KF's Worst Case Retirement Plan [KlangFool's]

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Tue Jun 13, 2017 7:12 pm

bayview wrote:
KlangFool wrote: delamer,

Thanks. That number = one more year for me. Or, if I am lucky, I may hit that number by the end of the yer.

KlangFool
KlangFool, I hope you get that year, or the market returns to make it happen sooner. It's an interesting world out there these days.

Best wishes to you and to your family. :beer
bayview,

Thanks. I hope so.

KlangFool

User avatar
Will do good
Posts: 860
Joined: Fri Feb 24, 2012 8:23 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by Will do good » Tue Jun 13, 2017 7:48 pm

KF,

Any possibility of signing yourself up as a minority business owner and pitch your own IT business from Fortune 500 companies? Instant of looking for another job if you lose this one.

As I understand it, many large companies pledge to spend x dollar supporting small minority businesses. I have a friend who did exactly that and his business growing.

Best of luck.

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Tue Jun 13, 2017 8:42 pm

Will do good wrote:KF,

Any possibility of signing yourself up as a minority business owner and pitch your own IT business from Fortune 500 companies? Instant of looking for another job if you lose this one.

As I understand it, many large companies pledge to spend x dollar supporting small minority businesses. I have a friend who did exactly that and his business growing.

Best of luck.
Will do good,

I have some possibility of consulting works if I am unemployed. It is a hit or miss. But, the pay is good. Normally, it is between $60 to $100 per hours and a few thousand per project.

KlangFool

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Sun Aug 20, 2017 7:11 am

Folks,

I do have a bit of good news to report.

My wife found a permanent part-time (20 hours per week) job with the county. It comes with full benefits, pension, and 457 retirement plan. The job pays around 10K but the health insurance is about the same or better than my existing employer with lower cost. So, as long as she keeps this part-time job, I might be able to retire.

KlangFool

delamer
Posts: 8742
Joined: Tue Feb 08, 2011 6:13 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by delamer » Sun Aug 20, 2017 11:16 am

KlangFool wrote:
Sun Aug 20, 2017 7:11 am
Folks,

I do have a bit of good news to report.

My wife found a permanent part-time (20 hours per week) job with the county. It comes with full benefits, pension, and 457 retirement plan. The job pays around 10K but the health insurance is about the same or better than my existing employer with lower cost. So, as long as she keeps this part-time job, I might be able to retire.

KlangFool
Congratulations to both your wife and you. A lot people still refer to health insurance, pensions, paid vacation, etc. as "fringe benefits" but there is nothing fringe about them. They are core parts of total compensation.

renue74
Posts: 1682
Joined: Tue Apr 07, 2015 7:24 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by renue74 » Sun Aug 20, 2017 11:22 am

Congrats. It seems health insurance is the major wild card for many contemplating retirement.

My wife is 47 and I'm 43. She's a school teacher and I get my insurance through her. I anticipate 55 or so for retirement and always kid with her that we can never get divorced! :D

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Sun Aug 20, 2017 1:16 pm

delamer wrote:
Sun Aug 20, 2017 11:16 am
KlangFool wrote:
Sun Aug 20, 2017 7:11 am
Folks,

I do have a bit of good news to report.

My wife found a permanent part-time (20 hours per week) job with the county. It comes with full benefits, pension, and 457 retirement plan. The job pays around 10K but the health insurance is about the same or better than my existing employer with lower cost. So, as long as she keeps this part-time job, I might be able to retire.

KlangFool
Congratulations to both your wife and you. A lot people still refer to health insurance, pensions, paid vacation, etc. as "fringe benefits" but there is nothing fringe about them. They are core parts of total compensation.
Thanks. Still crossing my fingers regularly.

KlangFool

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Sun Aug 20, 2017 1:18 pm

renue74 wrote:
Sun Aug 20, 2017 11:22 am
Congrats. It seems health insurance is the major wild card for many contemplating retirement.

My wife is 47 and I'm 43. She's a school teacher and I get my insurance through her. I anticipate 55 or so for retirement and always kid with her that we can never get divorced! :D
renue74,

I guess we are stuck with each other. :-) :-) I need her insurance. She needs my income. If I do not need insurance, I can take on some projects every now and then if I am unemployed.

KlangFool

flyingaway
Posts: 2387
Joined: Fri Jan 17, 2014 10:19 am

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by flyingaway » Sun Aug 20, 2017 1:40 pm

Dandy wrote:
Sat Jun 03, 2017 7:56 am
I given thought to how to determine if you have enough to retire i.e. have you reached your number. There should be some rule of thumb like I mention below - but so far as I know there isn't.

