How to plan for bonus without knowing amount?

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Regattamom
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How to plan for bonus without knowing amount?

Post by Regattamom » Thu Nov 08, 2018 12:38 am

My husband receives a bonus every year. It's been generous in the past, but he is now in a position to receive quite large bonuses. If they reach their target, his bonuses will now be 25 percent more than his annual salary. They can pay out more than 100 percent or less depending on how the company does and we don't know how much it will be until about a month before it pays out. Historically, the company pays out anywhere from 75 to 200 percent of the target bonus.

I don't know how to calculate this into our five and ten year plans. I have tried making Excel spreadsheets with various amounts for the upcoming years but it becomes quite confusing. I am afraid that without a plan in place, the money will be used emotionally (like falling in love with a newer, fancier home.) We have the option of deferred compensation, but I am not sure how I feel about that. Do I just wait every year until we find out the amount and then decide what to do? How do others in this position manage their bonus?

We don't have any debt except a mortgage, we max all our tax advantaged accounts, we have an emergency savings fund, and we are saving for our son's college. My husband also has a generous pension.

Edited: I originally said I was planning using percentages but I was not - I was using dollar amounts. I will now try planning using percentages.
Last edited by Regattamom on Thu Nov 08, 2018 10:52 am, edited 1 time in total.

123
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Re: How to plan for bonus without knowing amount?

Post by 123 » Thu Nov 08, 2018 1:04 am

Don't count your chickens before they hatch.

You can plan for income where the amount is unknown by simply developing a strategic plan with ongoing priorities for the use of incoming bonus funds as they arrive. You could have multiple plans based on the size of the bonus (allocate based on percentages of bonus). Perhaps a long-term plan will pretty be the same regardless of the bonus amount. Every time a bonus arrives it should not be a "from scratch" decision. As financial goals are achieved (like paying off a mortgage, completion of college funding, etc) you simply reallocate. You can always add new goals to your multi-year allocation plan. Each year any excess funds can always be invested in a taxable account in accordance with your asset allocation.

It would not be wise to incur debt with the expectation that it could be paid back with income from a series of bonuses.
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Yinks
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Re: How to plan for bonus without knowing amount?

Post by Yinks » Thu Nov 08, 2018 1:49 am

I treat my bonus as just that, a bonus. I plan my finances around my base pay and anything extra I receive once a year is, well, "bonus".

You could treat it like a windfall and there are lots of threads about managing windfalls, it's just you do it once a year.

I think a plan is reasonable to have so long as your plan is built on base salary, then when the bonus hits you can simply meet your objectives earlier.

Want a bigger house? Go for it! But i would save up bonuses for a very large down payment such that the mortgage is affordable based on base salary alone.

You never know when the company will hit a bad streak and bonus pool drops to 0. It happened with many companies in 2009.

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Hyperborea
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Re: How to plan for bonus without knowing amount?

Post by Hyperborea » Thu Nov 08, 2018 2:01 am

When I was working the largest part of my yearly income was stock and bonuses. The salary was good (6 figures) but the variable part was much larger. We lived out of the fixed salary part of my income only. The variables parts were entirely thrown into the investment pool. The variable amount can sometimes be estimated but you can't count on it.

That worked for us because the fixed part was large enough that we invested a sizable part of that too. If that's not the case for you then it would be ok to plan to use some of the variable amount for yearly expenses but I would try to keep the fixed expenses entirely within the base salary income. Use a portion of the variable income only for "extras" like vacations, new cars, etc. that can be skipped/delayed if the variable income is down one year.
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Re: How to plan for bonus without knowing amount?

Post by AlohaJoe » Thu Nov 08, 2018 3:00 am

How do you plan for future pay raises and promotions and job changes without knowing the amount?

Isn't it the same exact thing? The money isn't guaranteed, so create a framework that doesn't expect the money but still has a plan on what to do with money that does arrive.

Also, go watch the original National Lampoon's Christmas movie with Chevy Chase for a reminder about why making plans about future bonuses is not wise.

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Re: How to plan for bonus without knowing amount?

Post by student » Thu Nov 08, 2018 6:51 am

I agree with others who said that plan around your base pay only.

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Re: How to plan for bonus without knowing amount?

Post by MikeG62 » Thu Nov 08, 2018 7:11 am

Hyperborea wrote:
Thu Nov 08, 2018 2:01 am
When I was working the largest part of my yearly income was stock and bonuses. The salary was good (6 figures) but the variable part was much larger. We lived out of the fixed salary part of my income only. The variables parts were entirely thrown into the investment pool. The variable amount can sometimes be estimated but you can't count on it.

