Talk:Budget models of retirement spending

Article Abstract
--ThePrune 16:58, 2 September 2011 (EDT) Notice my peculiar use of the expression "referred to in this article as...". What I am trying to indicate is that certain budget type designations (specifically,. Current Spending budget, Bottom-up budget, Step Change budget and Flexible Spending budget) are original to this article. I have attempted to create a classification scheme by which many fundamentally similar budget models can be grouped together. In my opinion, this helps clarify relationships among them. Before sitting down to write this article, I had always thought of them as "20 to 30 different approaches". Now I can see the common features. I want the reader to also be able to see these commonalities.

That said, I am sensitive to the requirement of keeping original work out of Wiki articles. Yet I have been unable to find any outside articles that categorize these now (to me!) obvious similarities. When writing review articles as a professional engineer, this sort of new designation creation would have been perfectly acceptable. I'd be interested to hear if others think I have unacceptably violated the "No Original Work" rule. If so, what might be done about it?


 * The Wikipedia policy of No original research is defined as material—such as facts, allegations, and ideas—for which no reliable, published source exists. I don't think this is any different than an instructor who writes his own textbook and organizes the chapter material as he sees fit. The section headings are uniquely titled by the author, but the content uses equations and material that has been taught for years. You are not modifying the budget models themselves, just applying them for your intended purpose. The budgets are verifiable sources, which is not original research.
 * --LadyGeek 19:54, 2 September 2011 (EDT)

Additions and Corrections Needed
--ThePrune 14:04, 5 September 2011 (EDT) Need to add an entire section dealing with budgeting for the uncertainties in retirement spending that might result from unplanned events. Examples of such unplanned events might include:
 * Supporting aged parents and/or adult children
 * Paying out-of-pocket for long-term medical care
 * Large spikes in inflation (as occurred in the late 70's)

Others are encouraged to make their own additions to the list of unplanned events that should be included.

Also needed are good references for ways that retirees can incorporate unplanned expenses into their retirement spending plans. I have already discovered that the Society of Actuaries has a lot of material on Risks and retirement planning. So at first I'll focus on these articles.

Bottom-up approach (Worksheets)
--ThePrune 20:01, 26 August 2011 (EDT) I feel it's important to include links to 3 types of budgeting documents:  Paper format, Internet, and Downloadable spreadsheet. I've given a few links, and I really wouldn't want to give more than 3 links in each category. But I'm not really sure that I've found the best examples of each. (But I am partial to the Excel file Simple Budget Worksheets since it's what I use in the retiremet classes I teach). I'd appreciate it if other would post links to their favorite budgeting documents so that the Wiki community can select the very best ones for the article.

The wiki is not the right vehicle for poll taking; that's for the forum. You'll never get agreement on what "best" really means, as everyone uses what they are comfortable with. The intent is to teach the concepts, not worksheet mechanics. If I like the paper example better, I'll enter it into Excel (or LibreOffice / OpenOffice, the free alternatives). I would just use what you are comfortable with; the student can always choose something different after the course is over.

Giving too many choices (8 shown here) can be confusing to the student. Only four budgets have explanations (is good for infrequent purchases, etc.).

The Standard & Poor budget is a calculator, not a budget. I would delete it, explain why, or move it to the External links section.--LadyGeek 21:23, 26 August 2011 (EDT)


 * --ThePrune 20:45, 28 August 2011 (EDT) Good advice, LadyGeek.  I'll pick the one or two best worksheets and keep only those in the Wiki text section.  The rest will be moved to External References.  And the ones I like will be converted by me into Excel format.  I agree it would be nice to have equivalent Open Source spreadsheet versions; can you convert from Excel to Open Source equivalents?

MS Excel is the industry standard format. Save in MS Excel format and you are done. The open source applications (OpenOffice and LibreOffice) are able to read and write Excel format, the conversions are done internally. No further work is needed on your part.

As for formatting, note that blbarnitz suggested a quote box. I don't know if you saw it, but it's easily viewed by digging into the page's history and looking at versions. 06:48, 27 August 2011. I like tables here, but it depends on what you want to do. I just thought to mention it, as quote boxes are a good way to well, quote something. --LadyGeek 21:32, 28 August 2011 (EDT)


 * --ThePrune 08:47, 29 August 2011 (EDT) Thanks for mentioning blbarnitz's Quote Box formatting proposal.  I had not seen it. I like the appearance, but have come to agree with your view that offering too many budget worksheet options is not the best approach.  It's better to just offer a few excellent choices, so the reader has less to deal with.  So I'll stick with my last proposal to convert 1 or 2 good worksheets into Excel format.