Assume a 50% drop in your equities and then subtract 2 years of estimated withdrawals to fund your retirement expenses? After that math how comfortable are you with the number?
If you are, your number appears solid if not you may need to look at your allocation and/or the size of your number.

Retirement at age 54 adds additional concerns i.e. funding several extra years of retirement. I am not sure how to assess what the extra level of risk is but is it likely significant. e.g. longer funding to collect SS, Medicare, pension? greater chance of market/inflation risk, longer period with little or no human capital etc.
The assumption of market dropping 50% has been used again and again to warn potential early retirees that they need a portfolio of double size. It seems that if you had $1M, after the market dropped 50%, you would become much worse than the guy who had $0 before the market dropped. (That guy's portfolio did not change).

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Sun Aug 20, 2017 3:49 pm

flyingaway wrote:
Sun Aug 20, 2017 1:40 pm
Dandy wrote:
Sat Jun 03, 2017 7:56 am
I given thought to how to determine if you have enough to retire i.e. have you reached your number. There should be some rule of thumb like I mention below - but so far as I know there isn't.

Assume a 50% drop in your equities and then subtract 2 years of estimated withdrawals to fund your retirement expenses? After that math how comfortable are you with the number?
If you are, your number appears solid if not you may need to look at your allocation and/or the size of your number.

Retirement at age 54 adds additional concerns i.e. funding several extra years of retirement. I am not sure how to assess what the extra level of risk is but is it likely significant. e.g. longer funding to collect SS, Medicare, pension? greater chance of market/inflation risk, longer period with little or no human capital etc.
The assumption of market dropping 50% has been used again and again to warn potential early retirees that they need a portfolio of double size. It seems that if you had $1M, after the market dropped 50%, you would become much worse than the guy who had $0 before the market dropped. (That guy's portfolio did not change).
flyingaway,

We are human. We feel pain if we had it and lost it. Versus never having it. This is a fact of life. This is a good thing. It protects us from the fatal mistake and taking on too much risk.

KlangFool

wrongfunds
Posts: 2013
Joined: Tue Dec 21, 2010 3:55 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by wrongfunds » Mon Aug 21, 2017 9:56 am

Retire at 54
...
SS:-
20K at 62 years old
29K at 67 years old
36K at 70 years old
KF,

Are the above numbers assumed with you being retired at 54? Or are they taken from SS website which assumes that you will continue to earn at least the same annual salary until you reach the real retirement age? The SS website makes it extremely difficult to get the numbers based upon the retirement age (aka 0 contribution from that point onward) and the age at which you start taking the payments. It always assumes that you keep on working until taking the payments out from the system.

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Mon Aug 21, 2017 10:00 am

wrongfunds wrote:
Mon Aug 21, 2017 9:56 am
Retire at 54

SS:-
20K at 62 years old
29K at 67 years old
36K at 70 years old[/quite]

KF,

Are the above numbers assumed with you being retired at 54? Or are they taken from SS website which assumes that you will continue to earn at least the same annual salary until you reach the real retirement age? The SS wesbsite makes it extremely difficult to get the numbers based upon the retirement age (aka 0 contribution from that point onward) and the age at which you start taking the payments. It always assumes that you keep on working until taking the payments out from the system.
wrongfunds,

In my case, it does not really matter whether I keep on working since I had crossed the second bend points. Any additional earning will be credited at 15%. I believe that estimate is based on I stop working now.

KlangFool

wrongfunds
Posts: 2013
Joined: Tue Dec 21, 2010 3:55 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by wrongfunds » Mon Aug 21, 2017 10:05 am

Looks like I need to study the bend points to evaluate our specific situation.

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Mon Aug 21, 2017 10:14 am

wrongfunds wrote:
Mon Aug 21, 2017 10:05 am
Looks like I need to study the bend points to evaluate our specific situation.
https://www.ssa.gov/oact/cola/bendpoints.html

wrongfunds,

A quick and dirty estimate could be calculated.

The first bend point = $885
The second bend point = $5,336

So, your top 35 years of social security taxed earning exceed 35 X 12 X $885 = $371,700. You had crossed the first bend point. To cross second bend point, you need 35 X 12 X $5,336 = $2,241,120.

