross earnings less social security withholding and less retirement 
    plan contributions.  This turned out to be 65% of gross earnings.

Retired:
    Age 61.  Precipitated by reorganization at work.  DW continued to work another 
    couple of years.

Social Security:
    Plan to collect SS at age 70.  Longevity in DW’s family makes delaying in order to 
    collect increased benefits desirable.  When both DW and I are collecting SS, it will
    cover a bit more than 40% of our expenses.

Pension:
    Began collecting at age 62.  Although pension benefits increased for every year you
    delayed benefits, the year to year percentage increase dropped significantly at
    62 and continued to drop for every additional year of delay

Retirement:
    Our retirement portfolio is equity heavy.  To compensate for the risk, we started
    with three years of spending in cash and cash equivalents so we had funds to carry
    us through an economic downturn without selling stock at distressed prices.

    How big a downturn could we survive?  Since we’ve been retired for a few years,
    our sequence of returns risk has decreased.  I think we could take a 50% hit and a 
    four or five year recovery without changing our lifestyle (especially since SS will
    kick in in a couple of years).
                                                                                      
                                                         

[plugginaway22]

I am posting this in honor of my deceased Father who used to say..."Well the Eagle took a sh!t today!".
DH and I filed to receive SS benefits and when I logged into our bank account today, yes, The Eagle had done that.   

[jerseygirl]

MissR used that expression also
Still miss seeing her posts and never saw her garden

[debthaven]

plugginaway22 It's probably not an eagle, but the French equivalent pooped here on 9 Feb too. It was the first time for me too!

I was so excited to get my first retirement payment LOL! 

[plugginaway22]

It is definitely a good feeling to see that after working for SO many years! Congratulations debt!

[Rukh O'Rorke]

there was so much great info in this thread! I wasn't able to digest all of it at the time....with the market rising a bit the past month or so....I can start to think about this stuff again!!

[Rukh O'Rorke]

Jan 21, 2023 20:29:56 GMT -5 minnesotapaintlady said:

This is obviously all theoretical for me since I'm not there yet.

Q1.  That one is easy as I've been budgeting for so many years and have a very good idea what my monthly expenses are.  I basically took my today budget, which has a lot of "kid" expenses.  Assumed kid would be replaced with other things like increased medical and travel and then tacked $1000 on for a buffer to come up with what I felt would be comfy for me in retirement.  I'm not real thrilled with carrying a mortgage into retirement, but probably will.  It will only equal 5K/year, but that's 5K/year I can't spend on more fun things.

Q2.  As close to 59.5 as possible!  My youngest graduates from high school and turns 18 pretty much the same time as I hit 59.5, so some of it kind of depends on him and what his post high school plans are.  If he's already dropped out and moved in with his dad or pregnant girlfriend and is working a full time job things will be different than if he is planning on going to an expensive private school in hopes of law school afterwards.   I could see maybe staying on until 61 or 62 if I needed insurance for Carrot, but I might go part time. We keep full benefits for 30 hours, so you can just work 3 10's. 

Q3. Tentatively planning on 70 and it would cover more than 50% of expenses.  I had just always had that as a goal with no actual reasoning behind it just because it gives the highest payout, but recently I've ran some calculators and they were all coming up with 69 years 8 months or so, so I wasn't far off.

Q4.  8-11 years.  Plan on living completely off my 401K during that time, but having a 2 year "cash" (safe investments) buffer in case the market is down.  My asset allocation right now is 90% stocks and I think I will move more to 80/20, but not sure I'll get a whole lot more conservative than that.  I don't know yet.  If there's another run-up in the market I can see myself shifting some of it out of stocks though.  I won't have any guaranteed income for a decade, so probably should start considering asset allocation more.  I'm also considering buying an SPIA at some point.  Coincidentally, I just set this book on my end table to start reading.

www.amazon.com/Make-Your-Money-Last-Indispensable/dp/1476743770

I'm going to be 59.5 in about a year - how about you? I think you are 6 years out? 59.5 sounds like good timing as you gain access to everything....still pondering...

I am still uncertain about waiting til 70 for SS, think I will play it by ear and between retirement and 70 only file for benefits if the market goes wonky in a bad way.....or if rukh inc money goes away before I'd planned....

I'm trying to build up the cash piece. It is not easy! There is no cash equivalent in my current company 401k  . 

