Author Topic: How did you factor in a pension or other income streams?  (Read 3548 times)

rubybeth

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How did you factor in a pension or other income streams?
« on: December 14, 2018, 02:46:59 PM »
I am not post-FIRE but I really only want to hear from folks who have actually retired/cut back on work, so putting this here.

Can someone explain in really simple terms how to plan or provide a very simple FIRE calculator for someone with a pension? If I go by the 4% rule and save 25x what I'd need to retire, I'll have saved more than needed once my pension starts [and social security at 67 or whenever that would eventually happen in the universe timeline where Millennials get social security payments].

I'm 37, am already fully vested, and my estimated state pension amount at 55 if I quit today would be $450/mo. If I work until 45, it will be at least $660/mo. starting at 55. I can always delay the pension and get a higher payout, too. The pension is based on the average of the highest paid five years of work, so as wages go up, so will pension amount.

Also, DH will probably work longer than I will since he just did a career shift a couple years ago, so we'll continue to have his income for a while even if I pull the trigger or go part-time or something.

I find the Networthify simple calculator too simple, because it doesn't factor in taxes and that taxes will go down if one spouse stops working. I find FIREcalc awfully confusing and it tells me I need over a million to be safe. But what if I just want to draw like 4.5% for 3-5 years, then drop down to 3.5% or even 2.5% of the stash? And then maybe as little as 1.5-2% of the stash once I'm getting social security or am too old to do much?

sol

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Re: How did you factor in a pension or other income streams?
« Reply #1 on: December 14, 2018, 03:08:18 PM »
The normal approach is to just subtract your pension income off of your needed expenses, in the years when you will collect it.  That only works if you're doing a year by year future budget yourself in something like excel, though.

If you want to use a webpage app that does all of the addition and subtraction for you, then cFIREsim does have a pension/SS ("other income") option.  You can specify the amount and in what years you will receive it, and it will automatically subtract that off of your expenses and only draw from your investments the remaining amount required to meet your total spending targets.  It seemed to work just fine the last time I used it.

Freedomin5

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Re: How did you factor in a pension or other income streams?
« Reply #2 on: December 15, 2018, 12:38:22 AM »
Someone else was talking about the bucket strategy, where you divide your retirement into phases.

Here is one post that talks about it: https://ournextlife.com/2016/02/17/how-we-calculated-our-numbers-for-each-phase-of-early-retirement/

Also, I really like @Goldielocks post about the bucket strategy. If you click on the link below it should take you to the post. I didn't bother copying and pasting it here because goldielocks goes into great detail on how to calculate the amount needed in each phase of early retirement. Just follow the math and plug in your own numbers.


reeshau

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Re: How did you factor in a pension or other income streams?
« Reply #3 on: December 15, 2018, 02:54:09 AM »
If it helps to think of it as part of your savings "number," you could also think of it in terms of how much you would need to save to buy an equivalent annuity.  Then, count it as savings you have already achieved, or a reduction in your savings target.  The book Your Money Ratios discusses this approach in depth in an appendix.

SnackDog

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Re: How did you factor in a pension or other income streams?
« Reply #4 on: December 15, 2018, 04:43:10 AM »
If, like social security, there is risk that it ever gets paid, I would treat those amounts as upside and plan as if you were not going to receive them.

Greystache

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Re: How did you factor in a pension or other income streams?
« Reply #5 on: December 15, 2018, 07:27:03 AM »
Not sure if it is an option for you, but you may want to consider taking your pension as a lump sum payment. In my case, I elected to take my pension as a 10-year certain payout. My first 10 years of retirement will be funded by the pension and I won't tap my investment portfolio until the pension money runs out. 

DreamFIRE

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Re: How did you factor in a pension or other income streams?
« Reply #6 on: December 15, 2018, 09:22:25 AM »

I use cFireSim, not only for SS/pension, but for adding future expenses, such as the shift to Medicare further into the future, which isn't free for all the necessary parts, pieces, and supplements.

Sometimes I run it with a 25% cut in future SS benefits to see the effect.

dude

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Re: How did you factor in a pension or other income streams?
« Reply #7 on: December 17, 2018, 08:51:51 AM »


If you want to use a webpage app that does all of the addition and subtraction for you, then cFIREsim does have a pension/SS ("other income") option.  You can specify the amount and in what years you will receive it, and it will automatically subtract that off of your expenses and only draw from your investments the remaining amount required to meet your total spending targets.  It seemed to work just fine the last time I used it.

Yep, this is what I do on www.firecalc.com, with a slight twist -- in the first 8 years of retirement I'll have pension + supplement, after which the supplement goes away. So in firecalc, 8 years out (at 62), I add an expense equal to what I'll be losing when the supplement goes away (need to do this because firecalc only has starting dates for pensions, not ending dates).


rubybeth

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Re: How did you factor in a pension or other income streams?
« Reply #8 on: December 17, 2018, 09:46:47 AM »
The normal approach is to just subtract your pension income off of your needed expenses, in the years when you will collect it.  That only works if you're doing a year by year future budget yourself in something like excel, though.