Please note that the actual number you need is lower than this estimate because of the upward adjustment to the earlier year earning. With this method, you had definitely crossed the bend point with a big safety margin.

KlangFool

marcopolo
Posts: 2228
Joined: Sat Dec 03, 2016 10:22 am

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by marcopolo » Mon Aug 21, 2017 10:16 am

wrongfunds wrote:
Mon Aug 21, 2017 10:05 am
Looks like I need to study the bend points to evaluate our specific situation.
There is a calculator on the SS website that allows you to put in the year you plan to stop working, and your average salary between now and then (it uses your record for past earnings). If the age you enter is below 62, it will give you your anticipated benefits at age 62. I guess they assume if you retire early, you start SS early as well. But, with that number in hand, it is pretty easy to calculate the FRA and age 70 benefits assuming you never work again.

Klangfool,
Congratulations on overcoming yet another hurdle. Best of luck in the future.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Mon Aug 21, 2017 10:27 am

marcopolo wrote:
Mon Aug 21, 2017 10:16 am
wrongfunds wrote:
Mon Aug 21, 2017 10:05 am
Looks like I need to study the bend points to evaluate our specific situation.
There is a calculator on the SS website that allows you to put in the year you plan to stop working, and your average salary between now and then (it uses your record for past earnings). If the age you enter is below 62, it will give you your anticipated benefits at age 62. I guess they assume if you retire early, you start SS early as well. But, with that number in hand, it is pretty easy to calculate the FRA and age 70 benefits assuming you never work again.

Klangfool,
Congratulations on overcoming yet another hurdle. Best of luck in the future.
Thanks.

KlangFool

FOGU
Posts: 254
Joined: Tue Apr 24, 2018 9:41 pm

Re: KF's Worst Case Retirement Plan

Post by FOGU » Fri Jun 08, 2018 12:49 am

smitcat wrote:
Fri Jun 02, 2017 6:00 pm
indexonlyplease wrote:Klangfool, see it this helps,

Maybe if you follow the plan on this webstie it will work. I have been reading this site for a couple of years. The family lives frugal and both retired early. I beleive 40s.. I believe they live off of $30,000yr

http://www.mrmoneymustache.com

Certainly some of the ideas on that site are very good - but he definitely does not live on $30,00/year.
That site was and is a business play that worked out pretty well.
No doubt. It's an eminence front.
~ Don't just do something. Sit there. ~

michaeljc70
Posts: 5425
Joined: Thu Oct 15, 2015 3:53 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by michaeljc70 » Sat Jun 09, 2018 9:10 am

KlangFool wrote:
Sun Aug 20, 2017 7:11 am
Folks,

I do have a bit of good news to report.

My wife found a permanent part-time (20 hours per week) job with the county. It comes with full benefits, pension, and 457 retirement plan. The job pays around 10K but the health insurance is about the same or better than my existing employer with lower cost. So, as long as she keeps this part-time job, I might be able to retire.

KlangFool
That's fantastic as the healthcare part of your plan would have had me worried the most.

I can empathize with your situation. I have worked in IT for 25+ years. Almost all contracting. I took a "permanent" more "stable" job with benefits (health insurance) 2 months ago. A few weeks ago a merger was announced and there will be no jobs in 9-12 months. On top of that, I hate the job and the prospects of getting a new job I like that pays decent are moderate at best. I may retire sooner than expected. I know that I will be cutting it close, but like you, I also have several contingencies.

michaeljc70
Posts: 5425
Joined: Thu Oct 15, 2015 3:53 pm

Re: KF's Worst Case Retirement Plan

Post by michaeljc70 » Sat Jun 09, 2018 9:12 am

FOGU wrote:
Fri Jun 08, 2018 12:49 am
smitcat wrote:
Fri Jun 02, 2017 6:00 pm
indexonlyplease wrote:Klangfool, see it this helps,

Maybe if you follow the plan on this webstie it will work. I have been reading this site for a couple of years. The family lives frugal and both retired early. I beleive 40s.. I believe they live off of $30,000yr

http://www.mrmoneymustache.com

Certainly some of the ideas on that site are very good - but he definitely does not live on $30,00/year.
That site was and is a business play that worked out pretty well.
No doubt. It's an eminence front.
It's always easier to retire on $30k when you have a blog bringing in 6 figures. I don't consider running a business that earns you money being retired.

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Sat Jun 09, 2018 9:17 am

michaeljc70 wrote:
Sat Jun 09, 2018 9:10 am
KlangFool wrote:
Sun Aug 20, 2017 7:11 am
Folks,

I do have a bit of good news to report.

