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Bold again you do not need to sustain it for 22 years. The entire reason as you stated in the line before is to maintain it for 8 years (62 to 70). Big difference between the two. As you are making your way after 70 maybe some might need to replenish but that will be fewer than first glance.
As I stated in my post you saved and scrimped to get to retirement. You have a plan and a nest egg. That nest egg is there for you to use. There is no sense in leaving that on the table unless you die unexpectedly. If you retire say 62 to 65 and have a cool million in retirement and you are planning on taking 3% plus the equivalent SS money you only need that to cover those 8 years. So in your defense if you have drawn too much then maybe you might want to replenish but I contend you will not want to go back to original portfolio balance. Just get it to a point that will make ends meet in the future.
the draw is what your ss would be plus the draw from the portfolio , in this case 80k is taken inflation adjusted over a planned 30 years starting day 1 .
all that changes is the composition that makes up the 80k .
in the beginning it is all your own money making up 80k , at 70 it is the ss and what is left in the portfolio that makes up the 80k .
8% up front for 8 years and 4% plus 40k ss failed way to many times to last a 30 year retirement time frame .
it may if markets are not worst case scenario's but if you have some unexpected large bills or unexpected spending that has you going way over budget at times you will be glad you planned for a full 30 years whether you live that long or not .
if a couple odds are almost a coin toss one will .
It depends on your spending criteria. But I was thinking a 7% draw for 8 years and a 3% draw plus SS in perpetuity. As I said it depends on your spending. Even FIRECalc would give that a sustain.
correct , but the point is it is the same effect . when people say they are building the portfolio back up what they are rationalizing is :
they draw 8% for 8 years , then they still draw the original 4% they would have taken had they filed at 62 which of course won't hold on the reduced balance so they consider the extra 69% you get in ss at 70 as going back in to help the portfolio sustain the 4% draw .
it is the same thing just looked at in a round about manner . there will be no difference in balance left either way you view it .
FYI, I am an R.N employed by the Veterans Administration for the past 17 years. Unlike some Federal Government employees who have jobs that salaries that are higher than equivalent jobs in the private sector that is not the case for R.N.s, and that being said when I took my position along came with it a 20% pay cut but the promise of a pension after 20+ years of service to make up for the upfront income loss. That promise may be broken, and no it is not a good thing especially since I am 60 years old and a little too late for me to jump back into private sector employment and try to make up the income difference.
Do a little research because not all Feds are rolling in the dough like you may think.
colas were never meant to reflect anyone's personal rate of inflation . in fact the cpi's are not a cost of living index , they are only a price change index on a basket of goods and services many of which you have no use for .
they simply are a price change index's on a basket of goods and services through out the 1500 mini economies that make up this country .
it may have little in common with a real cost of living index which depends on what you buy , how many times you personally buy it and the quality of what you buy .
better quality goods tend to see higher price increases but may last many times longer than cheaper versions .
seniors also tend to have their spending patterns change as they age and spending generally reduces on many things .
spending studies have shown that what seniors no longer buy or do as they age helps defray the costs on what went up on the things they continue to spend on .
while it may not feel like it but seniors tend to need less inflation adjusting than someone raising a family who has a totally different effect from these price changes and does not stop doing and buying yet as they age like seniors do . .
our biggest costs are usually housing and energy . my neighbor has no car and lives in a rent stabilized building , the last 2 years 1/2 of all housing in nyc for millions has seen no rent increases . her personal cost of living is far different than yours . thinking the cpi is supposed to track your personal cost of living is a fallacy.
ss was not only never designed to track someone's personal cost of living but it was never designed to be a sole means of support either .
correct , but the point is it is the same effect . when people say they are building the portfolio back up what they are rationalizing is :
they draw 8% for 8 years , then they still draw the original 4% they would have taken had they filed at 62 which of course won't hold on the reduced balance so they consider the extra 69% you get in ss at 70 as going back in to help the portfolio sustain the 4% draw .
it is the same thing just looked at in a round about manner . there will be no difference in balance left either way you view it .
I understand why people would want to build it back up but that I feel is a knee jerk reaction to a feeling of overspending or more to the point over drawing. I just think that unless you are going completely broke after 8 years then you should not overreact.
I think that someone that has a million in retirement savings at 62 wanting to retire at that age starts drawing 7% would be pulling 70k to a total of 560k after 8 years. That would be leaving about half (just a bit under). Then the 40k SS plus a 3% draw of the remainder would last well into retirement. The key then is to keep spending under the initial 70k that I cite. Of course this is all a scenario and does not mean it would work for everyone.
again , they are not actually rebuilding , if they needed 40k from ss and 40k from their portfolio at 62 they are using the bigger ss check to assist the portfolio which can no longer safely provide 40k inflation adjusted safely from the balance anymore because the spending of the 8% left you to low to support 4% .
so the bigger ss check is really making up the difference and the draw based on the starting amount at 62 is now less than 4% .
there is nothing really built up , the larger check is used to take up the slack on the reduced portfolio .
the building part is because instead of drawing 4% from the portfolio plus your early ss check to live on if you filed early , at 70 the 69% larger check needs less money from the portfolio so what is left can compound from markets growing it since you need less from it now .
at the end of the day your income will be the same and balances close . taking it early has it's balance more dependent on markets , the balance taking it late has its balance more dependent on longevity .