If you want to use a webpage app that does all of the addition and subtraction for you, then cFIREsim does have a pension/SS ("other income") option.  You can specify the amount and in what years you will receive it, and it will automatically subtract that off of your expenses and only draw from your investments the remaining amount required to meet your total spending targets.  It seemed to work just fine the last time I used it.

I do have a budget by year in a spreadsheet, exactly as you mentioned. I just wondered if there was a simpler way to calculate a FIRE target goal for me that factored in higher withdrawals for a while until pension kicks in, and then later, maybe social security. For example, if I estimate taking out 4% of stash when I retire early, but then only 3% in the pension years, I end up with millions left over when I die, which is kind of unnecessary. But know taking out more than 4% at the beginning of FIRE increases the risk that I'd run out of money.

If, like social security, there is risk that it ever gets paid, I would treat those amounts as upside and plan as if you were not going to receive them.

There's no risk. It's a solid state pension. I read the management reports on it that I get about quarterly. I have no concerns that it won't happen. I am already fully vested, too.

Not sure if it is an option for you, but you may want to consider taking your pension as a lump sum payment. In my case, I elected to take my pension as a 10-year certain payout. My first 10 years of retirement will be funded by the pension and I won't tap my investment portfolio until the pension money runs out. 

Edited since my estimated total was off: It is an option, but it's not one I would be likely to take. I would only get my contributions back, with interest. My employer has been more than matching my contributions for years (my contribution is 6.5% and employer's is 7.5%), and if I start payments at 55 even assuming I only get the same amount I would today if I quit ($450/mo), that's only about 8 years of payments based on the current total of my contributions. So, assuming I live longer than 55 + 8 (age 63), I would get more out of the pension by taking the monthly amount than I would by taking the lump sum. There might be a tipping point with this, though. I can do more math.

Thanks for the other comments so far. I'll have to take a closer look at CFIREsim and firecalc.

Any other thoughts?
« Last Edit: December 17, 2018, 05:41:04 PM by rubybeth »

sol

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Re: How did you factor in a pension or other income streams?
« Reply #9 on: December 17, 2018, 10:29:52 AM »
if I start payments at 55 even assuming I only get the same amount I would today if I quit ($450/mo), that's only about 16 years of payments based on the current total of my contributions. So, assuming I live longer than 55 + 16 (age 71), I would get more out of the pension by taking the monthly amount than I would by taking the lump sum. There might be a tipping point with this, though. I can do more math.

One added complication that I'm not sure if you're considered is that the funds in your pension continue to accrue interest after you retire.  It's not like they convert your pension to a cash amount on the day you retire and then pay you for 16 years from that cash amount.  Part of your future pension payments will come from recent growth of your pension funds, accumulated since the day you retired, just like a normal stock market investment continues to accrue earnings even after you retire.

Cassie

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Re: How did you factor in a pension or other income streams?
« Reply #10 on: December 17, 2018, 11:08:46 AM »
We each have a small pension of 20k each and are really happy to have them. Can you go p.t. with your state so you would continue to earn half credits?

rubybeth

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Re: How did you factor in a pension or other income streams?
« Reply #11 on: December 17, 2018, 05:40:04 PM »
if I start payments at 55 even assuming I only get the same amount I would today if I quit ($450/mo), that's only about 8 years of payments based on the current total of my contributions. So, assuming I live longer than 55 + 8 (age 63), I would get more out of the pension by taking the monthly amount than I would by taking the lump sum. There might be a tipping point with this, though. I can do more math.

One added complication that I'm not sure if you're considered is that the funds in your pension continue to accrue interest after you retire.  It's not like they convert your pension to a cash amount on the day you retire and then pay you for 16 years from that cash amount.  Part of your future pension payments will come from recent growth of your pension funds, accumulated since the day you retired, just like a normal stock market investment continues to accrue earnings even after you retire.

I've corrected my math since I didn't recall the total when I posted. Yes, my funds will continue to accrue interest at whatever rate the state allows until I decide to start taking a monthly amount or take as a lump sum. But it's a guaranteed minimum amount paid to me per month depending on a variety of factors (the age at which I'd start taking payments, how much of a survivor benefit I would elect from a variety of percentage options, etc.). It also has a COLA that I haven't dug into. I guess I don't see what "complication" that adds?

We each have a small pension of 20k each and are really happy to have them. Can you go p.t. with your state so you would continue to earn half credits?

Yes, this is an option. I know multiple colleagues who've done this. I have considered going part-time but it wouldn't likely be in my same position--it would have to be a demotion.