My wife found a permanent part-time (20 hours per week) job with the county. It comes with full benefits, pension, and 457 retirement plan. The job pays around 10K but the health insurance is about the same or better than my existing employer with lower cost. So, as long as she keeps this part-time job, I might be able to retire.

KlangFool
That's fantastic as the healthcare part of your plan would have had me worried the most.

I can empathize with your situation. I have worked in IT for 25+ years. Almost all contracting. I took a "permanent" more "stable" job with benefits (health insurance) 2 months ago. A few weeks ago a merger was announced and there will be no jobs in 9-12 months. On top of that, I hate the job and the prospects of getting a new job I like that pays decent are moderate at best. I may retire sooner than expected. I know that I will be cutting it close, but like you, I also have several contingencies.
michaeljc70,

Thanks.

I have 2 kids going to college now. With my annual expense and college funding, I am spending 110K to 120K per year now. So, it makes a significant difference whether I survive the next 2 years. I hope for the best but plan for the worst.

KlangFool

tampaite
Posts: 569
Joined: Wed Feb 18, 2015 9:29 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by tampaite » Thu Apr 18, 2019 9:48 am

Deleting my messages on this forum
Last edited by tampaite on Mon Jun 03, 2019 7:37 am, edited 1 time in total.

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Thu Apr 18, 2019 9:52 am

tampaite wrote:
Thu Apr 18, 2019 9:48 am
KlangFool wrote:
Fri Jun 02, 2017 8:09 am
Folks,

This is my worst-case retirement scenario. Please review and criticize.

1) Retire at 54 years old with a portfolio of 1 million and the AA of 60/40
2) 300K Mortgage. 6 years into 30 years 3.49% fixed rate mortgage.
4) Annual expense = 60K with the mortgage, 45K without the mortgage. Out of that 45K/60K, 20K is budgeted for medical expense.
Just checking since it's been about 2 yrs since your posting - are you still on-track?
tampaite,

1) I am close to 1.3 million.

2) My son is graduating May this year. My daughter is graduating in May next year.

3) So, it is getting very close to the FI number.

KlangFool

marcopolo
Posts: 2228
Joined: Sat Dec 03, 2016 10:22 am

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by marcopolo » Thu Apr 18, 2019 10:53 am

KlangFool wrote:
Thu Apr 18, 2019 9:52 am
tampaite wrote:
Thu Apr 18, 2019 9:48 am
KlangFool wrote:
Fri Jun 02, 2017 8:09 am
Folks,

This is my worst-case retirement scenario. Please review and criticize.

1) Retire at 54 years old with a portfolio of 1 million and the AA of 60/40
2) 300K Mortgage. 6 years into 30 years 3.49% fixed rate mortgage.
4) Annual expense = 60K with the mortgage, 45K without the mortgage. Out of that 45K/60K, 20K is budgeted for medical expense.
Just checking since it's been about 2 yrs since your posting - are you still on-track?
tampaite,

1) I am close to 1.3 million.

2) My son is graduating May this year. My daughter is graduating in May next year.

3) So, it is getting very close to the FI number.

KlangFool
Congratulation! It seems like you have already largely achieved your goals.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Thu Apr 18, 2019 11:01 am

marcopolo wrote:
Thu Apr 18, 2019 10:53 am
KlangFool wrote:
Thu Apr 18, 2019 9:52 am
tampaite wrote:
Thu Apr 18, 2019 9:48 am
KlangFool wrote:
Fri Jun 02, 2017 8:09 am
Folks,

This is my worst-case retirement scenario. Please review and criticize.

1) Retire at 54 years old with a portfolio of 1 million and the AA of 60/40
2) 300K Mortgage. 6 years into 30 years 3.49% fixed rate mortgage.
4) Annual expense = 60K with the mortgage, 45K without the mortgage. Out of that 45K/60K, 20K is budgeted for medical expense.
Just checking since it's been about 2 yrs since your posting - are you still on-track?
tampaite,

1) I am close to 1.3 million.

2) My son is graduating May this year. My daughter is graduating in May next year.

3) So, it is getting very close to the FI number.

KlangFool
Congratulation! It seems like you have already largely achieved your goals.
Thanks.

KlangFool

lakpr
Posts: 2232
Joined: Fri Mar 18, 2011 9:59 am

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by lakpr » Sun Apr 21, 2019 12:08 am

Klangfool,

I just posted a similar note to below on another thread too.

