shmidds wrote: ↑Thu May 26, 2022 5:00 am
I’m 67. My wife is 64. I enter her age on the retirement worksheet. As the higher wage earner I’m delaying my social security to age 70. My wife will start her social security at 64 and 10 months, however I do not include her social security on the worksheet.
Question 1: Do I use 67 as my social security start age?
That is the general recommendation. Use the younger spouses age, especially if they are a female (typically longer life expectancy), so it aligns correctly.
As such, you'd express all dates
relative to their age. So when you turn 70 and collect social security, they'd be 67 - which is exactly what your stated!
shmidds wrote: ↑Thu May 26, 2022 5:00 am
Question 2: For planning purposes am I correct in not including my wife’s social security?
I think this is more subjective...
Eventually, once one of you dies - you'll be down to only a single social security check - which will be the larger of the two. Additionally, unless the program gets new funding and/or gets changed, it's scheduled to run out of money which will result in decreased benefits. So one could argue by excluding your wife's social security - you are building a more conservative estimate...
However, assuming you both live long healthy lives and social security is fixed before benefits are impacted, by ignoring her social security, you aren't getting an accurate view of things...
For myself, I include both our social security estimates. Given the dynamic nature of VPW it will adapt if/as we make changes (moving to one social security number, etc.). I also figure when the first of us dies, we'll have some reductions in expenses - which means our expenses will go down with our income (maybe not at the same rate though). Lastly, as required to utilize VPW - we have a large discretionary amount of our expenses we could comfortably reduce - be it for market crashes - or as noted above if we lose one of our social security checks...
shmidds wrote: ↑Thu May 26, 2022 5:00 am
We use VSCGX, LS Conservative 40/60, or equivalent across our holdings.
Question 3: Does using this more conservative fund have an effect on the income dampening approach?
Yes. The "required flexibility" is based on an estimated 50% loss on the equity side. So an AA of 40/60 is modeled as having a hypothetical 20% drop - which you'll see in the "required flexibility" section.
Having said that, to me, I don't get worried about the specific $ or %. Ultimately this model is wrong (they all are), as we can't predict the future. IMHO the
point is to maintain flexibility. Just because the model might show a hypothetical 20% drop as your "required flexibility" does not mean that the drop might end up being more... To me the beauty of the VPW is that it adapts to whatever the markets do.
With the caveat that it's best to use VPW with social security, pensions, and/or SPIA that provide lifelong income to meet your basic expenses.
But if you are asking more about the mechanics of buffering monthly withdrawals - no, not really. VPW is going to give you a monthly withdrawal amount, and if you use a 6 month buffer, the math is the same regardless of your AA.
shmidds wrote: ↑Thu May 26, 2022 5:00 am
We have an HSA invested in an S&P 500 fund nearing six figures that just doesn’t feel right to include in the portfolio. We’ve saved all receipts.
Question 4: Do any of these scenarios make sense? Use the HSA for income dampening instead of a savings account, use the HSA for income instead of an SPIA after age 80, or use the HSA as a bridge to claiming social security.
I'm not sure why you feel it's not appropriate to include in the portfolio... To me sounds like you have an extra 6 figure "Roth" type account, in that you have enough receipts to justify tax-free withdrawals as needed/wanted.
I'm also not sure how you'd practically use the HSA for income dampening... Hypothetically, let's say month 1 is $1000 withdrawal. Month 2 after a market pull back is only $900. Sure, you could pull the extra $100 out of your HSA... But think about the opposite - month 6 sees a massive market gain and the withdrawal is $1400 - you can't contribute that $400 back to the HSA... Month 7 goes to $1500... And then month 8 returns to $1000... Your HSA only would help in the "lower" months - it wouldn't help average out things to have a more stable income.
Lastly, when you do to make the VPW withdrawal, you'll want to think through and leverage the best sources. Once you have RMDs, you are forced to take those - even if more then you need (and more than VPW recommends). Until then, you may be balancing things like Roth conversions, managing income to stay below certain "cliffs", etc. As such, it might make sense to use different sources based on the circumstances at the time.