MasterStache

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Re: How did you factor in a pension or other income streams?
« Reply #12 on: December 18, 2018, 08:35:53 AM »
I might not be much help but we factored in my wife's pension more as "old people" money. We likely won't collect until she is 65, but it is a significant amount. The way we factored it in for ER is by figuring that even at a 5-6% SWR we would likely never run out of money. So even if we put a sizable dent in our ER money, the Pension and SS would both kick in down the road and give us a big boost. I just think it's too tough to nail down all the Math.

sol

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Re: How did you factor in a pension or other income streams?
« Reply #13 on: December 18, 2018, 09:11:38 AM »
I just think it's too tough to nail down all the Math.

Aaagh!  No!

This sort of thinking absolutely pushes my buttons.  Do the math!  Take your best stab at it, at least, rather than relying on gut instincts.   The world is full of big messy problems, but judicious application of basic arithmetic will usually give you a clear cut answer if you just s spend a few minutes working it out.

I went to school through the 24th grade specifically to learn how to use math to find solutions to poorly posed problems.  After you've written a ten page solution to "how far can a duck fly" the idea that a pension payment can't be calculated correctly seems ridiculous.  And infuriating.  Is it just me?

jim555

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Re: How did you factor in a pension or other income streams?
« Reply #14 on: December 18, 2018, 09:21:49 AM »
With a good pension you can basically FIRE without much effort at all.  You just have to fill the gap between early retirement and SS/pension. 

MasterStache

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Re: How did you factor in a pension or other income streams?
« Reply #15 on: December 18, 2018, 03:18:39 PM »
I just think it's too tough to nail down all the Math.

Aaagh!  No!

This sort of thinking absolutely pushes my buttons.  Do the math!  Take your best stab at it, at least, rather than relying on gut instincts.   The world is full of big messy problems, but judicious application of basic arithmetic will usually give you a clear cut answer if you just s spend a few minutes working it out.

I went to school through the 24th grade specifically to learn how to use math to find solutions to poorly posed problems.  After you've written a ten page solution to "how far can a duck fly" the idea that a pension payment can't be calculated correctly seems ridiculous.  And infuriating.  Is it just me?

Oh Iíve done the Math. Itís just that, the pension number changes and will keep changing. So the Math today is different from the Math next year. Itís totally dependent on the spouse and her intentions with work.

Linea_Norway

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Re: How did you factor in a pension or other income streams?
« Reply #16 on: December 19, 2018, 01:38:51 AM »
With a good pension you can basically FIRE without much effort at all.  You just have to fill the gap between early retirement and SS/pension.

Yes. But for us under a certain age (under 58), the pensions aren't as good anymore as they used to be. Like in the past in my (governmental) company, working 30 years would give you a full pension at 66% of your highest salary, for your lifetime with window-insurance. If I would work the full 30 years, I would probably receive 50%. And by early retirement, I won't even fill up my 30 years. Receiving a good pension is becoming more difficult these days than it used to be.

Still, DH and I count on that we will receive enough in old age pension, that we only need to cover the 20 years in between. We intend to have eaten up the stash by the time we receive our old age pension.

rubybeth

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Re: How did you factor in a pension or other income streams?
« Reply #17 on: December 19, 2018, 07:25:30 AM »
With a good pension you can basically FIRE without much effort at all.  You just have to fill the gap between early retirement and SS/pension.

Yes. But for us under a certain age (under 58), the pensions aren't as good anymore as they used to be. Like in the past in my (governmental) company, working 30 years would give you a full pension at 66% of your highest salary, for your lifetime with window-insurance. If I would work the full 30 years, I would probably receive 50%. And by early retirement, I won't even fill up my 30 years. Receiving a good pension is becoming more difficult these days than it used to be.

Still, DH and I count on that we will receive enough in old age pension, that we only need to cover the 20 years in between. We intend to have eaten up the stash by the time we receive our old age pension.

That sounds very much like mine. I've worked for my org for nearly 20 years (yes, I really did start working at 17), so if I work until 55, 65, or even later, the pension would be rather large and be a significant income replacement. However, I don't think I will want to work full time for that long. I have a variety of options (take my funds out as a lump sum, delay payments until I really need them, take no spousal component if I die first, etc.) but I guess I need to really do the math. It's also hard to predict what my highest five years of earnings will be since it depends entirely on what raises we get, and also how long I actually work.

jim555

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Re: How did you factor in a pension or other income streams?
« Reply #18 on: December 19, 2018, 09:17:14 AM »
My company froze the pension plan years ago.  New employees get no pension.  We got additional payments in our 401Ks in lieu of the pension.

dude

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Re: How did you factor in a pension or other income streams?
« Reply #19 on: December 19, 2018, 01:15:14 PM »
I just think it's too tough to nail down all the Math.

Aaagh!  No!

This sort of thinking absolutely pushes my buttons.  Do the math!  Take your best stab at it, at least, rather than relying on gut instincts.   The world is full of big messy problems, but judicious application of basic arithmetic will usually give you a clear cut answer if you just s spend a few minutes working it out.