With the TCJA, your mortgage interest is no longer deductible. With a 3.5% rate on a $300k balance you are paying $10.5k per year in interest, paying it off is the equivalent of gaining a $14.4k raise in income.

Still feeling worth it to carry the mortgage?

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Sun Apr 21, 2019 6:35 am

lakpr wrote:
Sun Apr 21, 2019 12:08 am
Klangfool,

I just posted a similar note to below on another thread too.

With the TCJA, your mortgage interest is no longer deductible. With a 3.5% rate on a $300k balance you are paying $10.5k per year in interest, paying it off is the equivalent of gaining a $14.4k raise in income.

Still feeling worth it to carry the mortgage?
Yes.

KlangFool

Tdubs
Posts: 686
Joined: Tue Apr 24, 2018 7:50 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by Tdubs » Sun Apr 21, 2019 6:43 am

KlangFool wrote:
Fri Jun 02, 2017 8:09 am

5) I had passed the second bend point with social security. Below is my estimated social security income.
How do you tell when you pass a bend point?

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Sun Apr 21, 2019 7:00 am

Tdubs wrote:
Sun Apr 21, 2019 6:43 am
KlangFool wrote:
Fri Jun 02, 2017 8:09 am

5) I had passed the second bend point with social security. Below is my estimated social security income.
How do you tell when you pass a bend point?
I create a spreadsheet and calculated that with my actual earnings.

KlangFool

TexasMu
Posts: 63
Joined: Wed Aug 28, 2013 8:39 am
Location: Dallas, TX

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by TexasMu » Sun Apr 21, 2019 8:15 am

Care to share the formula for the bend points ? I would like to recreate the spreadsheet for myself.

printer86
Posts: 123
Joined: Mon Apr 25, 2016 8:45 am

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by printer86 » Sun Apr 21, 2019 8:54 am

TexasMu wrote:
Sun Apr 21, 2019 8:15 am
Care to share the formula for the bend points ? I would like to recreate the spreadsheet for myself.
https://www.ssa.gov/oact/progdata/retirebenefit1.html

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Sun Apr 21, 2019 12:35 pm

TexasMu wrote:
Sun Apr 21, 2019 8:15 am
Care to share the formula for the bend points ? I would like to recreate the spreadsheet for myself.
TexasMu,

https://www.ssa.gov/oact/COLA/AWI.html

https://www.ssa.gov/oact/cola/bendpoints.html

The quick and dirty to confirm whether you cross the second bend point is

A) Take the latest second bend point number, $5,583 and multiply by 35 (years) and 12 (months) ~ 2.3 million.

B) Add up the top 35 years of tax social security income. If it is more than 2.3 million, you had definitely crossed the second bend point.

KlangFool

marcopolo
Posts: 2228
Joined: Sat Dec 03, 2016 10:22 am

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by marcopolo » Sun Apr 21, 2019 3:19 pm

KlangFool wrote:
Sun Apr 21, 2019 12:35 pm
TexasMu wrote:
Sun Apr 21, 2019 8:15 am
Care to share the formula for the bend points ? I would like to recreate the spreadsheet for myself.
TexasMu,

https://www.ssa.gov/oact/COLA/AWI.html

https://www.ssa.gov/oact/cola/bendpoints.html

The quick and dirty to confirm whether you cross the second bend point is

A) Take the latest second bend point number, $5,583 and multiply by 35 (years) and 12 (months) ~ 2.3 million.

B) Add up the top 35 years of tax social security income. If it is more than 2.3 million, you had definitely crossed the second bend point.

KlangFool
In step (B), you need to adjust each years Soc Sec income by the current wage index for that year. This adjust wages to today's dollars.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Sun Apr 21, 2019 3:25 pm

marcopolo wrote:
Sun Apr 21, 2019 3:19 pm
KlangFool wrote:
Sun Apr 21, 2019 12:35 pm
TexasMu wrote:
Sun Apr 21, 2019 8:15 am
Care to share the formula for the bend points ? I would like to recreate the spreadsheet for myself.
TexasMu,

https://www.ssa.gov/oact/COLA/AWI.html

https://www.ssa.gov/oact/cola/bendpoints.html

The quick and dirty to confirm whether you cross the second bend point is

A) Take the latest second bend point number, $5,583 and multiply by 35 (years) and 12 (months) ~ 2.3 million.