That worked for us because the fixed part was large enough that we invested a sizable part of that too. If that's not the case for you then it would be ok to plan to use some of the variable amount for yearly expenses but I would try to keep the fixed expenses entirely within the base salary income. Use a portion of the variable income only for "extras" like vacations, new cars, etc. that can be skipped/delayed if the variable income is down one year.
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Re: How to plan for bonus without knowing amount?

Post by Jack FFR1846 » Thu Nov 08, 2018 7:23 am

Plan for zero. My company pays quarterly and over the last year, bonuses have been tremendous. So much so that for the first time ever, I had to send estimated tax payments to keep up with the big payouts. Last quarter, executives did a series of stupid things, and the market punished them. In turn, since they made mistakes, who should pay? Well, us peon workers who had nothing to do with the stupidity that they exhibited. Zero bonus last quarter. I'll learn what we get this quarter during our company meeting today. I expect zero.

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TomatoTomahto
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Re: How to plan for bonus without knowing amount?

Post by TomatoTomahto » Thu Nov 08, 2018 8:52 am

You are at an inflection point as far as bonuses go. When we were starting out (and I was still working for a paycheck), our bonuses were generous, but they were not larger than our salaries. In that case, it was reasonable to "not plan on them" and treat them as pennies from heaven. IMO, that changes when the bonus can be a multiple of salary, as your husband's is.

Resist the urge to plan on getting a very generous bonus, but I think it's reasonable to expect that your husband will not get a $0 bonus. What you have to watch out for is getting on the "hedonic treadmill." In our case, while a $0 bonus was a possibility, always, a $0 bonus would simply have been another way of getting fired.

As a practical matter, we figured when bonuses were expected, and planned on them to pay tuition, taxes, etc. If the bonus was below expectations, we would have had to dig into our savings, but it never happened. When bonuses arrived, we'd put some aside for such expenses (tuition, taxes, etc.) and then lump sum invested the remainder.
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vineviz
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Re: How to plan for bonus without knowing amount?

Post by vineviz » Thu Nov 08, 2018 9:05 am

Regattamom wrote:
Thu Nov 08, 2018 12:38 am

I don't know how to calculate this into our five and ten year plans. I have tried making Excel spreadsheets with various percentages for the coming years but it becomes quite confusing. I am afraid that without a plan in place, the money will be used emotionally (like falling in love with a newer, fancier home.) We have the option of deferred compensation, but I am not sure how I feel about that. Do I just wait every year until we find out the amount and then decide what to do? How do others in this position manage their bonus?
It’s important to plan for what will happen with the money ahead of time, and this can be done even if the amount is uncertain.

For example, focus on drafting a policy statement of sorts. E.g:
After taxes, the first $25k of any bonus goes in the 529 plans; 50% of the remainder goes into retirement savings; 25% of the remainder goes into emergency savings; the final 25% goes into the annual vacation fund.

Obviously the categories and amounts will differ based on your priorities but there is a great value in writing it all down BEFORE the money arrives.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

RickBoglehead
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Re: How to plan for bonus without knowing amount?

Post by RickBoglehead » Thu Nov 08, 2018 9:08 am

In 1994 I switched jobs and got a nice bump in comp. That year was when we realized our max spending, in other words every increase in comp and bonus since then doesn't get spent.

As many have stated, plan on zero. When you get what you get, invest as per your plan.

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corn18
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Re: How to plan for bonus without knowing amount?

Post by corn18 » Thu Nov 08, 2018 9:12 am

When I retired from the military 10 years ago and started working in a civilian job where I get bonuses and RSU's, we would spend them. We tried to plan the amount and like you, got all mixed up and spent way more than we should. In 2013, we made a commitment to reduce expenses and wean ourselves off the bonus/RSU's and just live on my income. That took some effort and cutting back, but now that we are there, life is sooooooo much easier. Now when the bonus/RSU's come, they are invested. Per my Investment Policy Statement (IPS), they go into my taxable retirement brokerage:

Restricted Stock Units (RSU): When RSU's vest, sell immediately and invest the money in a lump sum in accordance with my Asset Allocation (AA) in my taxable retirement account.

Bonus: Invest entire bonus each year in a lump sum in accordance with my Asset Allocation (AA) in my taxable retirement account.