I went to school through the 24th grade specifically to learn how to use math to find solutions to poorly posed problems.  After you've written a ten page solution to "how far can a duck fly" the idea that a pension payment can't be calculated correctly seems ridiculous.  And infuriating.  Is it just me?

HAHAHA!!  Agree you have to give it your best shot, even if, like me, some math (ERN's SWR analysis, for example) is way over my head at this point in my life (due to atrophy of math skills).

dude

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Re: How did you factor in a pension or other income streams?
« Reply #20 on: December 19, 2018, 01:17:36 PM »
With a good pension you can basically FIRE without much effort at all.  You just have to fill the gap between early retirement and SS/pension.

Yes. But for us under a certain age (under 58), the pensions aren't as good anymore as they used to be. Like in the past in my (governmental) company, working 30 years would give you a full pension at 66% of your highest salary, for your lifetime with window-insurance. If I would work the full 30 years, I would probably receive 50%. And by early retirement, I won't even fill up my 30 years. Receiving a good pension is becoming more difficult these days than it used to be.

Still, DH and I count on that we will receive enough in old age pension, that we only need to cover the 20 years in between. We intend to have eaten up the stash by the time we receive our old age pension.

This strategy would terrify me here in the States, because there's no guarantee a pension due 20 years from now will still be there!

MasterStache

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Re: How did you factor in a pension or other income streams?
« Reply #21 on: December 20, 2018, 04:24:39 AM »
With a good pension you can basically FIRE without much effort at all.  You just have to fill the gap between early retirement and SS/pension.

Yes. But for us under a certain age (under 58), the pensions aren't as good anymore as they used to be. Like in the past in my (governmental) company, working 30 years would give you a full pension at 66% of your highest salary, for your lifetime with window-insurance. If I would work the full 30 years, I would probably receive 50%. And by early retirement, I won't even fill up my 30 years. Receiving a good pension is becoming more difficult these days than it used to be.

Still, DH and I count on that we will receive enough in old age pension, that we only need to cover the 20 years in between. We intend to have eaten up the stash by the time we receive our old age pension.

This strategy would terrify me here in the States, because there's no guarantee a pension due 20 years from now will still be there!

Yeah that's my fear. They have been scaling back their own contributions to her HSA and they match $0 of her 403(b) contributions. On top of that she is close to maxing out on her pay increases. All this despite working for one of the top hospitals in the country. ) :

If it's still there in 20 years fantastic. If not then I think we'll be fine without it.

infromsea

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Re: How did you factor in a pension or other income streams?
« Reply #22 on: December 20, 2018, 08:24:38 AM »
If it helps to think of it as part of your savings "number," you could also think of it in terms of how much you would need to save to buy an equivalent annuity.  Then, count it as savings you have already achieved, or a reduction in your savings target.  The book Your Money Ratios discusses this approach in depth in an appendix.

This is how I think of my military pension...

Is the book you mention worth a purchase? My local library doesn't have it so I've asked them to purchase a copy, not sure if it's worth the cost if the library doesn't pick one up?

Cannot Wait!

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Re: How did you factor in a pension or other income streams?
« Reply #23 on: December 20, 2018, 08:47:48 AM »
If the math is too much for you - post a question on Ask A Mustachian!   That's what I did with my pension questions and I had so many helpful responses that it made me cry.  We are so lucky to have people on these forums that freely share their brilliance!

reeshau

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Re: How did you factor in a pension or other income streams?
« Reply #24 on: December 20, 2018, 09:07:25 AM »
If it helps to think of it as part of your savings "number," you could also think of it in terms of how much you would need to save to buy an equivalent annuity.  Then, count it as savings you have already achieved, or a reduction in your savings target.  The book Your Money Ratios discusses this approach in depth in an appendix.

This is how I think of my military pension...

Is the book you mention worth a purchase? My local library doesn't have it so I've asked them to purchase a copy, not sure if it's worth the cost if the library doesn't pick one up?

I certainly think it is--for many reasons besides this one!  Although it is tuned to a normal retirement age, it is a financial planner on paper.  It's available for $8.99 on Kindle, and quite cheaply as a used purchase.  If we were talking live, I would hand you one--it's the one book I regularly hand out as homework for people starting their financial journeys.

What really makes it my go-to introduction is that every person I have given it to, recommended it to, or studied it with finds a different insight that speaks to them.  It covers basic budgeting, home purchases, insurance, saving for college, saving for retirement, etc. etc.  Again, the only thing that kills it as a Mustachian reference is that its simplified calculations are expecting you to work and save until 65.  But, it's not that hard to actually pick up the numbers and recalculate them to whatever you want--you can crib off of the book.
« Last Edit: December 20, 2018, 09:10:45 AM by reeshau »

infromsea

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Re: How did you factor in a pension or other income streams?
« Reply #25 on: December 21, 2018, 07:26:09 AM »
It's available for $8.99 on Kindle, and quite cheaply as a used purchase.

I grabbed a used copy as this struck me as the type of book I'd need in physical form.

