How Much Can I Spend in Retirement? (spouse, state, relatives)

[Robyn55]

Originally Posted by NewbieHere

I was thinking of taking my SS at FRA until I saw the actual amount at 70. It's worth the wait because my husband already taking it.
I've budget $40-$50k for travel the first few years, I know it will go down less than that in 5 years. But it's a separate budget from spending. For traveling, if I don't feel like doing it, I can scale down.

We spend more on travel now than we did a decade ago. In part because we like to be pampered more and in part because some things (not all) cost more. In terms of people who like to travel (not everyone does) - I don't see most cutting back until they're 80+ or so. Although a lot depends on one's physical condition (some people are fine when they're 80 - others aren't). Robyn

[mathjak107]

Originally Posted by reneeh63

I get the logic but my image was that you had a LOT of reserves invested - so much that a few hundred a month difference in SS benefits would not have a huge impact.

At what point/percentage of "replacement" income would SS have to make up in order to make delaying important....

a couple of hundred a month difference ? try more than 20k a year difference .


the difference between us getting 32k a year in ss filing early and over 54k a year in ss at 70 plus colas is a big difference in draw that we would have to take from savings forever if we filed early . we are not talking just a few hundred a month difference.

the difference between 62 and 70 is a 69% bigger check plus colas on the difference .

[crystal lite]

Originally Posted by mathjak107

my wife is older then me so she has been collecting since 62 . she will suspend hers at fra until 70 letting it grow .

.

This is great news if accurate. I didn't know you could start collecting SS at 62 and suspend at 66 to let grow until 70.

[mathjak107]

yes you can but you only get the increases from fra on . you get no additional credit for the earlier years .

[TuborgP]

Originally Posted by reneeh63

I get the logic but my image was that you had a LOT of reserves invested - so much that a few hundred a month difference in SS benefits would not have a huge impact.

At what point/percentage of "replacement" income would SS have to make up in order to make delaying important....

Having a multiple year history with MathJak I think we both prioritize growing wealth in retirement. A few years ago dying with more than you started retirement with was a goal. Averaging a 4 percent drawdown along with a 6 percent ROI not unheard. Folks plugged multiple scenarios into FireCalc and saw how many left you with greater wealth barring medical in the out years. Much of that has changed. If you plan into your 90's that $200 a month reinvested or invested can with compounding add up. The Extra SS means possibly not touching your taxable accounts and letting them grow. Adding $200 a month to Wellington instead of withdrawing can add up. Also at the upper end of the SS benefit spectrum delaying is a lot more than a couple of hundred a month.

[mathjak107]

it sure is , it is more than 20k a year difference . you need 400-600k to generate that on your own inflation adjusted today .

[GeoffD]

I'm trying to structure things so I defer collecting Social Security to age 70 as risk mitigation that I outlive my accumulated wealth. I have 65 1/2 penciled in for retirement and I will have to run the numbers then to see how to optimize my cash flow. I think I will be doing tax deferred IRA/401(k) rollovers to a Roth IRA but I really won't be able to fully assess the best tax and Medicare premium avoidance strategy until I'm retired in 8 years. Until then, all I can do is maintain a high savings rate while I'm working. I probably should have done a backdoor Roth in 2015.

I'm doing my best to have the same disposable income when I'm retired. It all hinges on my health care costs and taxes. It's tough to forecast either a decade from now.

[GeoffD]

Originally Posted by TuborgP

Having a multiple year history with MathJak I think we both prioritize growing wealth in retirement. A few years ago dying with more than you started retirement with was a goal. Averaging a 4 percent drawdown along with a 6 percent ROI not unheard. Folks plugged multiple scenarios into FireCalc and saw how many left you with greater wealth barring medical in the out years. Much of that has changed. If you plan into your 90's that $200 a month reinvested or invested can with compounding add up. The Extra SS means possibly not touching your taxable accounts and letting them grow. Adding $200 a month to Wellington instead of withdrawing can add up. Also at the upper end of the SS benefit spectrum delaying is a lot more than a couple of hundred a month.

I'm hoping the check to the undertaker bounces.

[BellaDL]

Originally Posted by GeoffD

I think I will be doing tax deferred IRA/401(k) rollovers to a Roth IRA but I really won't be able to fully assess the best tax and Medicare premium avoidance strategy until I'm retired in 8 years
..... I probably should have done a backdoor Roth in 2015.

I am wrestling with the maths right now to decide how much to convert my husband 401K to Roth IRA this year taking into consideration both Medicare premium brackets and Federal tax brackets.

My goal is to stay below the max limit of the Medicare MAGI bracket of $170K to $214K (2016 part B extra is $48.7 and part D is $12.7 per month). The premium extras for the next bracket are almost 3x more!

The Fed 25% bracket is from ~$75K to ~$152K and 28% is from ~$152K to ~ $231K. I am thinking of staying below the $214K Medicare number so we will only be taxed at 28% for around $62K.

I tried backdoor Roth IRA once when it was first offered (don't remember what year) and it was a mess since we had multiple previous IRA accounts (both deductible and non-deductibe). First we got IRS notifications of owning >$10K in taxes then after we filed some amended returns with explanations etc, it was reduced to $1K.

After that, I decided that the hassle was not worth it and never tried the backdoor Roth again. We have not contributed to our IRA non-deductible accounts for 2015 and probably will not bother since doing so will just increase the RMDs starting next year!

Back to the original topic of 'How much can I spend in retirement?', I am in total agreement with Robyn.

Originally Posted by Robyn55

I approach things from the POV of what kind of lifestyle can the income I'm pretty sure I'll have support. Not how much do I have to generate to support the lifestyle I might want.

The market has fluctuated a lot since 2007 so it's hard to estimate what is the right draw down amount. 2015 was not too bad a year in comparing to the last few months but our total dividends and capital gains amount for 2015 was only 65% of 2014 (with no changes in our portfolio). I have no ways of knowing what the total income from our taxable investments will be in 2016 and may have to wait until near the end of the year to decide how much of 401K amount to convert to Roth IRA to stay within our goal of <$214K.

My financial plan is just to 'stay the course', not making any changes in our portfolios or standard of living (which is assured with at least 3x in cash saving). In a year or two, I expect our incoming fixed income will be sufficient to cover our expenses and we will not have to touch any parts of our retirement savings.

[jrkliny]

Originally Posted by GeoffD

I'm hoping the check to the undertaker bounces.

More and more of us are considering cremation rather than ridiculous costs for traditional caskets and funerals. Donating your body to a medical school will eliminate even the costs of cremation. Your relatives will receive the remains for any additional ceremony they feel is important.