Last edited by mathjak107; 05-26-2017 at 03:21 PM..
FYI, I am an R.N employed by the Veterans Administration for the past 17 years. Unlike some Federal Government employees who have jobs that salaries that are higher than equivalent jobs in the private sector that is not the case for R.N.s, and that being said when I took my position along came with it a 20% pay cut but the promise of a pension after 20+ years of service to make up for the upfront income loss. That promise may be broken, and no it is not a good thing especially since I am 60 years old and a little too late for me to jump back into private sector employment and try to make up the income difference.
Do a little research because not all Feds are rolling in the dough like you may think.
Wow I sure hope that does not happen to you.
When any employer, public or private breaks longevity contracts it should be criminal.
Last edited by hurricane harry; 05-26-2017 at 05:53 PM..
FYI, I am an R.N employed by the Veterans Administration for the past 17 years. Unlike some Federal Government employees who have jobs that salaries that are higher than equivalent jobs in the private sector that is not the case for R.N.s, and that being said when I took my position along came with it a 20% pay cut but the promise of a pension after 20+ years of service to make up for the upfront income loss. That promise may be broken, and no it is not a good thing especially since I am 60 years old and a little too late for me to jump back into private sector employment and try to make up the income difference.
Do a little research because not all Feds are rolling in the dough like you may think.
Quote:
Originally Posted by hurricane harry
Wow I sure hope that does not happen to you.
When any employer, public or private breaks longevity contracts it should be criminal.
I brought both of these discussions so that no one gets the wrong information or idea. It is horrible what they are considering for FERS employees. The last 5 years there have already been some harsh changes to the system. It went from a 1% employee contribution to the pension annuity to a now 4% and they are talking more with this latest budget. The administration's budget for 2018 also is stripping the COLA from even current retirees. Lastly there is a provision in the contract that if someone is put out on a RIF they get a supplement paid to age 62. It is only for soldiers who work as well for the federal government for their agency (ie National Guard). It is there because soldiers in that position will lose their full time employment to a RIF in military positions. As it is most guardsmen can't go past age 60 as that is the maximum age for them to remain. In fact most don't even make it to 60 and like me are RIF'd out early.
I certainly hope that those items in the budget are not enacted. I understood and can accept the previous changes but these changes are very hard to reconcile. The trouble is when a change is broad brushed low wage employees are hurt most when in reality the trouble is really in other places but the regulations are pushed out to all.
once again , social security is not an 8% return . there is no return at all until you pass break even and then it starts at zero % . . it is only a 6-8% gain in your ss payment in exchange for the checks ,spousal benefits you give up and extra invested assets you spend down .
you cannot compare your ss to your investments until after break even
MJ, I respectfully disagree. There's a corner case: in mine, it boils down to raw cash in hand.
Personally, I am holding off because that extra $1K per month realized by delaying from FRA to 70 represents the dough that fills the gap between what I've got coming in, and LTC costs. What I've got coming in at that point are pension; taxable dividends; RMDs; and net rental income (in no particular order). Assuming LTC is ??120K??/yr at that point, I need the extra SS dough to avoid decimating my Roths, cash acct, and tax-deferred accounts. The extra dough fills the gap. I sure as h*ll hope I have a good CPA by then should that come to pass.
I am a sissy, simply don't LIKE the idea of decumulation (SP?). Thinking about such leads my (linear) thinking down a logical road. Today: INCOME=OUTGO. Tomorrow: INCOME > OUTGO, Me eat cat food in spectacularly deteriorated RV, parked in the Wal-Mart lot closest to the LTC facility waiting for my next RMD/SS/dividend/pension/rent checks, so they'll let me back in.
(Making fun of myself here somewhat, but not by a whole lot, lol!)
it is a toss up when it comes to cash in hand . yes you get more at 70 but taking it early , and leaving what you are laying out to delay invested could actually pan out better, allowing a higher draw from savings making up the difference .
delaying only works out better for sure if you are not stopping work until you actually file or you have outside sources of income like a pension so your invested money does not get spent down .
other wise you are betting more of your income on the markets and rates taking it early or betting more on longevity taking it later but the income can be pretty close in either case.
in fact using the example i showed above there is no difference in income for the most part .
you are setting your draw day 1 based on ss plus 4% of your portfolio as a max usually .
hypothetically without getting to deep in to the numbers whether that 80k in that example i gave is 4% of 1 a million dollar portfolio plus 40k ss taking it early or 60k ss and 20k from your portfolio delaying because you spent down a lot delaying the income stays the same .
Last edited by mathjak107; 05-27-2017 at 02:05 AM..
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