[Rukh O'Rorke]

Jan 23, 2023 22:16:14 GMT -5 svwashout said:

Jan 23, 2023 14:50:43 GMT -5 azucena said:

Didn't realize that we had some many FIRE folks here but I guess that makes sense amongst savers. Would love to hear your magic FIRE numbers if you don't mind sharing. I know there are lots of variables that go along with that number but I'd love to hear the number all the same.

I never had a pension so my magic FIRE target was a portfolio market value of 33x annual living expenses excluding income taxes, and that happened in 2003. My job situation improved around that time, so I stayed on at work. Last year's layoff round caught me by surprise, but I've been ready for it financially all these years. I am starting to see how retirement readiness involves more than just financial preparation, though.

Are you saying you reach a highly conserrvative FI and continued to work an additional 19 years? I would think you'd be rolling in the dough by now!!

[minnesotapaintlady]

Jun 7, 2023 13:29:35 GMT -5 Rukh O'Rorke said:

Jan 21, 2023 20:29:56 GMT -5 minnesotapaintlady said:

This is obviously all theoretical for me since I'm not there yet.

Q1.  That one is easy as I've been budgeting for so many years and have a very good idea what my monthly expenses are.  I basically took my today budget, which has a lot of "kid" expenses.  Assumed kid would be replaced with other things like increased medical and travel and then tacked $1000 on for a buffer to come up with what I felt would be comfy for me in retirement.  I'm not real thrilled with carrying a mortgage into retirement, but probably will.  It will only equal 5K/year, but that's 5K/year I can't spend on more fun things.

Q2.  As close to 59.5 as possible!  My youngest graduates from high school and turns 18 pretty much the same time as I hit 59.5, so some of it kind of depends on him and what his post high school plans are.  If he's already dropped out and moved in with his dad or pregnant girlfriend and is working a full time job things will be different than if he is planning on going to an expensive private school in hopes of law school afterwards.   I could see maybe staying on until 61 or 62 if I needed insurance for Carrot, but I might go part time. We keep full benefits for 30 hours, so you can just work 3 10's. 

Q3. Tentatively planning on 70 and it would cover more than 50% of expenses.  I had just always had that as a goal with no actual reasoning behind it just because it gives the highest payout, but recently I've ran some calculators and they were all coming up with 69 years 8 months or so, so I wasn't far off.

Q4.  8-11 years.  Plan on living completely off my 401K during that time, but having a 2 year "cash" (safe investments) buffer in case the market is down.  My asset allocation right now is 90% stocks and I think I will move more to 80/20, but not sure I'll get a whole lot more conservative than that.  I don't know yet.  If there's another run-up in the market I can see myself shifting some of it out of stocks though.  I won't have any guaranteed income for a decade, so probably should start considering asset allocation more.  I'm also considering buying an SPIA at some point.  Coincidentally, I just set this book on my end table to start reading.

www.amazon.com/Make-Your-Money-Last-Indispensable/dp/1476743770

I'm going to be 59.5 in about a year - how about you? I think you are 6 years out? 59.5 sounds like good timing as you gain access to everything....still pondering...

I am still uncertain about waiting til 70 for SS, think I will play it by ear and between retirement and 70 only file for benefits if the market goes wonky in a bad way.....or if rukh inc money goes away before I'd planned....

I'm trying to build up the cash piece. It is not easy! There is no cash equivalent in my current company 401k  . 

July of 2028...about 5 years.  So much depends on what happens with the younger kid who graduates high school in May of that year. 

[Rukh O'Rorke]

so wondering if I am doing this right, thinking I can sandwich this into this thread.....subheading...soc sec and net asset worth....or somesuch.

So, I've beentrying to find "my number" - previously, I had discounted any potential soc sec in my planning but that would have me working a bit longer so with market forces boosting me up quite a bit the past month or so.....taking my freedom feeling to the excel....

so if I want to retire as soon as possible, I think the minimum annual income I'm willing to plan around is 100k (seems extravagant, but about 40k would be for mortgage (all PITI), student loan payment, and car payment; then 40k for everything else....and about 20k for income taxes)

I'll be 59 later this year so using that as current age and modeling from retirement at age 59, and then taking social security at various ages. So I am taking (100k - expected soc sec) * 25 + 100k * years to get to that age. I find I'd need about 1.875M + 300k at 62. That is a 28% increase from where I am now in terms of assets, and seems to make sense.

