When we officially stopped working for a regular paycheck, it would still be 30 years before I could start to collect full Social Security benefits at Age 67, and 35 years before Winnie could receive the spousal benefit.
With Social Security so far in the future, many early retirees don’t even consider SS as a factor. Who knows, maybe the program won’t even be in place in 30 years. Best case it might be an insurance policy, a final layer of protection for worst-case outcomes.
But time marches on. It is now only 18 years before I am eligible for reduced early benefits at Age 62.
Which got me thinking… should I start to include Social Security in our overall portfolio value? And if so, can we spend that future Social Security income now?
Spending Future Social Security Income Now
I have zero qualms about increasing spending based on portfolio growth. If our portfolio doubles, we can double our expenditures.
This is not without risk, of course. Maybe this year is the year that the 4% Rule fails. (but probably not.)
But this is not the only deviation from a traditional Trinity Study / 4% Rule type analysis. Social Security income is imminent, and income from any source means our portfolio will bear a lighter burden.
Or… bear the same burden with greater withdrawals.
How much greater? And when?
Insurance / Terminal Value of Social Security
Based on the 4% rule, somebody retiring at normal retirement age with $1 million can spend $40,000 per year. It is known.
Additionally, they can spend 100% of their Social Security income. Guaranteed.
But how do we factor Social Security income into the equation 10, 20, or 30 years in advance?
I injected a Social Security income stream into cFIREsim at 5 year intervals while holding spending constant, and evaluated the increase in portfolio terminal value (the projected value of a portfolio after 30 years of retirement.) This is purely a mathematical construct and is completely independent of the initial portfolio value or withdrawal rate.
I used a 90/10 stock/bond portfolio and Social Security income of $1,500/month for me and a 50% spousal benefit with a 5-year delay, This equates to SS income of $18,000/year for 5 years and $27,000/year thereafter. (This is our expected SS income and also about the average.)
Our projected SS income – Numbers from this calculator
More income = more money, so over every one of the available 30-year rolling window periods from 1871 to 2018, average and median terminal values increase significantly. The worst case year also saw a substantial increase in terminal value.
This is the effective insurance value of Social Security and is shown in the chart below. When we choose to ignore Social Security for purposes of planning early retirement, this is what we exclude.
Example data points:
- It is reasonable to ignore Social Security if 30 or more years away from eligibility.
- At 25 years from Social Security eligibility, the insurance/terminal value is around $100k, or 10% of a $1 million portfolio. At this point, it likely pays to stop ignoring Social Security.
- Somewhere between 15 and 10 years before Social Security, the value of SS reaches $1 million. I would call that substantial.
Additional income, naturally, always results in an increase in terminal value. We should be able to spend some of that excess.
Spending Future Social Security Income Now
To determine how much of the excess we could spend, I again turned to cFIREsim, this time increasing spending while holding all other critical parameters the same, e.g. failure rate is the same and worst case dips in the portfolio are the same or improved relative to the no Social Security case.
From the historical record, the portfolio terminal value after 30 years will be no more rosy nor dire than if Social Security didn’t exist.
Example data points:
- At the midpoint, retiring 15 years in advance of average SS income, we could spend about $7,500 extra per year.
- Using exact numbers, we might spend $47.5k for 30 years rather than spend $40k for 15 years followed by $67k for 15 years. We drain the money bucket a little faster pre-SS and fill it up again post.
- 47.5k/40k*4% = effective 4.75% withdrawal rate from core portfolio
- assumes we’ll be alive to collect SS for 15 years, but if not, hey, we are dead
- Or we continue spending $40k/year, with an effective withdrawal rate of 3.4% (40k/47.5k*4% = 3.4%)
- insurance effect is an incredible 0.6% reduction in withdrawal rate
- “sleep better at night”
- Using exact numbers, we might spend $47.5k for 30 years rather than spend $40k for 15 years followed by $67k for 15 years. We drain the money bucket a little faster pre-SS and fill it up again post.