Thanks for the feedback, I'll try to remember to give some feedback in a few weeks.

Happy Holidays and Kindest Regards,

Tim

rubybeth

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Re: How did you factor in a pension or other income streams?
« Reply #26 on: January 03, 2019, 07:22:27 AM »
I FIREd at 42 and knew I would get a small gov pension once I was 50 or older. I just treated it as a future COL adjustment to off set inflation or market downturns or increases in medical insurance, etc rather than calculate it into my 4% rule FI number. Since your pension will be only around $400/month that's how I'd look at it myself and just base your FI number on your investments. Unless you have  very low planned FIRE expenses I don't think the amount of your pension will impact you very much.

ETA: If its a state pension you may have to worry about it being underfunded and at some point having your benefits reduced. I'm on CalPERS and I imagine that will happen someday...maybe soon if we see another 2008 market where the state lost a few gazillion.

It's already estimated at $450/mo if I quit today and started payments at age 55. I'm only 37 and will likely work another 10 years, at least (maybe more, maybe less). I suppose something terrible could happen to the pension fund, but I am not too worried about that.

I like the idea of mentally treating is as offsetting inflation somewhat for my future self. Most of it would likely be eaten up by healthcare or other rising costs that are unavoidable without dramatic change to US politics. Sigh.

Dicey

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Re: How did you factor in a pension or other income streams?
« Reply #27 on: January 03, 2019, 07:33:43 AM »
We each have a small pension of 20k each and are really happy to have them. Can you go p.t. with your state so you would continue to earn half credits?

Yes, this is an option. I know multiple colleagues who've done this. I have considered going part-time but it wouldn't likely be in my same position--it would have to be a demotion.
Wait! Can it really be considered a demotion if it provides you get-out-of-jail-free card freedom? Methinks that's more of a promotion.

sol

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Re: How did you factor in a pension or other income streams?
« Reply #28 on: January 03, 2019, 07:54:18 AM »
We each have a small pension of 20k each and are really happy to have them. Can you go p.t. with your state so you would continue to earn half credits?

Yes, this is an option. I know multiple colleagues who've done this. I have considered going part-time but it wouldn't likely be in my same position--it would have to be a demotion.
Wait! Can it really be considered a demotion if it provides you get-out-of-jail-free card freedom? Methinks that's more of a promotion.

The whole idea behind "promotions" is to exert control over you with another carrot.  It's an artificial reward system given to some of your slaves instead of others in order to keep all of them slaving away together.  You don't need to fall for that.

Consider doing what is best for you, regardless of what they have trained you to do.  I spent my while life as an ambitious ladder climber, checking off boxes, piling up accomplishments, moving up the ranks.  As soon as I realized that the entire ladder was for suckers, my perspective changed and I had to retire almost immediately.  Other people's expectations for what constituted my success did not align with the kind of success that I truly desired, and I'm sure I disappointed lots of people by ejecting from my high flying career.  My success is mine, though, and I get to decide what kind of life I want to live. 

I'd take the "demotion" in a heartbeat in your situation, if it gave me what I wanted.  You are not your job.  You decide you're self worth, not your employment status or the perceived prestige of your position.  As soon as you can really accept that truth, all of the carrots they can dangle in front of you start to look a little silly.  Seek your own goals for a change, and don't let them push you into serving their interests if they don't align with yours just because it's a "promotion". 

And certainly don't do the converse, and stay paralyzed with inaction in the wrong place, for fear of a demotion.  Remember that these titles and positions are all artificial, because every one of those people is a captive in that system regardless of what the org chart says.

SnackDog

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Re: How did you factor in a pension or other income streams?
« Reply #29 on: January 03, 2019, 03:23:09 PM »
At my megacorp we have a career ladder for technical types which goes deep into middle management pay grades (nearly seven figure total package).  There is even a very senior designation for those deemed to have demonstrated influence across the industry in their technical specialty.  So one guy I know struggled his whole career beating his breast and telling everyone how smart and influential he was, how he was the  best technically because he ate/drank/lived his specialty.  He was finally promoted to the highest technical distinction around age 55, and promptly retired.  People were pretty fed up that he said how much he loved his technical function and wanted more time to influence, educate, mentor and improve the function but once he was promoted to that level (highest he could get), he changed his mind and retired.  It was all just a game to him!  He didn't love the science at all!

rubybeth

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Re: How did you factor in a pension or other income streams?
« Reply #30 on: January 04, 2019, 08:12:05 AM »
We each have a small pension of 20k each and are really happy to have them. Can you go p.t. with your state so you would continue to earn half credits?

Yes, this is an option. I know multiple colleagues who've done this. I have considered going part-time but it wouldn't likely be in my same position--it would have to be a demotion.
Wait! Can it really be considered a demotion if it provides you get-out-of-jail-free card freedom? Methinks that's more of a promotion.