But modeling taking soc sec at older ages actually increases the amount of assets I need before pulling the plug....I thought it would decrease. Seems to be that 100k budget is so much higher than the soc sec increases year to year - on a 50k or 60k yearly budget, the required assets needed to retire do decrease with increased age at taking soc sec. But I know this doesn't really work because because by 70 I'm adding in 1.1M to make it up to 70, and yet 1.1M at .04 would nearly provide the yearly amount of soc sec I get at 70.

Although maybe it does work! because the (100k - expected soc sec) * 25 number gets correspondingly smaller each year! using this, I'd start at a 4.6% WR on 2.175M if taking soc sec at 62 down to a 4.2% WR on 2.366M if taking soc sec at 70.

The change in WR seems so slight! and the change in assets equally slight - an 8% increase which would be less than a year if an average market.....

So is this math working out? or what should I do differently?

Note:And while the PI of the mortgage and the loans will of course sequencially disappear accross the years, I did not want to include that as then I wouldn't feel comfortable using 4% rate. Keeping those pay offs over time as my wiggle room on the long term risks.

[plugginaway22]

If only we knew how long we will live and what the markets will do before we bite the dust!! We could not see the value in waiting to collect SS. Why wouldn't we want our retirement investments to stay put and keep earning? What is that saying...A Bird in the Hand is worth? 2 in the Bush?? Something like that. The best flexibility is to have 2+ years of cash when you do retire.

[Rukh O'Rorke]

yes! planning for 2-3 years in something stable....cds, i bonds, treasuries, etc.....whenever i do pull plug.....

[teen persuasion]

Ok, I was trying to figure out the same thing: DH retired 2 years ago at 54, I'm still working but part-time, not much income (putting 50% in IRA), so how much can we count on for a level spending amount? I finally hit on this way of thinking about it: Income layers.

Mentally separate your stash into two parts - one part will have the 4% rule applied to it forever; the other part is what I think of as my DIY SS replacement fund. So if we plan to claim SS at 70, whatever that SS payment would be times the number of years until age 70. The base layer.

Example math: if SS at 70 is $37k, and we need to fill in 13 years, my DIY SS fund is 13 * $37k = $481k. Then if my stash is $950k total, the remainder is $469k. Four percent of that is about $18,750. This layer floats on top and increases your total. Your total spending could be the sum: $55,750.

So you are definitely withdrawing more than 4% before SS (and drawing down the stash), but after claiming SS you drop back to only the inflation adjusted 4%.

You can swap in reduced SS at various ages (62, 65, 67) and the corresponding number of years, to see which gives the largest spending total. I'm also using my current partial earnings for a few more years as another tweak - my earnings replace some of the needed DIY SS for say 3 years.

One recent change I made to this mental framework - I was originally using our combined SS benefits, but a bogleheads thread made me realize that painted too rosy a picture of finances later in life if one of us died early, because the survivor drops back to only one payment. I was blithely assuming we'd both live a long time collecting both SS payments. So I switched to using only the highest SS payment, and my spousal payment will be a bonus for as long as we are both around! More conservative planning.

[CCL]

Jun 17, 2023 20:54:46 GMT -5 teen persuasion said:

Ok, I was trying to figure out the same thing: DH retired 2 years ago at 54, I'm still working but part-time, not much income (putting 50% in IRA), so how much can we count on for a level spending amount? I finally hit on this way of thinking about it: Income layers.

Mentally separate your stash into two parts - one part will have the 4% rule applied to it forever; the other part is what I think of as my DIY SS replacement fund. So if we plan to claim SS at 70, whatever that SS payment would be times the number of years until age 70. The base layer.

Example math: if SS at 70 is $37k, and we need to fill in 13 years, my DIY SS fund is 13 * $37k = $481k. Then if my stash is $950k total, the remainder is $469k. Four percent of that is about $18,750. This layer floats on top and increases your total. Your total spending could be the sum: $55,750.

So you are definitely withdrawing more than 4% before SS (and drawing down the stash), but after claiming SS you drop back to only the inflation adjusted 4%.

You can swap in reduced SS at various ages (62, 65, 67) and the corresponding number of years, to see which gives the largest spending total. I'm also using my current partial earnings for a few more years as another tweak - my earnings replace some of the needed DIY SS for say 3 years.

One recent change I made to this mental framework - I was originally using our combined SS benefits, but a bogleheads thread made me realize that painted too rosy a picture of finances later in life if one of us died early, because the survivor drops back to only one payment. I was blithely assuming we'd both live a long time collecting both SS payments. So I switched to using only the highest SS payment, and my spousal payment will be a bonus for as long as we are both around! More conservative planning.