Be sure to account for taxes. The withholding on bonuses/stock might not be sufficient to cover the actual taxes. I do the math and put aside enough to make an estimated tax payment or hold until taxes are filed (if I meet safe harbor).

Long term planning for retirement is something different. My bonus and RSU's are ~200% of my base salary, so getting them = early retirement. Not getting them = a longer road to retirement. I have a master planning spreadsheet that allows me to easily include/not include them so I can see what is possible.

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mhc
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Re: How to plan for bonus without knowing amount?

Post by mhc » Thu Nov 08, 2018 9:53 am

You know the historical range, so assume it will fall in that range. Certainly do not spend the money before you get it, but not budgeting for it is rather extreme. One should be able to see how the company is doing throughout the year to get a feel for what the bonus will be. I don't ever really know what my annual bonus will be, but I'm really close in guessing it.

Obviously, past returns do not guarantee future returns, similar to investing, but to ignore the past is foolish.

In strong economic times and if the company is doing well, to plan for zero bonus is also foolish.

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Re: How to plan for bonus without knowing amount?

Post by Dandy » Thu Nov 08, 2018 9:54 am

Ah bonuses - how I miss them - they created something like a child's holiday excitement just before it was time to open presents!

I used to think in term so percentage allocations e.g. 1/3 for long term savings, 1/3 for shorter term needs and 1/3 for fun. A late career change resulted in higher bonuses and being frugal I probably short changed the "fun" percentage. :oops: I do think they were a significant factor in getting two children through college and beyond without any debt for them or us.

If you can live basically off your salary, bonuses can be a real boost to financial stability and growth.

Regattamom
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Re: How to plan for bonus without knowing amount?

Post by Regattamom » Thu Nov 08, 2018 10:07 am

Thanks for the replies. We live well on my husband's salary alone and would never spend money in anticipation of his bonus. I like the idea of creating a plan using percentages. I was trying to plan using actual dollars and it was a headache. I'll try out the percentage plan and see how that works.

When (if ever) does it make sense to defer part of his bonus? The company is over 150 years old and very stable.

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Re: How to plan for bonus without knowing amount?

Post by runner540 » Thu Nov 08, 2018 10:16 am

Regattamom wrote:
Thu Nov 08, 2018 12:38 am
My husband receives a bonus every year. It's been generous in the past, but he is now in a position to receive quite large bonuses. If they reach their target, his bonuses will now be 25 percent more than his annual salary. They can pay out more than 100 percent or less depending on how the company does and we don't know how much it will be until about a month before it pays out. Historically, the company pays out anywhere from 75 to 200 percent of the target bonus.

I don't know how to calculate this into our five and ten year plans. I have tried making Excel spreadsheets with various percentages for the coming years but it becomes quite confusing. I am afraid that without a plan in place, the money will be used emotionally (like falling in love with a newer, fancier home.) We have the option of deferred compensation, but I am not sure how I feel about that. Do I just wait every year until we find out the amount and then decide what to do? How do others in this position manage their bonus?

We don't have any debt except a mortgage, we max all our tax advantaged accounts, we have an emergency savings fund, and we are saving for our son's college. My husband also has a generous pension.
Here's what we do: annual budget is based on salaries only, and we cover all planned expenses and retirement savings out of that amount.
The bonus if and when it comes, is allocated:
10-15% giving
5-10% splurges (trips, furniture, etc., NOT adding new recurring expenses)
80% to long term goals (house, college accts, etc.)

The great thing about bonuses are the big boost they can give those goals, and the fun of choosing how to splurge. I've applied this methodology in fat and lean years.

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Re: How to plan for bonus without knowing amount?

Post by SQRT » Thu Nov 08, 2018 10:30 am

When I was working my bonuses were multiples of my base salary. In addition I received multiples of that in the form of DSU’s and options. It was very difficult to accurately plan our financial future.

To OP. Be as conservative in your spending as you can. Maybe only assume he will get a reduced bonus and spend accordingly. Keep in mind it’s really only spending you have to worry about,not forecasting the future. Because, seems to me, that given the large bonuses he will likely be getting, retirement planning should take care of itself. You could model several scenarios though. Very good, average, very bad. Then try to set your spending at the lower level. At least till the big bucks start rolling in.

What I did. Simply try not to spend the “chickens before they hatch”. Not easy to do when your base pay might only be 10% of your total comp. I deferred as much as I could for as long as I could. Probably not the safest thing to do but it worked out really well when I finally cashed out. In the end you might end up with a lot more than you expected. Not such a bad problem to have.

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Re: How to plan for bonus without knowing amount?