Applying the Data to Our Own Plan
Deciding to spend future Social Security income now requires some confidence that the program will be there for us. This gets easier as we age.
If we are also confident that the insurance effect of a higher terminal value is no longer necessary, because of:
- a positive sequence of returns in the early years,
- spending less than 4% / less than projected
- accidental income from other sources
- general hubris
…then we could choose to tap SS early.
The benefits aren’t great when still 25+ years away from the Social Security event horizon, but increase rapidly with time. Where we are presently, 18 years out, we could expect a benefit of $5,000/year, which will grow by about $1,000 for each year we wait.
If we were to tap into SS early at some time, we would probably spend this extra on discretionary items versus lifestyle inflation, so spending can go back to normal levels if need be. In other words, use it to buy handbags and bicycles not a long term triple net lease on a dream house.
Summary
Many early retirees choose to ignore Social Security as part of their portfolio and longevity analysis. 30+ years from Social Security eligibility, this is a reasonable approach. But once we get within 25 years of our first Social Security income, the impact on portfolio longevity becomes significant.
More income, even decades from now, means an increase in portfolio terminal value (the value after 30 years of withdrawals.)
This increase is a real component of our overall portfolio, which has the effect of reducing our effective withdrawal rate if we continue to spend as usual.
Or, we can take this increase and spend it, in effect spending future Social Security income now.
For other interesting views on Social Security, check out when I estimated the value of SS as an annuity or when I calculated total SS return on investment.
A deterministic model including Aus ‘Age Pension’ (non-contributary, means tested, age eligibility welfare)
https://www.telstrasuper.com.au/information-hub/calculators/retirement-income-projector
Tapering payments due to the ‘Asset Test’ results in a tax free $A0.076 increase in income for each $A1 of assets reassigned to non-assessable by spending such as on home improvements in the range from $A848,000 to the ‘Sweet Spot’ of $A416,013.
More ‘Alice in Wonderland’ to come from a possible Labor government stopping tax credits attached to dividends for Self Funded Retirees but not Age Pensioners – a difference of ~30% * 8% * $A848,000 = $A20,000 depending on whether $1 inside or outside the Asset Test.
Warning: Governments can be irrational longer than you can live.
Governments can be irrational longer than you can live would be a good name for an album.
In the US, Imputed rent is a nice tax benefit for people with paid off homes, and primary home value is often excluded for various means tests or protected from seizure.
You might want to think of Social Security as longevity insurance. What happens if you live to 100+? When you look at it that way, taking it early may not be your best option.
I totally disagree. After a quick calculation, taking it as early as possible is ALWAYS the best decision.
Can you share your calculation? Thanks!
For me, I will be lucky if I get $10k a year from social security because of my shortened career (less than 35 years) and the effect of WEP since my last 5-6 years of employment are at a job with no Social Security Contributions. Back of the envelope, I found that the rate of return for Social Security for 2 people married filing jointly is about 1.23%. (Source – https://www.heritage.org/social-security/report/social-securitys-rate-return). I think that it really doesn’t matter when you tap Social Security, it really comes down to your finances and how long you think you will live. However, there is one caveat, If you take your Social Security early at 62 and then throw it at a Roth IRA in VTSAX and use the rest for medical expenses or an additional taxable account. Then you can get a better rate of return and more money from your Social Security Contributions than if you waited until age 70 to start pulling out your money.
Thanks for this great article. All of my investments are in Tax Differed Buckets and I have no Taxable Accounts. My new job has a 457k that I am maxing out each year and I plan on living on that to avoid the 10% penalty for early withdrawals while I use my Traditional IRA for my Roth Conversion Ladder. One of my concerns is the sequence of return risk since I will be pulling out twice my yearly expenses for the first 5 years getting the ladder up and running. Based on your calculations above (I will be less than 20 years from 62 at FIRE), I’m glad to see that the math supports cutting deeper into my accounts in the beginning and refilling them later once I start collecting SS at 62. You constantly improve my outlook on life and my future. You truly should be on the Mount Rushmore of the FIRE Movement.