B) Add up the top 35 years of tax social security income. If it is more than 2.3 million, you had definitely crossed the second bend point.

KlangFool
In step (B), you need to adjust each years Soc Sec income by the current wage index for that year. This adjust wages to today's dollars.
marcopolo,

You could do that for better accuracy. But, if you cross the 2.3 million, it is without question that you had crossed the second bend points.

KlangFool

marcopolo
Posts: 2228
Joined: Sat Dec 03, 2016 10:22 am

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by marcopolo » Sun Apr 21, 2019 3:28 pm

KlangFool wrote:
Sun Apr 21, 2019 3:25 pm
marcopolo wrote:
Sun Apr 21, 2019 3:19 pm
KlangFool wrote:
Sun Apr 21, 2019 12:35 pm
TexasMu wrote:
Sun Apr 21, 2019 8:15 am
Care to share the formula for the bend points ? I would like to recreate the spreadsheet for myself.
TexasMu,

https://www.ssa.gov/oact/COLA/AWI.html

https://www.ssa.gov/oact/cola/bendpoints.html

The quick and dirty to confirm whether you cross the second bend point is

A) Take the latest second bend point number, $5,583 and multiply by 35 (years) and 12 (months) ~ 2.3 million.

B) Add up the top 35 years of tax social security income. If it is more than 2.3 million, you had definitely crossed the second bend point.

KlangFool
In step (B), you need to adjust each years Soc Sec income by the current wage index for that year. This adjust wages to today's dollars.
marcopolo,

You could do that for better accuracy. But, if you cross the 2.3 million, it is without question that you had crossed the second bend points.

KlangFool
Yes. But, if the simple addition (without wage index adjustment) yields something below 2.3M, it does not say anything about whether or not you have hit the second bend point.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Sun Apr 21, 2019 3:33 pm

marcopolo wrote:
Sun Apr 21, 2019 3:28 pm
KlangFool wrote:
Sun Apr 21, 2019 3:25 pm
marcopolo wrote:
Sun Apr 21, 2019 3:19 pm
KlangFool wrote:
Sun Apr 21, 2019 12:35 pm
TexasMu wrote:
Sun Apr 21, 2019 8:15 am
Care to share the formula for the bend points ? I would like to recreate the spreadsheet for myself.
TexasMu,

https://www.ssa.gov/oact/COLA/AWI.html

https://www.ssa.gov/oact/cola/bendpoints.html

The quick and dirty to confirm whether you cross the second bend point is

A) Take the latest second bend point number, $5,583 and multiply by 35 (years) and 12 (months) ~ 2.3 million.

B) Add up the top 35 years of tax social security income. If it is more than 2.3 million, you had definitely crossed the second bend point.

KlangFool
In step (B), you need to adjust each years Soc Sec income by the current wage index for that year. This adjust wages to today's dollars.
marcopolo,

You could do that for better accuracy. But, if you cross the 2.3 million, it is without question that you had crossed the second bend points.

KlangFool
Yes. But, if the simple addition (without wage index adjustment) yields something below 2.3M, it does not say anything about whether or not you have hit the second bend point.
Correct. But, if the simple addition yield a number greater than 2.3 million, there is no need to do more calculation. That was my case.

And, for many folks with 6 figures annual income, it was good enough.

KlangFool

marcopolo
Posts: 2228
Joined: Sat Dec 03, 2016 10:22 am

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by marcopolo » Sun Apr 21, 2019 3:42 pm

KlangFool wrote:
Sun Apr 21, 2019 3:33 pm
marcopolo wrote:
Sun Apr 21, 2019 3:28 pm
KlangFool wrote:
Sun Apr 21, 2019 3:25 pm
marcopolo wrote:
Sun Apr 21, 2019 3:19 pm
KlangFool wrote:
Sun Apr 21, 2019 12:35 pm


TexasMu,

https://www.ssa.gov/oact/COLA/AWI.html

https://www.ssa.gov/oact/cola/bendpoints.html

The quick and dirty to confirm whether you cross the second bend point is

A) Take the latest second bend point number, $5,583 and multiply by 35 (years) and 12 (months) ~ 2.3 million.

B) Add up the top 35 years of tax social security income. If it is more than 2.3 million, you had definitely crossed the second bend point.

KlangFool
In step (B), you need to adjust each years Soc Sec income by the current wage index for that year. This adjust wages to today's dollars.
marcopolo,

You could do that for better accuracy. But, if you cross the 2.3 million, it is without question that you had crossed the second bend points.