Post by knowledge » Thu Nov 08, 2018 11:00 am

When I first started to receive bonuses, I planned as many have advised here - $0 for any future bonuses. As time has gone on, my comp mix is now ~60% base, the rest bonuses & stock. Further, the variability in my bonus payouts have made it clear that % payout vs. target is really a range of 70-130%, notwithstanding black swans. That stability in bonus has adjusted my plans so that I do forecast a good chunk of target bonus payout (90%), but remove equity assumptions.

I wish I could say that I plan my future spending on my base salary only, but I also know that if needed, there's a clear set of spending that get things rightsized.

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Re: How to plan for bonus without knowing amount?

Post by Peculiar_Investor » Thu Nov 08, 2018 11:09 am

Regattamom wrote:
Thu Nov 08, 2018 12:38 am
I don't know how to calculate this into our five and ten year plans. I have tried making Excel spreadsheets with various amounts for the upcoming years but it becomes quite confusing. I am afraid that without a plan in place, the money will be used emotionally (like falling in love with a newer, fancier home.) We have the option of deferred compensation, but I am not sure how I feel about that. Do I just wait every year until we find out the amount and then decide what to do? How do others in this position manage their bonus?
For planning and forecasting purposes we've always waited until the amount was actually confirmed and then decided what to do with it. Some years we have used it to "upgrade" vacation plans, other years it has gone to renovations. Since the amount is not known in advance and might not even be paid in some years, I think it dangerous (maybe too strong a word?) to build it into your future plans.
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Regattamom
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Re: How to plan for bonus without knowing amount?

Post by Regattamom » Thu Nov 08, 2018 11:16 am

SQRT wrote:
Thu Nov 08, 2018 10:30 am
When I was working my bonuses were multiples of my base salary. In addition I received multiples of that in the form of DSU’s and options. It was very difficult to accurately plan our financial future.

To OP. Be as conservative in your spending as you can. Maybe only assume he will get a reduced bonus and spend accordingly. Keep in mind it’s really only spending you have to worry about,not forecasting the future. Because, seems to me, that given the large bonuses he will likely be getting, retirement planning should take care of itself. You could model several scenarios though. Very good, average, very bad. Then try to set your spending at the lower level. At least till the big bucks start rolling in.

What I did. Simply try not to spend the “chickens before they hatch”. Not easy to do when your base pay might only be 10% of your total comp. I deferred as much as I could for as long as I could. Probably not the safest thing to do but it worked out really well when I finally cashed out. In the end you might end up with a lot more than you expected. Not such a bad problem to have.
SQRT,

When you say you deferred, do you mean that you deferred planning/spending or you deferred your compensation? I assume you mean you deferred your bonus. Being able to defer compensation is new to us and I am curious when/if it makes sense.

Thanks

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Re: How to plan for bonus without knowing amount?

Post by coupleofcents » Thu Nov 08, 2018 11:26 am

I also receive a 25-50% bonus of my yearly salary every December. As many have said just split it up in buckets based on percentages.

If you're worried about life style inflation, probably the most boring but safest thing you could do would be to dump it onto your mortgage. Sounds like you are already saving well for retirement, college for kids etc.

Or put it 100% into a Total Stock Market fund. This help me not to touch it because I fear i will either miss out on coming gains, or lock in losses if the market is tanking.

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fortfun
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Re: How to plan for bonus without knowing amount?

Post by fortfun » Thu Nov 08, 2018 11:33 am

Regattamom wrote:
Thu Nov 08, 2018 12:38 am
My husband receives a bonus every year. It's been generous in the past, but he is now in a position to receive quite large bonuses. If they reach their target, his bonuses will now be 25 percent more than his annual salary. They can pay out more than 100 percent or less depending on how the company does and we don't know how much it will be until about a month before it pays out. Historically, the company pays out anywhere from 75 to 200 percent of the target bonus.

I don't know how to calculate this into our five and ten year plans. I have tried making Excel spreadsheets with various amounts for the upcoming years but it becomes quite confusing. I am afraid that without a plan in place, the money will be used emotionally (like falling in love with a newer, fancier home.) We have the option of deferred compensation, but I am not sure how I feel about that. Do I just wait every year until we find out the amount and then decide what to do? How do others in this position manage their bonus?

We don't have any debt except a mortgage, we max all our tax advantaged accounts, we have an emergency savings fund, and we are saving for our son's college. My husband also has a generous pension.