Ha! That visual is hilarious. I’ve seen the real Mt. Rushmore a couple of times as a kid, as well as the infamous Wall Drug.
SS ROI isn’t so good, generally, but it is better than the zero most people would have due to not saving.
Nice post. Did the same simulations back in 2015. Early SS is 21 years away for me and yes, it is now factored in. Even if somehow it gets reduced (I’m confident it won’t and they’ll just increase FICA to 7 or 8% and increase income limit over time), it would be still be an amount of future income simply too large to foolishly ignore ($15k+ real). That money is 100% earmarked for extra travel and extra fun.
We might have to fly business class more often.
They’ve been increasing the wage base faster than inflation, afair. COLA went up 2.8% for 2019 but wage base went up 3.5%. Also, the thresholds for SS income being taxable aren’t indexed to inflation. Further tinkering would help.
Your recent posts seem to be implying that you’re recalculating your 4% numbers every year as if you were starting retirement new each year. That’s not at all what the Trinity study proved and exposes you to pretty extreme sequence of returns risk. Your other income sources will likely cover you, but I wonder if it’s wise to make clear to your readers that the proven 4% rule applies only to a one time number upon original retirement date, adjusted yearly for inflation. If you have some reason to believe recalculating yearly is a valid and safe strategy, I’d love to hear more about how you came to that conclusion.
Here you go. Or you may want to re-read my 4% rule post.
>That’s not at all what the Trinity study proved and exposes you to pretty extreme sequence of returns risk.
I disagree.
If somebody retires Jan 1, 2019, with $1 million, what can they spend in 2019? 4% or $40k.
If a retiree from any prior year also has $1 million on Jan 1, 2019, and they spend $40k in 2019, does it matter what their starting value was?
Does one have more sequence of returns risk than the other? If so, why?
Of course the 2nd scenario has more sequence risk. If we have 10 years of bull runs, we’re much more likely to have a bear market the following year. This isn’t even controversial, it’s common sense. Goodness, what a misguided idea to share with readers who aren’t going to be pulling in 10s of thousands of dollars per year in blog income. This is a massive misreading of the Trinity study.
Both parties will have the same results.
This isn’t what the Trinity Study states. Agreed. Although I do like your use of the words misreading and misguided.
Thanks.
Isn’t the Trinity study based on what you’ll have left in 30 years? If I retire in 2015 and you retire in 2019 and as of Jan 1 2019 we each have 1 million dollars (assuming we both pull 4%) the trinity study predicts my outcome 26 years from now where it predicts your outcome 30 years from now. I agree that both of us will have the same outcomes but for me to fall withing the success bracket of the trinity study I’ve only got to go 26 more years which (although I’m too lazy to do the math) should put me into a higher than 95% success bracket whereas you are still in the 95% chance. I agree that in the real world our outcomes will be the same but if our portfolios crash and burn to $0 28 years from now the great statistician in the sky will conclude that I fell into the success side of the study and you didn’t. Real world impact is we both end up on the street but if the topic is Trinity study our outcomes are vastly different.
Let’s say both parties are the same age and have the same life expectancy. It doesn’t matter if we stop counting at 26 if we run out of money before death.
Er… No… Any adaptive system (i.e. variable withdrawals) displays less sequence of return risks than the naive flat spending (inflation-adjusted) implied by the Trinity study – which is a massively bad way of planning for retirement income! GCC is absolutely correct to suggest a % of the CURRENT portfolio as a much improved way of proceeding. Run the numbers by yourself or use cFIREsim to compare…
If it’s okay to increase your spending as your portfolio increases, do you have to decrease your spending as your portfolio decreases? To use your example,
If retiree #1 retires Jan 1, 2019, with $1 million, what can they spend in 2019? 4% or $40k.