KlangFool
Yes. But, if the simple addition (without wage index adjustment) yields something below 2.3M, it does not say anything about whether or not you have hit the second bend point.
Correct. But, if the simple addition yield a number greater than 2.3 million, there is no need to do more calculation. That was my case.

And, for many folks with 6 figures annual income, it was good enough.

KlangFool
Agreed.
Once in a while you get shown the light, in the strangest of places if you look at it right.

TexasMu
Posts: 63
Joined: Wed Aug 28, 2013 8:39 am
Location: Dallas, TX

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by TexasMu » Sun Apr 21, 2019 4:53 pm

I've worked 33 years and have accumulated $1,686,154 per ssa.gov . Where do I go from here or should I open a new thread ?

MindBogler
Posts: 834
Joined: Wed Apr 17, 2013 12:05 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by MindBogler » Sun Apr 21, 2019 4:54 pm

TexasMu wrote:
Sun Apr 21, 2019 4:53 pm
I've worked 33 years and have accumulated $1,686,154 per ssa.gov . Where do I go from here or should I open a new thread ?
Without a more specific question it is difficult to say.

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Sun Apr 21, 2019 6:39 pm

TexasMu wrote:
Sun Apr 21, 2019 4:53 pm
I've worked 33 years and have accumulated $1,686,154 per ssa.gov . Where do I go from here or should I open a new thread ?
TexasMu,

Open a new thread. It is a very simple spreadsheet.

KlangFool

User avatar
KidIcarus
Posts: 7
Joined: Sun Feb 04, 2018 12:40 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KidIcarus » Sun Apr 21, 2019 7:00 pm

You can also just paste you earnings record from ssa.gov into https://socialsecurity.tools. It is a great website and will show you exactly where you are with respect to the bend points.

TexasMu
Posts: 63
Joined: Wed Aug 28, 2013 8:39 am
Location: Dallas, TX

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by TexasMu » Sun Apr 21, 2019 8:28 pm

Thanks guys. I'll check out the websites and open a thread if I get stuck :thumbsup

User avatar
Will do good
Posts: 860
Joined: Fri Feb 24, 2012 8:23 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by Will do good » Sun Apr 21, 2019 9:55 pm

Hey KlangFool, you are so very close to FI, OMY.
What would you want to do once you do hit FI?
Congrats.

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Sun Apr 21, 2019 10:23 pm

Will do good wrote:
Sun Apr 21, 2019 9:55 pm
Hey KlangFool, you are so very close to FI, OMY.
What would you want to do once you do hit FI?
Congrats.
Will do good,

Working on it. May work after FI if I can work from home and reduce the hours.

1) Singing lesson?

2) Coffee roasting?

3) Yoga?

4) Tai Chi?

5) More cycling

6) Blog on food, coffee, and tea.

Aka, doing stuff just for fun...

KlangFool

User avatar
Will do good
Posts: 860
Joined: Fri Feb 24, 2012 8:23 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by Will do good » Sun Apr 21, 2019 11:21 pm

KlangFool wrote:
Sun Apr 21, 2019 10:23 pm
Will do good wrote:
Sun Apr 21, 2019 9:55 pm
Hey KlangFool, you are so very close to FI, OMY.
What would you want to do once you do hit FI?
Congrats.
Will do good,

Working on it. May work after FI if I can work from home and reduce the hours.

1) Singing lesson?

2) Coffee roasting?

3) Yoga?

4) Tai Chi?

5) More cycling

6) Blog on food, coffee, and tea.

Aka, doing stuff just for fun...

KlangFool
It would be great to work less hours and from home if you can, it could help you ease into retirement with more time doing what you want and still some income once in a while. It took me 2+ years from semi retired to fully retired, Just as I want it.

Good luck!

wrongfunds
Posts: 2013
Joined: Tue Dec 21, 2010 3:55 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by wrongfunds » Tue Apr 23, 2019 11:00 pm

marcopolo wrote:
Sun Apr 21, 2019 3:42 pm
KlangFool wrote:
Sun Apr 21, 2019 3:33 pm
marcopolo wrote:
Sun Apr 21, 2019 3:28 pm
KlangFool wrote:
Sun Apr 21, 2019 3:25 pm
marcopolo wrote:
Sun Apr 21, 2019 3:19 pm


In step (B), you need to adjust each years Soc Sec income by the current wage index for that year. This adjust wages to today's dollars.
marcopolo,

You could do that for better accuracy. But, if you cross the 2.3 million, it is without question that you had crossed the second bend points.