The whole idea behind "promotions" is to exert control over you with another carrot.  It's an artificial reward system given to some of your slaves instead of others in order to keep all of them slaving away together.  You don't need to fall for that.

Consider doing what is best for you, regardless of what they have trained you to do.  I spent my while life as an ambitious ladder climber, checking off boxes, piling up accomplishments, moving up the ranks.  As soon as I realized that the entire ladder was for suckers, my perspective changed and I had to retire almost immediately.  Other people's expectations for what constituted my success did not align with the kind of success that I truly desired, and I'm sure I disappointed lots of people by ejecting from my high flying career.  My success is mine, though, and I get to decide what kind of life I want to live. 

I'd take the "demotion" in a heartbeat in your situation, if it gave me what I wanted.  You are not your job.  You decide you're self worth, not your employment status or the perceived prestige of your position.  As soon as you can really accept that truth, all of the carrots they can dangle in front of you start to look a little silly.  Seek your own goals for a change, and don't let them push you into serving their interests if they don't align with yours just because it's a "promotion". 

And certainly don't do the converse, and stay paralyzed with inaction in the wrong place, for fear of a demotion.  Remember that these titles and positions are all artificial, because every one of those people is a captive in that system regardless of what the org chart says.

Whoa, this is a little extreme. Maybe it's true for some people, but I just meant that I am a professional in my field and there aren't part-time jobs in my area that would be of interest to me at this point in my career. I don't really care about "promotions" vs. "demotions," just that I'm doing work that makes me happy and for which I'm compensated (relatively) fairly. I do look at job postings but I still think I've got a better gig than most in my field. I've passed up many, many opportunities to move "up" because the money isn't worth it for the cost to my sanity. ;) My current job perfectly fits my skill set--it was a newly created position when I was hired for it 9 years ago, so I got to help determine what the role would be. It's really up to me what I work on, with some guidance from my supervisor (who is our Executive Director, so she calls the shots but with a LOT of input from me... and I've said no to many projects over the years when I haven't felt I'm a good fit to lead them). A part-time job in the field in which I work would also mean a much less flexible work schedule and I'd be working a lot more with the public vs. my current office/desk job that is project based. Right now, I'm also recovering from a pretty serious hip surgery in 2018, so having the desk job is ideal for my physical limitations (I have a sit/stand desk so can alternate postures based on how I'm feeling, which would not be an option with almost any of the other jobs in the organization).

My plan at this point is to keep working full time until I am close to my target number, then maybe try to negotiate a sabbatical or splitting up my job--maybe making it part-time or contract-based, while I train someone else on my tasks. My position is so specialized (literally, I am a "Specialist" in my job title) that I think some overlap with the person replacing me would be ideal for the organization since I have such extensive institutional knowledge (this year will be 20 years with the organization).

CSuzette

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Re: How did you factor in a pension or other income streams?
« Reply #31 on: January 09, 2019, 05:18:27 AM »
Not an expert but I think you bring your future income streams to present value and add them to your investments. Lots of PV calculators around.

BTDretire

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Re: How did you factor in a pension or other income streams?
« Reply #32 on: January 11, 2019, 09:00:43 AM »
What ever you do, you need to correct your pension income for inflation, SS is already inflation adjusted.
If I expected $660 a month I would multiply by 12 and get $7,200.
  Using the 4% guideline that is like having $180,000 in your stache.
 If that is not inflation adjusted and we use 3% as the yearly inflation rate (we won't know until it has happened)
The purchasing power of $180,000 after 18 years of 3% inflation is $105,731.
So, if you retire at 55 your pension is like have $105,731 in your stache.

  One thing I never see addressed on MMM is the effect inflation has on your goal amount.
If one has a goal to retire on $1M in 12 years, you want to be aware that $1M will have the same purchasing power of $1,425,761 if inflation is 3%. It's a hard fact to accept. You may need 42% more than you thought.
  I remember when gas was $0.189 and I could buy 10 hamburgers for $1. (they were small though)
In 1968 a McDonald's Hamburger was $0.15. The good old days! Or were they?
I worked for $0.60 an hour in 1969, worked my way up to $1.00 by 1971.
 Just a fun note, cleared out my attic and found a 1970 1040 form, I made just over $300 and paid $3 to have my taxes calculated. That's 1%, I got robbed!
 I

rubybeth

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Re: How did you factor in a pension or other income streams?
« Reply #33 on: January 11, 2019, 09:15:49 AM »
What ever you do, you need to correct your pension income for inflation, SS is already inflation adjusted.
If I expected $660 a month I would multiply by 12 and get $7,200.
  Using the 4% guideline that is like having $180,000 in your stache.
 If that is not inflation adjusted and we use 3% as the yearly inflation rate (we won't know until it has happened)
The purchasing power of $180,000 after 18 years of 3% inflation is $105,731.
So, if you retire at 55 your pension is like have $105,731 in your stache.