If retiree #2 who retired from any prior year started out with $2 million, but now also has $1 million on Jan 1, 2019, what can they spend?
Following the trinity study, using 4% of the first year’s value of $2 million and adjusting only for inflation, retiree #2 is allowed to spend $80k+, but retiree #1 can only spend $40k.
Perhaps the trinity study assumes that most people can not easily reduce their spending through retirement so they’ve designed the 4% rule to use only the starting portfolio value. I wonder, if you *allow* adjustments each year as the portfolio increases and decreases, do you also have to *require* adjustments each year?
Also, if you adjust each year, does that increase or decrease the safe withdrawal rate as a result? For example, if you withdrew 99% each year and adjusted each year, you’ll actually never run out of money.
Exactly right. In your variation, the Trinity Study says retiree #2 can spend an inflation-adjusted $80k.
There are a number of withdrawal strategies. The traditional Trinity Study uses an inflation-adjusted constant spend approach. There is also fixed percentage of portfolio value, Variable CAPE, Guyton-Klinger, etc… Some of them allow increasing withdrawals with portfolio growth, some don’t. Some require reductions in spending if the portfolio value drops, some don’t.
The Trinity Study also uses only 2 asset classes, US equities & US bonds. Historically adding some non-US equities has increased returns with lower volatility, which would allow for increased withdrawal rates as well.
There are a number of tools people can use to explore withdrawal strategies and asset allocation (I used cFIREsim in this post.) It’s probably best to try out a few of the options and see how it feels versus randomly following the one study people talk about most. Each has pros/cons.
“There are a number of withdrawal strategies.”:
I use a contrarian strategy.
As a proportion of real income, increase expenditure when the market delivers cheaper prices and increase savings when the market delivers higher risk adjusted yields.
Both are independent of each other but can occur simultaneously.
Jeremy, I think the idea of ratcheting up spending makes sense given your logic on the 4% rule, but my confusion comes in at what to do if your stash drops in value? Spend less? But, what about when you can’t cut the budget anymore?
In your example above, my understanding of the 4% rule is that if you retire on Jan 1, 2019, and your portfolio is $1 million you can spend $40,000. And then if the portfolio dips so that on Jan 1, 2020 it is worth $900K, you can still spend $40,000. Or is that you must ratchet down spending to $36,000?
Also, would your analysis of social security apply to pensions (as government worker – I get one of those!)? Seems like it would.
Not trolling, just interested as we continue to save and become FI.
Yes, it would work the same for pensions.
It depends on what withdrawal rate strategy you are using. If you are using the trinity study inflation-adjusted constant spend approach, then you would just keep spending $40k year after year. If you had chosen a different strategy, you would follow those rules. (Following the rules you set in advance, after studying them and making a conscious choice, is more important than which rules you choose.)
To your question:
As an example, if I enter our data into cFIREsim with the “% of Portfolio” spending plan:
Yearly Spending = 4%.
Floor = minimum essential spend.
Ceiling = a big luxury travel year.
Future SS income = as outlined in this post.
With this withdrawal strategy:
If the portfolio doubles, we can double spending (up to the ceiling.)
If the portfolio gets cut in half, we should cut spending in half (or down to the floor.)
With this approach, I get a success rate of 100% and a worst case terminal value equal to the starting value. That is pretty robust. Experiment from there.
If your social security letter says you can expect to receive $1500 15 years from now, but you aren’t working anymore and aren’t payment social security taxes anymore, will your benefit amount actually stay at $1500 or will it be reduced because of 15 years of 0 income?
Depends. The letter might say the estimate is based on working to a certain future date.
Use the calculator I linked, where you can specifically state that future income = $0.
I don’t like that idea at all. I prefer to be conservative and save Social Security for later. We probably will have to spend much more on medical expenses when we’re old so it’s good to have a cushion. Kid will probably need help financially too. It’s tough out there.