I'm thinking the biggest issue you might have with this plan will be if the markets/retirement accounts happen to take a dive during the pre-Social Security period. That extra to cover SS until you actually claim it might drain your account too much. Of course, assuming you are 62, you could start collecting SS sooner.

[teen persuasion]

Yes, sequence of returns risk in the first ten years is always an issue. Given that we are both mid-50s, just a small amount of part-time earnings could give a lot of breathing room if markets tank. Also, I'm figuring what I *could* spend - which is higher than our normal spending right now, so there's padding that we could cut in poor years, too. Some of that extra spending I'd like to direct to making the house more energy efficient, so it should payoff in lower utility costs, saving future money. And current spending still includes 2 boys living at home, who will hopefully leave the nest in the near future, further dropping baseline expenses.

There's lots of built-in slush.

[Rukh O'Rorke]

Jun 17, 2023 20:54:46 GMT -5 teen persuasion said:

Ok, I was trying to figure out the same thing: DH retired 2 years ago at 54, I'm still working but part-time, not much income (putting 50% in IRA), so how much can we count on for a level spending amount? I finally hit on this way of thinking about it: Income layers.

Mentally separate your stash into two parts - one part will have the 4% rule applied to it forever; the other part is what I think of as my DIY SS replacement fund. So if we plan to claim SS at 70, whatever that SS payment would be times the number of years until age 70. The base layer.

Example math: if SS at 70 is $37k, and we need to fill in 13 years, my DIY SS fund is 13 * $37k = $481k. Then if my stash is $950k total, the remainder is $469k. Four percent of that is about $18,750. This layer floats on top and increases your total. Your total spending could be the sum: $55,750.

So you are definitely withdrawing more than 4% before SS (and drawing down the stash), but after claiming SS you drop back to only the inflation adjusted 4%.

You can swap in reduced SS at various ages (62, 65, 67) and the corresponding number of years, to see which gives the largest spending total. I'm also using my current partial earnings for a few more years as another tweak - my earnings replace some of the needed DIY SS for say 3 years.

One recent change I made to this mental framework - I was originally using our combined SS benefits, but a bogleheads thread made me realize that painted too rosy a picture of finances later in life if one of us died early, because the survivor drops back to only one payment. I was blithely assuming we'd both live a long time collecting both SS payments. So I switched to using only the highest SS payment, and my spousal payment will be a bonus for as long as we are both around! More conservative planning.

This makes much more sense! I knew I was missing something.....

Using this approach, I would need 1.950k to retire with an initial WR of 5.12% if drawing soc sec at 62. Looking at taking soc sec later, the required assets lessens over the years as the WR increases. At 70, the assets needed are 1.810k with an initial WR of 5.53%.

This is super encouraging! A decent market will take me into that ball park in about a year.....which of course also means the market could plummet and not recover for 5 years! But that is the world we live in.....

[Rukh O'Rorke]

Jun 17, 2023 22:51:58 GMT -5 CCL said:

Jun 17, 2023 20:54:46 GMT -5 teen persuasion said:

Ok, I was trying to figure out the same thing: DH retired 2 years ago at 54, I'm still working but part-time, not much income (putting 50% in IRA), so how much can we count on for a level spending amount? I finally hit on this way of thinking about it: Income layers.

Mentally separate your stash into two parts - one part will have the 4% rule applied to it forever; the other part is what I think of as my DIY SS replacement fund. So if we plan to claim SS at 70, whatever that SS payment would be times the number of years until age 70. The base layer.

Example math: if SS at 70 is $37k, and we need to fill in 13 years, my DIY SS fund is 13 * $37k = $481k. Then if my stash is $950k total, the remainder is $469k. Four percent of that is about $18,750. This layer floats on top and increases your total. Your total spending could be the sum: $55,750.

So you are definitely withdrawing more than 4% before SS (and drawing down the stash), but after claiming SS you drop back to only the inflation adjusted 4%.

You can swap in reduced SS at various ages (62, 65, 67) and the corresponding number of years, to see which gives the largest spending total. I'm also using my current partial earnings for a few more years as another tweak - my earnings replace some of the needed DIY SS for say 3 years.

One recent change I made to this mental framework - I was originally using our combined SS benefits, but a bogleheads thread made me realize that painted too rosy a picture of finances later in life if one of us died early, because the survivor drops back to only one payment. I was blithely assuming we'd both live a long time collecting both SS payments. So I switched to using only the highest SS payment, and my spousal payment will be a bonus for as long as we are both around! More conservative planning.