  One thing I never see addressed on MMM is the effect inflation has on your goal amount.
If one has a goal to retire on $1M in 12 years, you want to be aware that $1M will have the same purchasing power of $1,425,761 if inflation is 3%. It's a hard fact to accept. You may need 42% more than you thought.
  I remember when gas was $0.189 and I could buy 10 hamburgers for $1. (they were small though)
In 1968 a McDonald's Hamburger was $0.15. The good old days! Or were they?
I worked for $0.60 an hour in 1969, worked my way up to $1.00 by 1971.
 Just a fun note, cleared out my attic and found a 1970 1040 form, I made just over $300 and paid $3 to have my taxes calculated. That's 1%, I got robbed!

There is a cost of living adjustment in my pension plan. But it's good to ponder this. I think for some retirees, the timeline until retirement is very long (30+ years) so inflation is more of a consideration. When you're 10 years from retirement, that's a little easier to plan for and conceptualize.

MasterStache

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Re: How did you factor in a pension or other income streams?
« Reply #34 on: January 11, 2019, 09:44:26 AM »
What ever you do, you need to correct your pension income for inflation, SS is already inflation adjusted.
If I expected $660 a month I would multiply by 12 and get $7,200.
  Using the 4% guideline that is like having $180,000 in your stache.
 If that is not inflation adjusted and we use 3% as the yearly inflation rate (we won't know until it has happened)
The purchasing power of $180,000 after 18 years of 3% inflation is $105,731.
So, if you retire at 55 your pension is like have $105,731 in your stache.

  One thing I never see addressed on MMM is the effect inflation has on your goal amount.
If one has a goal to retire on $1M in 12 years, you want to be aware that $1M will have the same purchasing power of $1,425,761 if inflation is 3%. It's a hard fact to accept. You may need 42% more than you thought.
  I remember when gas was $0.189 and I could buy 10 hamburgers for $1. (they were small though)
In 1968 a McDonald's Hamburger was $0.15. The good old days! Or were they?
I worked for $0.60 an hour in 1969, worked my way up to $1.00 by 1971.
 Just a fun note, cleared out my attic and found a 1970 1040 form, I made just over $300 and paid $3 to have my taxes calculated. That's 1%, I got robbed!

There is a cost of living adjustment in my pension plan. But it's good to ponder this. I think for some retirees, the timeline until retirement is very long (30+ years) so inflation is more of a consideration. When you're 10 years from retirement, that's a little easier to plan for and conceptualize.

Yep! Funny thing is we expect our expenses to go down over the coming years. With both kids leaving the nest (one is in High School already) and our gaggle of animals passing away, well see expenses fall.

matchewed

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Re: How did you factor in a pension or other income streams?
« Reply #35 on: January 11, 2019, 09:52:46 AM »
What ever you do, you need to correct your pension income for inflation, SS is already inflation adjusted.
If I expected $660 a month I would multiply by 12 and get $7,200.
  Using the 4% guideline that is like having $180,000 in your stache.
 If that is not inflation adjusted and we use 3% as the yearly inflation rate (we won't know until it has happened)
The purchasing power of $180,000 after 18 years of 3% inflation is $105,731.
So, if you retire at 55 your pension is like have $105,731 in your stache.

  One thing I never see addressed on MMM is the effect inflation has on your goal amount.
If one has a goal to retire on $1M in 12 years, you want to be aware that $1M will have the same purchasing power of $1,425,761 if inflation is 3%. It's a hard fact to accept. You may need 42% more than you thought.
  I remember when gas was $0.189 and I could buy 10 hamburgers for $1. (they were small though)
In 1968 a McDonald's Hamburger was $0.15. The good old days! Or were they?
I worked for $0.60 an hour in 1969, worked my way up to $1.00 by 1971.
 Just a fun note, cleared out my attic and found a 1970 1040 form, I made just over $300 and paid $3 to have my taxes calculated. That's 1%, I got robbed!
 I

I think very few people have such goals and ignore them so much to not understand that the goal in today's numbers != the goal in tomorrows number.

BTDretire

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Re: How did you factor in a pension or other income streams?
« Reply #36 on: January 11, 2019, 11:27:34 AM »
What ever you do, you need to correct your pension income for inflation, SS is already inflation adjusted.
If I expected $660 a month I would multiply by 12 and get $7,200.
  Using the 4% guideline that is like having $180,000 in your stache.
 If that is not inflation adjusted and we use 3% as the yearly inflation rate (we won't know until it has happened)
The purchasing power of $180,000 after 18 years of 3% inflation is $105,731.
So, if you retire at 55 your pension is like have $105,731 in your stache.