If we don’t need the SS benefit, I would use it as a donation fund like my father in law does.
A wise approach. And generous.
I wonder offhand what the tax implications are. If you’re spending down brokerage money now (at long-term capital gains tax rate) vs spending SSI later (at whatever tax bracket you’re in)… and if your taxable income is correspondingly lower at 70.5 because your tax-advantaged retirement savings minimum distributions aren’t as high…
I’m too fried from work this Monday morning to calculate, but I imagine there’d be a reasonable difference between strategies.
SS income at age 70 will still be the same, so it is just a question of what the portfolio throws off in involuntary taxable income.
Thinking out loud… in the case of being 15 years away from SS and spending an extra $7,500/year.
For the 90/10 $1 million $40k/year case, I picked a random starting year that had the average terminal value of $2.6 million (1954.)
15 years in, spending $47.5k/yr, we spend $112,500 more and the portfolio is worth $225k less than spending $40k/year.
In the current environment, if everything was in taxable accounts, that $225k would throw off about $5k in dividends and interest. Even at 20% effective tax rate that is only $1k, albeit a savings of $1k.
So I’m wondering. Because you are not working anymore you are not earning more towards your SS. Am I right?
I’ve been paying self-employment taxes on blog income, so I’m still paying in.
I’ve performed a mini analysis on paying more in to SS. My current portfolio could be run as a business paying 15.3% self employment tax. Have been close to or over the max SS incomes most of my career, but I do have two zero years and 2 low years that could be replaced. The extra money to SS yields so little, it’s not even close to worth it. I’d receive $108 a year more for paying in $8250 (claiming $55k of income) the year before I file to reduce lost opportunity costs on the $8250.
The ROI on additional SE taxes is not so good. You might break even if you live long enough if before the 3rd bend point, but definitely not after.
That’s because of the SS formula. The return is good for the first $400k worked over 35 years but not so much after that. For me, any additonal income would only return an extra 1% in SS (if I generated an extra $100k of income, I would only get an extra $1k annually in SS).
Well, no need to use cFIREsim for this… This is a simple Net Present Value computation. For anybody with basic Excel skills, it is really worth it to learn how to do it yourself, as the truth is there is often more than social security to account for (pensions, inheritance, house downsizing, etc). Also, there are some important subtleties as such procedure can compound sequence of return risks (you don’t really spend future income, you do spend more from your portfolio). I recently wrote a fairly lengthy 2-parts article on the topic for the Bogleheads blog: https://finpage.blog/2019/02/01/early-retirement-and-time-value-of-money
The subtleties are why using cFIREsim is better than using NPV, albeit simple.
For many people, cFIREsim might indeed be a better approach. For a math-savvy and Excel-savvy individual like you, I am not so sure, LOL! Anyhoo, the subtleties I was referring to are of a slightly different nature. Check Part2 of my blog, if you’re curious… In any case, thank you for promoting such ideas, they are important ones for us early retirees.
I have a full version of cFIREsim I created that I can run in Excel, but the actual tool is better unless you really want to dig into the yearly details.
$1500 a month ain’t gonna go very far in 25 years. The real question is: where did you come up with that figure? I suspect that assumes some things by SS that aren’t theoretically going to happen…like you resuming work. After 33 years working as a Systems Engineer in Aerospace Industry, I retired at age 58. In 4 years, my SS income will be a whopping $1809/month at 62. Even understanding the Social Security “bend points”, and knowing that the $ rise flattens out over one’s career, I cannot believe that you will be getting $1500/month with as few years as you have paid in. Perhaps my error is the fact that $1500 probably won’t buy a decent dinner for two out on the town, then. Good Luck!
Social Security numbers are adjusted for inflation. That $1500 is today’s dollar.