I'm thinking the biggest issue you might have with this plan will be if the markets/retirement accounts happen to take a dive during the pre-Social Security period. That extra to cover SS until you actually claim it might drain your account too much. Of course, assuming you are 62, you could start collecting SS sooner.

Yes, totally agree! But this is a somewhat different question I think, and gets into asset allocation after the first step of determining necessary assets.

I'm actually pretty excited about putting into my excel what teen persuasion was talking about. Because once I hit 59 from where my model starts - I can actually start to quantify the lower amount of assets I need on a month to month basis. So while my assets are *hopefully* increasing month to month, the needed number to quit immediately is slightly less. This is something I've been doing with my current employer 401k to see what is needed to get to 59.5 when I could access all my accounts (using the rule of 55 with current employer).

Work has gotten better since I took on that task, lol!  I think I can now commit to working until 59.5 which will happen in April of 2024. After having enough to make it to 59.5, I started tracking how much would be needed to make it to 62 just out of that account.

All that said, I have been altering my AA the past 2-3 years as my investing has tended towrds the very high risk/reward part of it for the past 20 years. So I think for me (being a bit older than teen) that having the cash/cash equivalents part of my AA being enough to fund me to a minimum of 62 would be part of my plan. 

So based on needing 1.810 - 1.950M which is a 6-15% incease from my current 1.7M, and hitting 59.5 in about 10 months.....seems like I need to get onto my other planning - which has not been happening!

[Rukh O'Rorke]

Jun 17, 2023 23:39:16 GMT -5 teen persuasion said:

Yes, sequence of returns risk in the first ten years is always an issue. Given that we are both mid-50s, just a small amount of part-time earnings could give a lot of breathing room if markets tank. Also, I'm figuring what I *could* spend - which is higher than our normal spending right now, so there's padding that we could cut in poor years, too. Some of that extra spending I'd like to direct to making the house more energy efficient, so it should payoff in lower utility costs, saving future money. And current spending still includes 2 boys living at home, who will hopefully leave the nest in the near future, further dropping baseline expenses.

There's lots of built-in slush.

One thing that worries me is - if I take this info that I can retire with 1.8M at a 5.53% WR if taking soc sec at 70.......and then before I start drawing the soc sec they cut benefits pretty significantly. I would be 69 and not well able to do anything about earning money and would likely have depleted my assets after a decade at a higher WR.

Does this worry you at all? Maybe your slush is enough that it wouldn't, but I don't want to end up at 80 with only a small soc sec to keep me going......my mother is still going at 99, so I would likely be facing decades of life.

[teen persuasion]

Jun 18, 2023 13:35:19 GMT -5 Rukh O'Rorke said:

Jun 17, 2023 23:39:16 GMT -5 teen persuasion said:

Yes, sequence of returns risk in the first ten years is always an issue. Given that we are both mid-50s, just a small amount of part-time earnings could give a lot of breathing room if markets tank. Also, I'm figuring what I *could* spend - which is higher than our normal spending right now, so there's padding that we could cut in poor years, too. Some of that extra spending I'd like to direct to making the house more energy efficient, so it should payoff in lower utility costs, saving future money. And current spending still includes 2 boys living at home, who will hopefully leave the nest in the near future, further dropping baseline expenses.

There's lots of built-in slush.

One thing that worries me is - if I take this info that I can retire with 1.8M at a 5.53% WR if taking soc sec at 70.......and then before I start drawing the soc sec they cut benefits pretty significantly. I would be 69 and not well able to do anything about earning money and would likely have depleted my assets after a decade at a higher WR.

Does this worry you at all? Maybe your slush is enough that it wouldn't, but I don't want to end up at 80 with only a small soc sec to keep me going......my mother is still going at 99, so I would likely be facing decades of life.

Yeah, I've played what-if with different SS scenarios. My own SS record is pretty skimpy - college earnings didn't count, 20 years as SAHM, working only part-time, way less than 35 years of SS income.  So I'm pretty dependent on DH's SS - first for spousal half of his FRA PIA, and then on his optimized age 70 SS.  But if he doesn't make it to 70, we don't get that max payment amount - I believe the best I can do is the higher of whatever it would be at his death (if he hasn't filed yet) or his FRA PIA (if he's under FRA when he dies, and I wait to claim so I don't trigger early reductions). Survivors-only is a lot less rosy than the max at 70 for him + spousal 50% for me. Worse yet if we ALSO get only 70-something% of SS when the trust fund runs out. Like $37k vs $15.5k for best vs worst scenarios!

