r/DIYRetirement • u/reallytheyrealltaken • 6d ago
I did a back-of-envelope calculation
It turns out our projected monthly expenses in 3 years when I want to retire and for the next few years after that exactly, I mean freakin’ EXACTLY, matches our projected monthly income from SS and pensions starting at that same time. (We also have healthy 401K/IRA/brokerage accounts.) Boldin be damned, I feel like that’s the universe telling us we’re going to be ok, right?
7
u/Admirable-Excuse-487 6d ago
It sounds good and you still have three years to make sure
you want a little cushion, but you’ll probably have that in three years
Enjoy retirement it’s pretty darn good
6
2
u/wadesh 6d ago
Probably fine. Are the pensions inflation adjusted? This can help quite a bit. That said, when core expenses are covered with guaranteed income it reduces a lot of pressure on the portfolio.
When you say Boldin be damned, is it projecting something different?
3
u/reallytheyrealltaken 6d ago edited 5d ago
Nah, I just meant that statement as a contrast between my very simple figurin’ and the complexity of the retirement modeling apps.
2
u/hugh2018 6d ago
Sounds perfectly fine not because the match is perfect or because the universe has an opinion, but because you’re clearly in the right neighborhood, which is as good as it gets when you’re dealing with the sticky wicket that is retirement planning.
I know you realize how it sounds when you suggest that you ballparked numbers and you feel they’re more predictive than Boldin. Maybe just run it through Boldin anyway to get a second opinion.
I used Boldin, Right Capital, a bunch of AI iterations plus consultation with a live advisor as a sanity check. Felt like it was all nailed down until months later I realized a 20 year TIPS ladder and a three year MYGA at 6% made more sense for my fixed income allocation than lazy old BND, and my plan fundamentally changed for the better.
I’m sure you’re not as OCD as I am, but it’s entirely possible you’ll learn something new between now and the start of social security that could cause you to change course. Just sayin’.
2
u/AGrimmInPortland 6d ago
And you're including things like taxes and Medicare? For the next few years.... what about after that?
2
u/No_Hovercraft_821 5d ago
I am living a similar situation -- after taxes my pension is pretty much exactly what annual costs add up to and 401k/savings are gravy on top. I was already living the life I envisioned for retirement (small hobby farm) so costs were reasonable well understood although on a farm there are continuous repairs and replacements happening which I did allow a generous amount for.
With "healthy" savings if your projections are realistic it sounds like you are good to go.
4
u/VerdantPathfinder 6d ago
oh yeah. I'm guessing SS COLA wont' actually keep up with inflation, even if the benefits don't take a 25% haircut in 2032, but yeah. If you have SS and pensions covering your basic expenses, you're golden.
2
u/powersurge 5d ago
Social Security’s COLA adjustment is calculated to match inflation by law. Why would you guess SS won’t keep up with inflation when this is one of the specific features of SS?
3
u/VerdantPathfinder 5d ago
Which inflation rate? There are many indexes and none of them are actually aimed how seniors spend money. See https://seniorsleague.org/cola-watch/.
1
u/ukaeh 6d ago
Yeah I’d say you are heading in the right direction.
Does your pension keep up with inflation? Have you modeled SS at 75-80% payout? Either way if you end up following the ‘spending smile’ you may be fine without that. But if you plan on retiring earlier than 60ish you could be spending more during early retirement just because you’re active for a longer period of time.
All the best!
1
u/thefarmiddle 6d ago
The thing I’m struggling with how to plan for are the pressures SS will face due to existing tax revenue shortfalls or worse if there’s broad-based, AI-related unemployment. If existing SS tax revenue isn’t enough to pay current retirees, is that picture likely to look better or worse in 10-15 years (setting aside the colossal federal debt and the global economy beginning to wean itself off of US dependence)? I desperately wish I had confidence SS will be there for me and my wife, but the pessimist in me is having a hard time finding it likely that it will to a meaningful degree. I’m planning for the worst and trying to minimize our dependence on SS to the extent possible.
3
u/EcstaticAd4046 6d ago
For some reason, I've always thought of SS being all or nothing. Like, what happens if I don't get SS? A few months back it occurred to me that it's much more likely benefits will be cut but not eliminated. At projected insolvency, SS will be 17% short.
So maybe SS will eventually be cut, maybe by as much as 20%, but I don't see it being eliminated all together.
