current dollars for Annual Retirement Spending doesn't seem right

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dlbnew
Posts: 5
Joined: Thu Jul 26, 2018 6:38 am

current dollars for Annual Retirement Spending doesn't seem right

Post by dlbnew »

I'm 47 and running the simulation for retirement at age 60 with a need for $50,000 per year in retirement spending. That is in today's dollars. However, when I look at the detailed view, I see that my withdraw and other income (from a pension) only total $50,000 at retirement year 1. There isn't an adjustment between today's dollars and that of 2031 (which should be around $69,000).

The documentation states:
The first input in this section is the Annual Retirement Spending (in current dollars) that needs to be funded during the retirement years. The value specified here should not include amounts needed for payment of income taxes on retirement income or investments since these are calculated and deducted automatically.
Am I not understanding something correctly? ...probably!

jimr
Posts: 634
Joined: Thu Feb 28, 2008 6:48 pm

Re: current dollars for Annual Retirement Spending doesn't seem right

Post by jimr »

The reason it shows as $50k is that all the amounts displayed in the detailed view table are shown in today's value dollars. One way to see how this works is to enter your retirement income in additional inputs and experiment with the COLA Type options. If you enter your annual spending with NO COLA (no inflation adjustment), you'll see it actually declines from year to year in the detailed view table, reflecting its constantly decreasing purchasing power from year to year.

dlbnew
Posts: 5
Joined: Thu Jul 26, 2018 6:38 am

Re: current dollars for Annual Retirement Spending doesn't seem right

Post by dlbnew »

I see! Thank you for this clarification.

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