Author Topic: Withdrawal Rates & Pensions  (Read 1556 times)

AshwoodFarmer

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Withdrawal Rates & Pensions
« on: March 13, 2015, 09:51:41 AM »
Hi Everyone. This is my first post here but I have been lurking for years. The information here as been incredibly helpful.

I work as an Engineer for a local municipality and therefore I am eligible for a pension. I'm curious how/if I can plan around this money if I would like to retire before age 55 (once I can begin collecting/currently 26yrs old)

To give you an idea at some of the pension options:
-Work until 35 = collect ~18k/yr @ 55
-Work until 40 = collect ~25k/yr @ 55

My goal is for my wife and I to generate approx 35k/yr in income from our investments.

Should we just shoot for 875k before we pull the plug or come up with a lesser amount/higher WR and plan on the pension correcting the higher WR.

Thanks again for any help!

terran

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Re: Withdrawal Rates & Pensions
« Reply #1 on: March 13, 2015, 10:12:00 AM »
A couple of questions you should weigh in to the decision: Is the pension inflation adjusted? Does the pension replace social security, or is it in addition to social security?

I would probably treat the pension as "reducing" expenses rather than trying to account for the pension value in your net worth. Or if you can reasonably expect to hit your goals without considering the pension you could view it as a safety net.

Cfireism will let you add a pension that starts on a future date to its calculations: http://www.cfiresim.com/input.php

AshwoodFarmer

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Re: Withdrawal Rates & Pensions
« Reply #2 on: March 13, 2015, 10:44:46 AM »
Great ideas...

- I do not believe the pension amount is adjusted for inflation so I will lose a considerable amount of "value" over 15-20 yrs it sits prior to collection.
- Assuming neither my wife or I move to the private sector, social security will not be a option.

As for cfiresim... If I choose a "retirement" date of say 2025 do I adjust my expenses to what 36k/yr will be in 2025 (~48k) or is that part of the calculations already?

Thanks again for the input.