Edited: I originally said I was planning using percentages but I was not - I was using dollar amounts. I will now try planning using percentages.
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Re: How to plan for bonus without knowing amount?

Post by stimulacra » Thu Nov 08, 2018 11:41 am

You don't. I think I learned that lesson initially watching National Lampoon's Christmas Vacation as a kid (Griswold plans on using his annual Christmas bonus to surprise his family with a backward pool but instead receives a jelly of the month subscription).

My bonuses have been all over the map. From $200 to 25% of my base pay. Usually I just bank half or add it to the vacation fund after the fact. Sometimes I use it to do last minute gift upgrades or splurge on stocking stuffers. One year I was able to max out my IRA with it, in one transaction, which was nice.

But I learned to not count on it before the check clears or I get the statement or private chat from my functional manager.

Regattamom
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Re: How to plan for bonus without knowing amount?

Post by Regattamom » Thu Nov 08, 2018 11:52 am

To the people saying to not plan on receiving a bonus, I ask why not? I am not planning on spending the bonus. I want to plan on what to do with the money as it will likely be a very substantial amount- well into the six figures. I am trying to figure out how much to pay against our mortgage, how much to invest, how much to defer, etc.

I think having a plan in place is the safest way to head off spending on things that aren't needed.

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Re: How to plan for bonus without knowing amount?

Post by SQRT » Thu Nov 08, 2018 12:02 pm

Regattamom wrote:
Thu Nov 08, 2018 11:16 am
SQRT wrote:
Thu Nov 08, 2018 10:30 am
When I was working my bonuses were multiples of my base salary. In addition I received multiples of that in the form of DSU’s and options. It was very difficult to accurately plan our financial future.

To OP. Be as conservative in your spending as you can. Maybe only assume he will get a reduced bonus and spend accordingly. Keep in mind it’s really only spending you have to worry about,not forecasting the future. Because, seems to me, that given the large bonuses he will likely be getting, retirement planning should take care of itself. You could model several scenarios though. Very good, average, very bad. Then try to set your spending at the lower level. At least till the big bucks start rolling in.

What I did. Simply try not to spend the “chickens before they hatch”. Not easy to do when your base pay might only be 10% of your total comp. I deferred as much as I could for as long as I could. Probably not the safest thing to do but it worked out really well when I finally cashed out. In the end you might end up with a lot more than you expected. Not such a bad problem to have.
SQRT,

When you say you deferred, do you mean that you deferred planning/spending or you deferred your compensation? I assume you mean you deferred your bonus. Being able to defer compensation is new to us and I am curious when/if it makes sense.

Thanks
I had the ability to defer some aspects of my comp. Employee options and DSU’s mostly but also a portion of my bonuses. They were deferred into “phantom stock units” like DSU’s and accrued notional dividends. Accordingly, I also deferred spending. I would never defer planning as I have a planning fetish and am always planning.

Conventional wisdom is you should not be over concentrated in your employers stock/options/equity units. I ignored this and it worked out very well for me but you have to be careful.

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Re: How to plan for bonus without knowing amount?

Post by TomatoTomahto » Thu Nov 08, 2018 12:16 pm

Regattamom wrote:
Thu Nov 08, 2018 11:52 am
To the people saying to not plan on receiving a bonus, I ask why not? I am not planning on spending the bonus. I want to plan on what to do with the money as it will likely be a very substantial amount- well into the six figures. I am trying to figure out how much to pay against our mortgage, how much to invest, how much to defer, etc.

I think having a plan in place is the safest way to head off spending on things that aren't needed.
Yes, I agree. For example, I put expected bonuses into ESPlanner, the software I use to keep track of our "larger" plans. What I meant by "not counting on it" is that we wouldn't be in dire straits if it doesn't arrive, just really bummed :D

I think the best prediction of the next bonus is the previous one, adjusted for how you think the company and your husband are doing.
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Re: How to plan for bonus without knowing amount?

Post by Afty » Thu Nov 08, 2018 12:27 pm

I just save my bonus. I don't splurge with any of it, and I don't feel any real excitement when I receive it. I just think of it as part of my compensation.

Am I the most boring person on Bogleheads??

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Re: How to plan for bonus without knowing amount?

Post by Peculiar_Investor » Thu Nov 08, 2018 12:29 pm

Regattamom wrote:
Thu Nov 08, 2018 11:52 am
To the people saying to not plan on receiving a bonus, I ask why not? I am not planning on spending the bonus. I want to plan on what to do with the money as it will likely be a very substantial amount- well into the six figures. I am trying to figure out how much to pay against our mortgage, how much to invest, how much to defer, etc.

