The 4% safe withdrawal rate (and related things..)

[Cap_Scarlet]

So my simple question is this:

How do people factor in benefits they will receive later in life and are there any calculators out there that will do that for you?

For example, most people will at some point receive at least some money in social security, some will receive at least part of a company pension fund and some will receive (unfortunately) an inheritance.

So how do you factor all those things in?

[matchewed]

http://forum.mrmoneymustache.com/welcome-to-the-forum/public-pension-part-of-investment-portfolio/
http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-account-for-social-security-when-calculating-fi-date/
http://forum.mrmoneymustache.com/ask-a-mustachian/value-on-pension-what-do-you-think-mustachians/5/

[dandarc]

I chalk SS up to additional safety factor and move on.  So yeah - I, for one, am just ignoring it.  If I was closer to receiving it, then I'd run a bunch of numbers, and maybe bump up to a 5% withdraw rate if it made sense.

Personally don't have a pension coming, unless something changes.

Inheritance would just get added to the 'stache if / when it actually happens.  Risk of something happening to where a 'planned' inheritance doesn't happen as planned too great to count that before it actually happens.

[Eric]

www.cFIREsim.com has the inputs for pensions, SS, and any other future payment you expect to receive.

[Cap_Scarlet]

www.cFIREsim.com has the inputs for pensions, SS, and any other future payment you expect to receive.

Thanks - very helpful

[ysette9]

cFIREsim also lets you put in additional, finite expenses into your modeling as well as other income streams. I found this helpful for playing "what if" scenarios such as buying a house on a mortgage at some point in retirement.

[Villanelle]

So my simple question is this:

How do people factor in benefits they will receive later in life and are there any calculators out there that will do that for you?

For example, most people will at some point receive at least some money in social security, some will receive at least part of a company pension fund and some will receive (unfortunately) an inheritance.

So how do you factor all those things in?

I also play around with various scenarios in cFIREsim.  I generally assume we will get at least some SS.  Also, much of our FIRE strategy revolves around DH's likely military pension, so I add than it, based on what is likely a pretty good estimate of the value (which is thankfully, fairly easy to calculate).  For quick numbers outside cFIREsim, I simply subtract the pension amount from the total I need at a 4% SWR.  So if we want 70k in income and the pension is about 40k, then I only need 30k, which using 4% would be a $750k stache.

I wouldn't say I simply use SS as an additional margin of safety, but it's also not something we will absolutely require in order to meet our basic needs.  It's money that will fund the lifestyle we hope to have, but we wont' be destitute without it.  It will pay for some of the fancypants stuff we imagine as part of our older lifestyle. 

[Greystache]

Here is how I did it:
I retired at 55 with a lump sum pension worth $500K and IRAs and 401K totaling $1.2M.  I want $60K per year income in retirement For the first 10 years, I take $50K per year in pension payments (ten year certain).  I also take $10K from my 401K. After I reach 59.5, I will roll the remaining 401K into an IRA.  When I turn 65, my pension payments stop and I will be living off of IRA and SS.  I have not decided yet if I will take SS at 65 or wait til 67 or 70.  I don't think SS is going away, but I assume for planning purposes that I only get 75% of what is due.  So my investment WR is 1% for the first ten years and around 4% thereafter with SS making up the balance.

[dude]

www.cFIREsim.com has the inputs for pensions, SS, and any other future payment you expect to receive.

www.firecalc.com does as well.  I've never gotten the hang of cFIREsim.com -- firecalc seems easier to use/more intuitive to me.  Am I alone in that opinion?

[dude]

Here is how I did it:
I retired at 55 with a lump sum pension worth $500K and IRAs and 401K totaling $1.2M.  I want $60K per year income in retirement For the first 10 years, I take $50K per year in pension payments (ten year certain).  I also take $10K from my 401K. After I reach 59.5, I will roll the remaining 401K into an IRA.  When I turn 65, my pension payments stop and I will be living off of IRA and SS.  I have not decided yet if I will take SS at 65 or wait til 67 or 70.  I don't think SS is going away, but I assume for planning purposes that I only get 75% of what is due.  So my investment WR is 1% for the first ten years and around 4% thereafter with SS making up the balance.

I've similar (sort of) calculations, but I've got to get creative, because my pension payment decreases when I hit age 62.  I haven't found a straightforward way to address that because both sites seem to have a start date for payments, but not a stop date.  So I have to use "Other Spending" or "Off Chart Spending" to effectuate the decrease.

[arebelspy]

www.cFIREsim.com has the inputs for pensions, SS, and any other future payment you expect to receive.

www.firecalc.com does as well.  I've never gotten the hang of cFIREsim.com -- firecalc seems easier to use/more intuitive to me.  Am I alone in that opinion?

It's worth going through their help and spending 20-30 minutes figuring it out and getting comfortable with it.  It has many more options, spending models, and is more accurate (I'd be using the old version of cFIREsim at the moment though)--FIRECalc has a known bonds calculation error.

Also the creator is much more responsive, Mustachian, and not corporate *s who silence any talk of other calculators.  Just a better person to support overall  :)

[jim555]

I have a pension that can start anywhere between 55-65.  SS from 62-70.  Together they are my longevity insurance since they never run out.
Draw downs on investments from 49-65, then the backups take over.

[MDM]

See https://www.bogleheads.org/forum/viewtopic.php?t=115839#p1686175 for a good synopsis of what makes a good retirement calculator, and some additional options.