KlangFool
Yes. But, if the simple addition (without wage index adjustment) yields something below 2.3M, it does not say anything about whether or not you have hit the second bend point.
Correct. But, if the simple addition yield a number greater than 2.3 million, there is no need to do more calculation. That was my case.

And, for many folks with 6 figures annual income, it was good enough.

KlangFool
Agreed.
Suppose I have the benefit amount listed right now on my own SSA page and another from the last year. Would minor increase therein tell me if I have already passed the 2nd bend point or not?

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Wed Apr 24, 2019 6:15 am

wrongfunds wrote:
Tue Apr 23, 2019 11:00 pm
marcopolo wrote:
Sun Apr 21, 2019 3:42 pm
KlangFool wrote:
Sun Apr 21, 2019 3:33 pm
marcopolo wrote:
Sun Apr 21, 2019 3:28 pm
KlangFool wrote:
Sun Apr 21, 2019 3:25 pm


marcopolo,

You could do that for better accuracy. But, if you cross the 2.3 million, it is without question that you had crossed the second bend points.

KlangFool
Yes. But, if the simple addition (without wage index adjustment) yields something below 2.3M, it does not say anything about whether or not you have hit the second bend point.
Correct. But, if the simple addition yield a number greater than 2.3 million, there is no need to do more calculation. That was my case.

And, for many folks with 6 figures annual income, it was good enough.

KlangFool
Agreed.
Suppose I have the benefit amount listed right now on my own SSA page and another from the last year. Would minor increase therein tell me if I have already passed the 2nd bend point or not?
No. Because the benefit number is based you continue to work until the full retirement age.

KlangFool

wrongfunds
Posts: 2013
Joined: Tue Dec 21, 2010 3:55 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by wrongfunds » Wed Apr 24, 2019 8:49 am

I thought that once past 2nd bend point, the additional extra year of working hardly increases the benefit amount but before reaching the 2nd bend point that there is substantial increase in the benefit amount. Is that wrong assumption?

marcopolo
Posts: 2228
Joined: Sat Dec 03, 2016 10:22 am

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by marcopolo » Wed Apr 24, 2019 9:10 am

wrongfunds wrote:
Wed Apr 24, 2019 8:49 am
I thought that once past 2nd bend point, the additional extra year of working hardly increases the benefit amount but before reaching the 2nd bend point that there is substantial increase in the benefit amount. Is that wrong assumption?
That is true. But, your Soc Sec statement is not based on what you have contributed to date. It assumes you will keep working and contributing at your current rate until your FRA age. So, even if you have not passed the 2nd bend point yet, but will do so in the future, then each subsequent year might not make a big difference to estimate, because each estimate assumes you will pass the bend point at some time in the future.

There are two bend point. Contributions below the 1st bend point count at 90%, between the first and second bend point, you get 32%, beyond the 2nd bend point you get 15% until you hit the maximum.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Topic Author
KlangFool
Posts: 13418
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Wed Apr 24, 2019 9:31 pm

marcopolo wrote:
Wed Apr 24, 2019 9:10 am
wrongfunds wrote:
Wed Apr 24, 2019 8:49 am
I thought that once past 2nd bend point, the additional extra year of working hardly increases the benefit amount but before reaching the 2nd bend point that there is substantial increase in the benefit amount. Is that wrong assumption?
That is true. But, your Soc Sec statement is not based on what you have contributed to date. It assumes you will keep working and contributing at your current rate until your FRA age. So, even if you have not passed the 2nd bend point yet, but will do so in the future, then each subsequent year might not make a big difference to estimate, because each estimate assumes you will pass the bend point at some time in the future.

There are two bend point. Contributions below the 1st bend point count at 90%, between the first and second bend point, you get 32%, beyond the 2nd bend point you get 15% until you hit the maximum.
Correct. And, for folk with 6 figures annual income, it is most likely that the social security estimate which assumes that the person contributes until FRA will pass the second bend point.

KlangFool

rich126
Posts: 651
Joined: Thu Mar 01, 2018 4:56 pm

Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by rich126 » Thu Apr 25, 2019 6:41 am

At the beginning of the thread people pointed out the obvious (which I'm sure you were already aware of) that your numbers were risky (60K expenses on 1M of savings. Unless I missed something, you are now around $1.3M which is much closer. I probably missed it, but what was your goal, $1.5M?

Post Reply