  One thing I never see addressed on MMM is the effect inflation has on your goal amount.
If one has a goal to retire on $1M in 12 years, you want to be aware that $1M will have the same purchasing power of $1,425,761 if inflation is 3%. It's a hard fact to accept. You may need 42% more than you thought.
  I remember when gas was $0.189 and I could buy 10 hamburgers for $1. (they were small though)
In 1968 a McDonald's Hamburger was $0.15. The good old days! Or were they?
I worked for $0.60 an hour in 1969, worked my way up to $1.00 by 1971.
 Just a fun note, cleared out my attic and found a 1970 1040 form, I made just over $300 and paid $3 to have my taxes calculated. That's 1%, I got robbed!
 I

I think very few people have such goals and ignore them so much to not understand that the goal in today's numbers != the goal in tomorrows number.
Huh?
 I think you said I am wrong?
 I see people here often have financial goals, often $1M sometimes less sometimes more.
But then they have 7 or 10 years before they retire, maybe some want to retire with less then $1M of spending
power, but I doubt it. I wouldn't!

matchewed

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Re: How did you factor in a pension or other income streams?
« Reply #37 on: January 11, 2019, 02:16:53 PM »
What ever you do, you need to correct your pension income for inflation, SS is already inflation adjusted.
If I expected $660 a month I would multiply by 12 and get $7,200.
  Using the 4% guideline that is like having $180,000 in your stache.
 If that is not inflation adjusted and we use 3% as the yearly inflation rate (we won't know until it has happened)
The purchasing power of $180,000 after 18 years of 3% inflation is $105,731.
So, if you retire at 55 your pension is like have $105,731 in your stache.

  One thing I never see addressed on MMM is the effect inflation has on your goal amount.
If one has a goal to retire on $1M in 12 years, you want to be aware that $1M will have the same purchasing power of $1,425,761 if inflation is 3%. It's a hard fact to accept. You may need 42% more than you thought.
  I remember when gas was $0.189 and I could buy 10 hamburgers for $1. (they were small though)
In 1968 a McDonald's Hamburger was $0.15. The good old days! Or were they?
I worked for $0.60 an hour in 1969, worked my way up to $1.00 by 1971.
 Just a fun note, cleared out my attic and found a 1970 1040 form, I made just over $300 and paid $3 to have my taxes calculated. That's 1%, I got robbed!
 I

I think very few people have such goals and ignore them so much to not understand that the goal in today's numbers != the goal in tomorrows number.
Huh?
 I think you said I am wrong?
 I see people here often have financial goals, often $1M sometimes less sometimes more.
But then they have 7 or 10 years before they retire, maybe some want to retire with less then $1M of spending
power, but I doubt it. I wouldn't!

I think you may be assuming that people don't realize the affect of inflation, or that in X number of years they're not rechecking their numbers and determining that their end goal has changed. So while people have the goals I think it's a strange assumption that they are not aware that the goal is affected by variables particularly inflation.

Or in other words it is strange to assume people don't know that inflation exists or that they're unaware whether they're talking about real or actual dollars.

Much Fishing to Do

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Re: How did you factor in a pension or other income streams?
« Reply #38 on: January 12, 2019, 01:03:51 PM »
I'm 46 and near FIRE. 

I basically view my FIRE as two distinct 20 year time periods for simplicity sake:

47-67 (when I am living off of no social security, have kid expenses, am traveling quite a bit, and am trying to keep my withdraws to Taxed accounts)
 
67-87 (when I will take SS, will withdraw from taxed advantaged accounts, kids have left the nest, and probably will not be traveling near as much).

We've never had any family member on either side make it past 87, so consider that both improbable and if it does happen assume we'll not be in such a state to care what any balance is anywhere.

All my planning for each period is based off of expected expenses and assets/income for each of the periods.  I use FIRecalc to figure if either asset base/expense expectations work separately.


Dibdab

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Re: How did you factor in a pension or other income streams?
« Reply #39 on: January 17, 2019, 06:47:38 PM »
Charles Schwab has a good calculator accommodating many scenarios.  I have found them very helpful and walked me through my plan meeting with a Schwab consultant for free a couple times since I was nearing retirement .  This year, because I am FIRING now, the financial consultant suggests I pay a one time small fee to a CPA who will work with my assigned consultant  in presenting me a drawdown strategy.

Cassie

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Re: How did you factor in a pension or other income streams?
« Reply #40 on: January 18, 2019, 11:31:26 AM »
MS, some expenses go down but some go up. We now travel more and spend more on activities, entertainment and eating out because we have the time and are not tired from working.

fredbear

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Re: How did you factor in a pension or other income streams?
« Reply #41 on: January 18, 2019, 04:38:03 PM »
When once actually retired, you can treat SS and bomb-proof pensions as equivalent to a bond component of your investment assets.  So if bonds are yielding 2% and you have an income stream from the SS and bp pension of 30000, that's equivalent to 1.5 million in bonds.  For most people this means that they can up the stock fraction of their investment mix.  If the pension is not bomb-proof, use it for something you don't have to have, that isn't necessarily in accord with maximizing investment return, but is nice - like accelerating your mortgage, or your kids' existing mortgages.  If the pension evaporates, you'll still have augmented your net worth (or your kids') while it lasted, and you will not have addicted yourself to the income stream.