No additional work required. See the output of the SS calculator that shows $0 income going forward results in $1500 monthly SS starting at Age 62 (actually $1578.) Also on that chart, if I work another 18 years making $70k/year, the number goes up by about $300/month.
I actually have 30 years of SS work history, going back to when I was 15 and made $240.
GCC, in such a consumer based society is it wise to advise on how to spend even more money we dont have (yet)? 😂
Somebody needs to boost corporate profits.
Nice post, I’ve always excluded SS in my retirement planning, figuring it would just be a bonus if I could claim it in 2045. However, based on current projections, SS would give me a terminal benefit of about $400k. As you said, that is no small amount to ignore.
On the flip side, I have never calculated paying for college for my future kids either (No kids yet, but planning to have 2 kids in the future). I always figured I would start planning for college once I actually have kids, but given rise in tuition over the past few decades, I wouldn’t be surprised if tuition was $50k/yr by the time my future children are heading off to school. Two kids at $50k/yr for 4 year equals $400k so the way i look at it, I will spend my future SS income on paying for my future kids college, whenever that happens. And if SS isn’t there, then they can pay for it them selves. I paid for my own school and while it wasn’t easy to do, I still think it’s a luxury to help pay for college, not necessarily a must have. I also plan to spend down my after tax savings before my kids are college age so I hope that they will qualify for some financial aid as well. But who know what the future will bring. Either way I’m not worried about social security or college tuition!
Nice. It’s pretty amazing how little you need to save to pay for college when you invest before conception.
Hey John,
Maybe I’m wrong but I was recently listening to the Choose FI podcast and they discussed college hacking. Based on what they said, I was under the impression that retirement accounts/savings accounts don’t factor into financial aid. Qualification is determined by earned income, but maybe I’m wrong.
This is one of these posts that fit into the “new & noteworthy” category to me so thanks for putting it together and sharing it with us. Have you thought about putting together a book about your nifty Early Retirement tactics & systems?
For us, since one person in our household have French citizenship we are thinking about becoming eligible to tap into the generous healthcare system that France provides to its residents. This is a great worry reducer if one day we need some extensive medical assistance (even though we are proactively keeping health our priority number one in our lifes). As for receiving US Social Security benefits, while we are eligible as we both worked more than 40 quarters in the US, we are still 30+ years away from it so we aren’t thinking about it yet.
Similar to the idea of forecasting how much someone can spend early on if they expect a large windfall in the future, do you think people can apply a similar thinking about any inheritance they know they will get? While this might sounds a bit of a morbid thought, what made me came to this question is because people in France are pretty used to the idea of gambling on someone’s life expectancy. They do so by giving someone’s a downpayment + regular cash installments in order to receive someone’s real estate once the person passed away. You can read more about the wonderful topic of “Viager” at: https://www.investopedia.com/terms/v/viager.asp
I read a story once of a young man who bought the Paris home of an older woman in this way. But then she lived past 100 and he died before receiving the house.
IIRC that “older woman” became the oldest person in the world and held that honor for a number of years. You pay your money and take your chances.
Why not wait until age 67 to take SS? Its an extra 8k a year and i believe your wife would get 4k a year more with the 50% rule. Thats 12k additional income a year if your healthy in your 60’s going forward and i assume you will be with the stress free life of early retirement and all the bike riding you do:)
We’ll factor health into the “when to take SS” decision as that time approaches. Kitces did a good post on making that decision.
It’s also possible I could die on a bike ride at age 66.
If you really retire early and have no earned income, your SS will be minimal if you retired at 35
Yes and no.
Most Social Security projections, including the official one on SSA.gov, assume you continue to work at your (inflation-adjusted) current salary from now until the time you start taking social security benefits. For people pursuing FIRE, that’s not likely to be true. If FIRE people earn no salary from RE to starting taking Social Security benefits, their benefit could be much lower. The details will depend a complex formula that counts the “best” 35 years of FICA-taxable earnings.
