Annual Retirement Spending

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Dale
Posts: 1
Joined: Sat Mar 08, 2014 9:51 am

Annual Retirement Spending

Post by Dale »

does Annual Retirement Spending (ARS) include the amount I enter for Annual Retirement Income (ARI)? Or, instead, does ARS identify the amount of additional $$ my investments will need to contribute to my total spending assuming that any monies I acquire thru ARI are also spent?

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

Re: Annual Retirement Spending

Post by jimr »

Hello,

The way it works, Annual Retirement Spending is the total spending you expect each year in retirement and annual income is the amount of income you expect each year. If you use additional inputs, there are actually a few different categories of both expenses and income, depending on taxation and how inflation adjustments are handled.

The sum of all retirement spending amounts (from the main input page and additional inputs) is subtracted from the sum of all retirement income sources (again from the main input page and additional inputs). Any difference between total expenses and total after tax income is funded with withdrawals from your portfolio.

Jim

lbhough
Posts: 10
Joined: Tue Dec 02, 2014 8:40 am

Re: Annual Retirement Spending

Post by lbhough »

I also had a question related to retirement spending. As you have suggested in other posts, after setting up my basic expenses, income and portfolio, I ran a 'doomsday' scenario in which I simulated a 25% drop in returns during the first year of retirement. Using 'fixed' rules for spending, I don't like the outcomes very much ! but using the flexible spending rules, things still look great !

I understand that you can set the flexible spending rules (the default here looks to be 25% of planned expenses), but I am looking hard now at how those spending rules are coded. It would help me to understand how I would 'translate' these flexible rules into spending plans.

Obviously, I could spend 100% of my spending limit during down years and still not run out of money for ten years. So I'm asking how does the program 'decide' to spend less ? For example, does it decide to spend less in 2017 based on 2016 returns ? Does it only spend the full amount when the returns of previous year exceed the spending limit for the following year ?

Since I'm new to the forum i wasn't sure if this question belonged in this category, so feel free to move it. Thanks for any additional info related to flexible spending rules/guidelines.

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

Re: Annual Retirement Spending

Post by jimr »

Sorry I missed this post. See the answer here.

Jim

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