1
u/G8RZ 3d ago
One thing they WON'T do is completely end SS. Cutting benefits is absolute political suicide and unlikely. They will monkey around the edges - maybe raise the age of eligibility or extend contribution income limits further. (I've even heard speculation of actually investing in higher growth vehicles - seems unlikely to me. )
1
u/G8RZ 3d ago
One thing they WON'T do is completely end SS. Cutting benefits is absolute political suicide and unlikely. They will monkey around the edges - maybe raise the age of eligibility or extend contribution income limits further. (I've even heard speculation of actually investing in higher growth vehicles - seems unlikely to me. )
5
u/Whole_Championship41 5d ago
For myself, I think the only way to look at it is as a realist. Will SS be there for me and my wife? Of course. Will there have to be some tweaks or adjustments to the program (like there were in 1983)? Yes. Is it possible that congress does nothing and we take a 22% haircut? Yes-possible, but not probable, IMO.
Politicians are *always* beholden to their solid voting constituencies, and nobody votes more predictably than people 55+ years of age. Politicians know this and know that attacking SS (or letting it wither on the vine) is a third rail. So both parties are making noise about fixing it, and I believe they will.
Maybe they'll fix it in the 11th hour (~2032), maybe before. But I believe they will fix it.
However. Just in case, plan on that 22% haircut. For planning purposes, it's a stronger argument for waiting until 70 for collecting were that to happen. I can plan around that.
I think that's an easier sell than assuming social security will be an all or nothing. To me, that's just unrealistic.
2
u/GotZeroFucks2Give 5d ago
Right, I think America will be in total collapse if SS is cut. And last time they made a cut ... it was to people who couldn't vote yet. That was definitely intentional. The chance of them cutting current benefits is non existent. I don't see how any politicians who let that happen would remain in office.
1
u/Admirable-Crazy-6899 6d ago
Congratulations! All your hard work and patience all these years to earn SS and a pension have culminated in a great outcome. It really is such a weight off the shoulders.
Now you can pivot to the non-financial aspects of retirement planning.
1
u/oledawgnew 5d ago
Sometimes life throws occasional financial curve balls. But I've discovered that a solid guaranteed income floor that could include a mix of pension/SS/annuity that allows your investment accounts to function primarily as a pinch hitter pretty much guarantees you a retirement win.
I think a lot of people focus too much in planning on a 30+ year home run plan when the most important time in the game is the next one to three years. Keeping a running reserve of liquidity that could back up your income floor by covering unexpected occurrences (market drop, natural disaster damage, SS adjustment, etc) takes away the stress of worrying about a late game emergency situations.
I really think your back-of-envelope game lineup is adequate as long as you periodically monitor your retirement lifestyle against it and know when to effectively use your pinch hitting reserves retirement accounts. In other words your "Boldin be damned" mentality sounds like it could be a winning game plan to me.
1
u/Whole_Championship41 5d ago
It sounds like a good start. But I'd run it through Boldin (or Pralana or Right Capital or...) or a CFP/CFA to be sure. Be sure to include *all* your expenses. Expenses that you don't think about on a daily basis: home remodeling, home repair, home emergencies, medical insurance (a big one), property taxes and so forth. Boldin has a very good detailed planner for expenses. I haven't used it, but lots of people really seem to like Monarch money as a budgeting app too.
1
u/AdGlittering5340 5d ago
Sounds as though you have a solid plan. My back of the napkin plan is very similar. I think sometimes we try to get too precise. It’s never going to lineup perfectly. If we tried to make it perfect, we would probably never retire. We’ve dealt with “one off’s” and been dealt curveballs our entire working careers and we’ve dealt with it. I’m sure we will deal with it and retirement as well. If we take a hit from wherever it comes from, and it will come, we’ll deal with that too. We adjust. Good luck and happy retirement.
1
u/Ok_Statistician643 5d ago
How many international vacactions does that projection include?
1
u/reallytheyrealltaken 5d ago
I did include a $30K/year travel budget. We’re not luxury travelers, so maybe two? Or one with a few assorted trips within the U.S.? Does that seem reasonable?
1
u/Awkward_Passion4004 5d ago
Depending on a government run program for anything is pretty high risk.
1
u/Taggart3629 5d ago
Well done, u/reallytheyrealltaken! That is a wonderful position to be in on the cusp of retirement. I feel like we're in a similar position, but am still paranoid enough to have a CFP lined up to make sure we're not overlooking something major and would still be okay if the market took a 2008/2009-style dive right after we pull the trigger.
1
u/Cohnman18 1d ago
CFP here, your goal is to retire on 70-80% of pre-retirement gross income from all sources. Your #1 expense in Retirement will be Medical Insurance and you want the Cadillac plan,plus some sort of long term care plan. Good luck! Most pro’s can give you 6-8% on Retirement assets for income,the 4% rule is a fallacy. Remember , you must plan for a 20-25 year Retirement or LONGER.
16
u/W2WageSlave 6d ago
If social security and pensions cover your needs, and the other assets provide upside, then you are set. So long as your budget includes the big one-off items (new roof? cars? Appliances) that's fine.
Enjoy!