A reasonable estimate can be done by downloading earnings history from SSA.gov and comparing each year’s FICA earnings to the FICA limit. This gives a number between 0% (earned nothing) and 100% (earned the FICA limit) for each year in the past. Make estimates of this for the future. Then take the 35 highest numbers and average these. If your 35-year average is 100%, you will earn the maximum possible benefit at normal retirement age. If it’s 50%, you will earn about 50% of the maximum benefit. You can then use this year’s maximum benefit as an estimate if you’re looking for a number in today’s dollars. If you want future dollars, you can take this number and inflate by compounding your inflation estimate from today to your normal retirement age.
For people who retire early (30s-40s), it’s nearly certain their Social Security benefit will be 30-50% lower than what they get from the official Social Security calculator. This is because their work history at time of RE is much less than 35 years, so there will be many zero years included in the “best” 35 years of FICA-taxable earnings.
If we assume that most people start working around age 20, only people retiring early at around age 55 will have a full 35 years of earnings history. Retiring earlier than age 55 will result in “zero years” in the 35-year history and these zero years will bring down the Social Security benefit.
There has already been substantive evidence on here that shows you don’t need to work a full 35 year history to reap maximum results for SS. If anything, you would rather invest money you save by not paying into the system and figure out where the SS curves are for how much you make…
> Most Social Security projections…
Mine don’t. See the chart in the post… where it states “And you earn an average of $0 per year from now until age 65,67”
Zero years in the SS work history aren’t a big deal. If I worked another 20 years or so, I would get an extra $300/month.
Why this is the case is explained in detail in this post.
My point was that it’s easy for someone working towards FIRE to get a bad (too high) estimate of future social security income. Then they have an important error in their plan.
I’m not saying someone should work to age 55 to maximize their social security. Saving more outside of social security is a better deal. Once you have enough, you have enough.
Two things, I would say you are overly optimistic with a 90% stock allocation. If the stock portion experiences a 40-50% drawdown will you be able to ride this out? If you can then more power to you. Bengen used a 50/50 allocation in his study. Secondly, l wouldn’t base retirement withdrawals on the 4% rule as it has only worked in the United States, Canada, and Denmark for the 20th Century. The 20th century stock market returns were pretty impressive so will the 21st returns be equally as impressive or a reversion to the mean? You’ll need to make adjustments annually to tighten your belt if needed.
I am 10 years from retirement and will use social security as a longevity annuity.
I’ll be fine, thanks.
In your more pessimistic view, what percentage withdrawals would you recommend?
How Safe are Safe Withdrawal Rates in Retirement? An Australian Perspective
http://www.finsia.com/docs/default-source/Retirement-Risk-Zone/how-safe-are-safe-withdrawal-rates-in-retirement-an-australian-perspective.pdf
So many people in finance are so pessimistic. I think this is a good idea, especially if you get close to being able to collect.
My question to you, if your portfolio doubles again once or twice, do you think you’d double or quadruple your expenses? I know it’s hypothetical but I’m curious the differences you’d have if your lifestyle.
nah, this is about as far as it goes.
I’ve been ruminating on this post for a few days and contemplating how I might apply it to my scenario. What happens if one of you kicks the bucket? Seems like it would be a smaller impact to you but likely big to your wife by drawing down your portfolio with money you possibly will be getting via SS in mind. Very interested to hear your thoughts. Thanks.
SS survivor benefits apply, which is equal to the larger of his/her SS income. In our case this would eliminate 1/3 of the total. For a household where both spouses had equal benefit, SS income would be reduced by 1/2.
Expenses related to the deceased spouse no longer apply, so actual impact is dependent on how much expenses are reduced.
I guess it would depend on if you started using up your nest egg at a greater rate anticipating SS. To receive the full amount a widow/widower must wait until full retirement age which would impact younger spouses. Let’s all hope we have many, many years of collecting ahead of us!