Time-Varying Budget Models
I would rename this section, as its not descriptive. Anything can be simple or complex, it depends on the perspective. Do you mean the time-varying models? --LadyGeek 19:39, 29 August 2011 (EDT)
 * --ThePrune 17:02, 3 September 2011 (EDT) Yes, calling the section "Time-varying budget models" is much more descriptive. Wording has been changed.

Single Budget Models
--ThePrune 15:09, 4 September 2011 (EDT) LadyGeek had made the suggestion to use the section title "Time-varying Budget Models" rather than the less descriptive "Complex Budget Models". Thinking this over for another day, it also seemed appropriate to use the section title "Single Budget Models" rather than "Simple Budget Models" for just the same reason. As an added benefit, the new section title supplies a clearer comparison to the section titled "Dual Budget Models".

Flexible spending budgets
The Fidelity Retirement Income Planner requires an account. I didn't try it, but added a note in the article. There are a number of Retirement Calculators in the wiki, see if anything applies here: Retirement calculators. --LadyGeek 22:10, 5 September 2011 (EDT)


 * --ThePrune 22:40, 5 September 2011 (EDT) Nice catch about Fidelity. I'll systematically go through your Wiki list of retirement calculators once I'm finished going though my own bookmarked list.  There's a lot of overlap!  I'm adding even more of these calculator references into my draft text for the remainder of the "Introduction to retirement spending models" article.  I think it's useful for people who care about the details to be able to look in the article references and see what models are used by which programs.

Reader feedback: Would be nice to have a few ...
108.248.250.124 posted this comment on 17 January 2014 (view all feedback).

"Would be nice to have a few typical actual budgets posted."

Any thoughts?

LadyGeek 12:58, 18 January 2014 (CST)

Reader feedback: I'd like to suggest that thi...
73.171.211.193 posted this comment on 10 September 2016 (view all feedback).

"I'd like to suggest that this page alludes to whether taxes are part of the 'essential budget' or in addition to it."

Any thoughts?

I added a section on Income taxes as a budget category in the Introduction, with a general comment on the need to include all taxes for total retirement spending.--Whaleknives 00:51, 16 September 2016 (EDT)

The recent change to make "real = nominal + inflation" instead of the previous "nominal = real + inflation" seems incorrect. What was the reason for the change? --FiveK 21:12, 16 September 2016 (EDT)

I think the reason for disagreements on this, and past inconsistencies in this particular article, come from the way future cash flows are adjusted for inflation. The referenced Wikipedia article says "The price index is applied to adjust the nominal value of a quantity, such as wages or total production, to obtain its real value. The real value is the value expressed in terms of purchasing power in the base year." If you are saying any future year is nominal, then FiveK is correct.

But if you have determined a retirement budget, the spending is in current dollars, making today your base. Any inflation adjustment by calculators such as i-ORP is applied to future cash flows. The real value at any point in retirement is today's nominal value + inflation adjustment. For the purposes of retirement spending estimates, the base year is the present. This is consistent with Investopedia's definition of nominal: "When describing concepts such as interest rate or GDP, nominal refers to their unadjusted rate, value or current price without taking elements such as inflation, seasonality, loan fees, interest compounding or other factors into account."

Perhaps we should change terms to "present or current" and "future (inflation adjusted)"? -- Whaleknives 22:46, 17 September 2016 (EDT)

If one treats today's spending as the base, then there are no adjustments needed for today's spending and real and nominal are equal today.

Looking ahead to future spending, if consumption (i.e., how much food, travel, medical care, etc.) stays constant then future real spending equals current spending. Future nominal spending, however, will change due to inflation. In other words, the nominal value at any point in retirement is today's real value (which does equal today's nominal value) + real changes in consumption + inflation adjustment. --FiveK 12:45, 18 September 2016 (EDT)

I made an administrative change to put the editor's signature at the end of the comments (per Wikipedia convention for Talk pages). --LadyGeek 15:41, 18 September 2016 (EDT)

FiveK has convinced me, so I've changed my previous reversals of "nominal" and "real". Thanks for the correction. --Whaleknives 17:12, 18 September 2016 (EDT)