I've tried to look into what exactly should happen if they don't fix SS and the trust fund runs out. It's really not spelled out - payments should drop to match inputs. Everyone assumes that those already receiving SS won't get cut (because it's never happened before), only new applicants would see cuts. And besides, 70-something% is *most* of what they owe you, right? Uhm, no, to cut the total outgoing to 70-something% and still pay current recipients 100%, all those new applicants would need to get 0% until enough current ones stop collecting (i.e., die) to get the math to work.  There's no way that will work peacefully. So I have to believe the SS shortfall *must* get fixed somehow - made up from general budget, tax increases, lift the wage cap, more benefit reductions, higher age limits,... But they really are playing chicken by continuing to ignore it.

So I don't want to draw down our stash too much, in case politicians succeed in gutting SS either deliberately or thru neglect. If we ignore future SS, the 4% rule on our current stash would suggest a withdrawal similar to our best case SS benefits (which is why I developed my plan - just doing 4%, then adding SS at 70 suddenly doubles the total - why not level  it out?) - more than our current spending.

The problem with the 4% rule is that nobody uses it as an actual withdrawal rubric - it's just a rule of thumb to judge whether you have enough  to retire on. You should have *enough* for at least 30 years based on past market history, but will you have *just* enough, or will you end up with millions extra that you could have spent if only you'd known SORR wouldn't hit *you*?  So bogleheads and others have developed all sorts of variable withdrawal plans - you set a floor that covers necessary spending, normal levels to also include spending on wants, and rules on how much to increase withdrawals when markets are up or how much to reduce withdrawals if markets drop - the idea being that TOTAL spending could be greater over time with a bit of prudent ebb and flow.

Our actual path is   - we are making it up as we go along, tiptoeing into FIRE. DH quit, I'm still in OMY mode (I keep saying at least until DS5 is no longer our dependent or FAFSA filing tax years run out, best guess is after 2025). I want to get to zero earned income to make room for Roth conversions before SS, so we can reduce future taxes once SS starts, but who knows what tax changes might pop up to mess with my plans?

I'm also working on reducing expenses everywhere I can, to reduce our need for a bigger stash. House is paid off, student loans paid off. Working on house upgrades to be more energy efficient if not independent (oil is stupid expensive now). That 4% rule implies that spending $25k on upgrades that reduce energy expenses by at least $1k/year going forward is a wash - I'm hoping we can reduce expenses by more than that, offsetting some of the planned drawdown. Ultimately, the house itself is an additional fallback source of income if everything goes wrong - sell and downsize, reverse mortgage, etc.

[Rukh O'Rorke]

realized my numbers were all wrong...had to go into ssa.gov and input 0 future earning. Was not a huge change since its just a few extra years and I already have more than 35 years in there....

Everything is coming just slightly under 2M. With the revamped numbers is 1.976M (62) to 1.913M (70) and a 5.06% to a 5.23% WR.....

So my goal will be to hit 2M and start out with 5% WR, and then can play taking soc sec by ear......this would include 200-300k in cash/equivalents to cover a minimum of 2 years without cashing in stocks. So - it is less than I was hoping for and a higher WR than "ideal"......but - well - time's awasting....

I remember a thread back in ye ole YM days......my goal was 3.333M and a 3% WR for 100k.....well......

[haapai]

Jun 17, 2023 20:54:46 GMT -5 teen persuasion said:

Ok, I was trying to figure out the same thing: DH retired 2 years ago at 54, I'm still working but part-time, not much income (putting 50% in IRA), so how much can we count on for a level spending amount? I finally hit on this way of thinking about it: Income layers.

Mentally separate your stash into two parts - one part will have the 4% rule applied to it forever; the other part is what I think of as my DIY SS replacement fund. So if we plan to claim SS at 70, whatever that SS payment would be times the number of years until age 70. The base layer.

Thank-you!  I'm stealing the bolded part.  I'm slightly embarrassed not to have thought of it earlier, but thinking about it in layers solves a lot of problems. 

Yes, I'm embarrassed that this hadn't occurred to me earlier, or that I hadn't seen it earlier, but who cares?  A good idea that cuts through confusion is a good idea. 

Message boards can be kinda magical. 

FWIW, I am unlikely to be able to use this idea to retire "early" but it might transform how I think about retiring involuntarily before hitting FRA. 

[countrygirl2]

I just had everything typed up and it disappeared, grrr. May again later.