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when someone dies and you are left with one social security check and possibly reduced survivor benefits you begin to understand why you need that cushion and margin of safety.
Last edited by mathjak107; 07-30-2013 at 05:32 PM..
My wife is set if I should pass first and I am set if she passes first. We planned it that way. Each of our pensions were reduced from taking survivor options and she has her own SS which she is taking now and I am taking mine at 70. We know multiple people who did it this way. Not all but many.
We have the same plan regarding our pensions. We're going with the reduced survivor benefit, which combined will be around 30K per year. Wifey will take SS and I'll wait till FRA. I'm 2 years older to begin with. As I've chirped in on other threads about living in NY, yes taxes are higher but often times so are the salaries, and that can pay off in retirement. I've been fortunate to hit the max SS earnings for a while and that hopefully is good news when I file. The 800 pound gorilla in the room is my 401k. Call it fear but I grew up in a single parent household on welfare. I wanted to get out of that so bad. Never wanted to end up poor again. Worked hard, went to college, got a great job and have been contributing close to the max in to my 401k for some time. Even with 3 kids we made sure the 401k came first. My company has very good match, low fees, and I reinvested my dividends for a long time. Never went crazy on new cars, but still enjoyed family vacations and hobbies and a few other things. To the point, about 30k in pensions, SS should be pretty good based on what i've read on their website and my 401k projects over the 1M mark by a nice sum.
Of course very few men in my family have lived past 65 so hopefully not smoking and trying to get back in shape will help or there's going to be one very popular widow in the Hudson Valley.
There is no magic number. It is all going to depend on:
How long you will need to draw
the amount you hope to draw and if you want to inflation adjust.t
what your allocations will be.
how the markets and interest rates do.
how the sequence of your gains ,losses come in.
What inflation will be.
and most important pertaining to the amount you need is how high of a success rate do you want to maintain with that income you are drawing to never running out of money.
nothing is 100% in a vacuum, everything has trade offs depending on the above criteria
everything is tied to each other and anyone who throws numbers out at random is shooting from the hip.
All good points but I believe you omitted the most important variable of all: your health.
All good points but I believe you omitted the most important variable of all: your health.
health comes in on the budgeting side . it really does not come into play on the sustainanility of a withdrawal. health can be the unexpected expenses like divorce or family emergencies..
it may influence for how long you plan but again the sustainability of that created pay check is not dependent on health. if it was a balance sheet health is on the liability side not the income side.
remember there are two aspects to planning. the budgeting and expenses side and then the creating that income side to match.
once you know how much you need you can back into the amount by looking at the various success rates and the allocations you would need to get that level of income.
it is like a big puzzle you are matching pieces to.
i always find this chart helpful for at least getting a ball-park to what would have worked to date, then i can modify it to me and events as they unfold in real time.
.
Last edited by mathjak107; 07-31-2013 at 03:43 AM..
health comes in on the budgeting side . it really does not come into play on the sustainanility of a withdrawal. health can be the unexpected expenses like divorce or family emergencies..
it may influence for how long you plan but again the sustainability of that created pay check is not dependent on health. if it was a balance sheet health is on the liability side not the income side.
remember there are two aspects to planning. the budgeting and expenses side and then the creating that income side to match.
once you know how much you need you can back into the amount by looking at the various success rates and the allocations you would need to get that level of incpome.
it is like a big puzzle you are matching pieces to.
i always find this chart helpful for at least getting a ball-park to what would have worked to date, then i can modify it to me and events as they unfold in real time.
.
.
So basically depending on your desired income. You can meet your goal if at the time you begin to withdraw and plan for 30 years you are good if your portfolio is 50% stocks to bonds. Obviously the mid-term government bonds and a good mix of stocks say small and mid cap with an index fund being the easiest.
well we would have been good until now. the future is always the unknown but you would end up adjusting in real time anyway. i doubt anyone would keep spending as they were if we fell 50% even though the income stream historically hardly ever failed at 50/50.
it shows how what we think is the safest route 0% stock can actually be the riskiest attempt at anything longer than 20 years at 4%. .
remember we never had low to no interest rates and high stock valuations like we have now so the future is a little fuzzy for all allocations...
Last edited by mathjak107; 07-31-2013 at 04:01 AM..
I should add that early on, I thought I needed a $1 million in order to retire. As time went by and our sources of retirement income became clearer and we had a better idea of what retirement expenses would be, that amount was reduced and the date of my retirement became earlier. Over the years, I've reduced the $1 million 3 times (to $650k, then $500k and to where it is now), and reduced my retirement age from 67 to 60. We're lucky in that we both have pensions with health coverage.
The pensions and health coverage are exactly why you don't need a million or much money
at all. LUCKY ducks.
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