I think having a plan in place is the safest way to head off spending on things that aren't needed.
I see where you are going with this, but I keep coming back to "It’s Difficult to Make Predictions, Especially About the Future".

We've always treated bonuses as essentially a windfall, because the amount is generally not guaranteed nor known. For planning purposes I just don't know how to build that into a forecast.

Perhaps a hybrid approach might be to have a side note in the plan that deals with bonuses, if and when received. This could be something like some percentage to be applied against the mortgage, some percentage toward discretionary spending and some percentage to reward yourselves for whatever sacrifices were required in the previous year to earn the bonus.
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djpeteski
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Re: How to plan for bonus without knowing amount?

Post by djpeteski » Thu Nov 08, 2018 12:35 pm

Regattamom wrote:
Thu Nov 08, 2018 12:38 am
I don't know how to calculate this into our five and ten year plans.
I am going to disagree with the conventional wisdom of "not counting your chickens before they hatch". You are looking to create a 5 to 10 year plan, not spending the money prior to getting it. If for whatever reason the bonus falls through, is greatly reduced, or the company is no longer profitable you seem wise enough to adjust your plan. I applaud you for making efforts to plan so far into the future.

The key thing to remember is that you are going to be wrong. However, the planning always has value as it is far easier to adjust a plan than create a new one based on some catastrophic event. The goal is to be wrong on the low side, so not overly optimistic. It is far easier to adjust a plan up than down.

For the numbers you cite I would plan on him receiving 75% of his salary as a bonus. This gives you a lot of cushion. Also as part of the plan, I would make a plan, for each year at the start of that year, if he gets a more common amount, like the 125% that you cite.

Your husband is a blessed man.

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Re: How to plan for bonus without knowing amount?

Post by celia » Thu Nov 08, 2018 12:39 pm

stimulacra wrote:
Thu Nov 08, 2018 11:41 am
surprise his family with a backward pool
I think I'd be interested in one too, if I could figure out how it works! LOL :D

As far as tax withholding, make sure you always withhold 110% of the previous year's tax liability to avoid an underpayment penalty when the bonus is more than expected.

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Re: How to plan for bonus without knowing amount?

Post by Carson » Thu Nov 08, 2018 12:45 pm

Timely. I just got my bonus news yesterday and while it seemed like a solid number (13% of my annual salary) I realize I only take home 27% of it. :shock: So depending on your numbers you might not realize as much of it as cash as you think.

25% to federal withholding (will get portion back as unplanned tax refund)
10% to ESSP (immediately sold and funds ROTH IRA with updated 2019 limit)
28% to 401k
10% to FICA & State taxes

I'm trying to be grateful that this gives me an unplanned boost to my 401k, and I'll get a little bit back as a federal tax refund. I run a pretty tight budget ship and we've exceeded our savings goals this year and are on pace to have a solid year next year without any expectation of future bonus. I really should do something fun with it and use it to share with DH/kids, but it's so hard to let it go.
30-something personal finance enthusiast, just get getting started on this whole portfolio thing.

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tuningfork
Posts: 399
Joined: Wed Oct 30, 2013 8:30 pm

Re: How to plan for bonus without knowing amount?

Post by tuningfork » Thu Nov 08, 2018 1:05 pm

Regattamom wrote:
Thu Nov 08, 2018 10:07 am
The company is over 150 years old and very stable.
I once worked for a company that was over 100 years old and very stable. That company no longer exists. Bonuses were good until they suddenly weren't. Some things can change surprisingly quickly.

stimulacra
Posts: 345
Joined: Wed Dec 21, 2016 3:50 pm
Location: Houston

Re: How to plan for bonus without knowing amount?

Post by stimulacra » Thu Nov 08, 2018 1:32 pm

celia wrote:
Thu Nov 08, 2018 12:39 pm
stimulacra wrote:
Thu Nov 08, 2018 11:41 am
surprise his family with a backward pool
I think I'd be interested in one too, if I could figure out how it works! LOL :D

As far as tax withholding, make sure you always withhold 110% of the previous year's tax liability to avoid an underpayment penalty when the bonus is more than expected.
Backyard Pool* :P

I anticipate bonuses and might indulge on some daydreaming and note them on my monthly budgets but don't actually plan on spending the money until the check clears. It helps keep my emotions in check.

Circumstances change, sometimes suddenly and without warning. I enjoy reading these bonuses threads every November.

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