Thank you. You have suggested FIREcalc and I have tried it. It gave me some nice results. But, unless I’m missing something with FIREcalc, I didn’t see where it told me how much I can spend each year and the declining balance picture. I’ll go take another look.
I hope you aren’t posting from New Zealand, BTW, because I’d hate to interrupt the idyll. 
I’m going to send you a PM which you might find interesting.
@AttorneyMother, I took a quick look and off-the-top-of-my-head run through the free version, and it’s very different. I didn’t get anything in red. Since non-discretionary spending refers to “Housing expenses, special expenses, contributions to retirement accounts and your reserve fund, life insurance premiums, and Medicare Part B premiums,” I’d check those. I don’t see why contributions to retirement accounts would be non-discretionary.
The output report is so dramatically different (a small tally vs 130+ pages, of which at least 20 are of interest) that I’m afraid that I can’t help. When they have confused me, I asked online, and they responded quickly and in detail. Twice I got answers from Dr. Kotlikoff himself.
Thanks for doing that. I think I mentioned I’m tech challenged, but I didn’t think that interpreting a summary was beyond me. I plugged some numbers in all those categories, except for Medicare B premiums. I was extravagant in the spending categories but not crazy, so as to over-estimate. I was conservative in the asset and return fields. I think it’s telling me we won’t run out of money, but in a very strange way because it’s cast as a spending model.
I’ll shelve it for now and look at it later, and be happy that our tax return is done and ready for filing. That’s enough for a Monday.
I’m sitting in LAX waiting for my flight home.
One of the annoying things about New Zealand is the rarity of free WiFi, and mobile data is quite expensive. So I didn’t have too many opportunities to log in.
Firecalc is geared to predicting if you will run out of money, I don’t remember if there is a setting to give you running balances. I’ll play with it more when I’m not on my phone.
For those that do not have LTC insurance, this is another piece of the retirement puzzle. Some may have health issues that preclude purchasing (if so, need to plan for those potential health care costs). Try to find affordable LTC insurance that will give you some protection on this variable - maybe your state insurance agency can provide which companies see this insurance in your state. It is very freeing to have this variable taken care of for us - and we did it years before I had cancer at age 52/53 (I would not qualify after the cancer).
Social security in my state is exempt from state income tax. We will have to evaluate where we want to live after retirement, but will probably stay here for a while. Want to get the house ‘ready to sell’ at the appropriate time. May consider downsizing to here, but may just also look at the best ‘window of opportunity’ to sell here. Can always rent something in the area if we temporarily want to stay until we can scope out making another home/residential purchase.
Kudos to those that can retire before 65. Thankfully H and I are only months apart in age. The income on these years until 65 are high income earning years for H, and the stress is no higher than it has been. He is highly regarded in his company and has a good ‘routine’. We feel really good about our investments with our investment guy Don and our allocations in H’s 401k. Do not want to even consider the costs we would have with health insurance before age 65. If something happened to H’s health, then we would have to change things of course. Have plenty of term insurance on H (do you get that I like the security of insurance within reason?)
If you can, set up contributions into your kids’ Roth IRAs to help them with tax free growth using the element of time to your kids’ advantage. Older DD’s earnings in 2013 were small, but we put that income level into a Roth IRA account. Now both DDs had earnings in 2014 and we have put the same $$ cumulative into both accounts (so keeping things as similar as we can). Once they can figure the investment options, can turn it all over to them. I have used ETFs through TDAmeritrade. So in this way, gifting money to them which can use the time value of money for them.
Alternately, some people have grandchildren. As we all know, the rates that college costs are accelerating may mean you want to do something for their college savings. However my thinking also is that the children’s parents also should make personal financial sacrifices to take care of their kids - and not expect the grandparents to carry them on this. For example, I have a nephew/niece expecting their 3rd child - not sure if they will have 4 (that they announced they want for their ‘ideal family size’) but not sure how well they will be on making the sacrifices along the way. I doubt that their house is on a 15 year mortgage; she plans to home school but I wonder if she will be able to do (if she changes her mind, then they would probably need to be in a better school district than where their house is). Glad I am not in their shoes! A friend about 15 years younger than me (that lives only a few blocks away from me) just had her 7th child - they have three older students (3rd is going to college - thankfully we have a good local university so all 3 older ones started there the first few years). I just wonder how well she will feel once the youngest 4 will be finished with HS and entering college. I could not imagine! She home schools, but there is a very good local cover school so the kids do have classes taught by others and pretty competently. The older ones seem to be doing well in college with well thought out career choices.
H was happy with our gains in his 401k. Now working on college kids transitions happening once the spring term ends…
Two of them wouldn’t know what “ETF” means. The third is in Wall St and just after he took the job he told me that he was quite restricted as to what he could trade - things like SPY were OK, so I guess these would be too since they are broad enough. I haven’t seen his portfolio, so I don’t know.
Actually these guys are PhDs - econ profs at Yale. I’m in no position to judge their plan, but it was certainly interesting. If 100-age is a reasonable rule of thumb for equities, why not a bit higher? And their point of making defined benefit pensions and SS part of the equity/bond allocation made a lot of sense to me.
Having said that I still manage money for two of mine, and I don’t have anything that’s leveraged. One is a die-hard Apple fan, so she does have a bit of those in addition to boring things like VOO that I go for.
One is to buy an ETF that’s already x2 which ProShares does a lot of, and mentioned by DStark.
The other technique listed in the book went somewhat like this: If you bought something like an S&P 500 (or broader) mutual fund or ETF, you were 100 to 0 in equity to bonds. Let’s say SPY is trading, in round numbers, at 200. If you buy in money SPY calls with strike price of 100 that expired two years from now, you have a product that’s roughly leveraged x2. I think they said they were looking for a fund family to float target date funds with their >100% leverage built into it.
Yes. I know that strategy too. 
I don’t think 20 year olds should own bonds…at least not treasury bonds.
You can take a lot of chances in your 20’s…not as much in your 60’s.
This strategy of leveraging 2 to 1 is interesting.
This strategy with long term options worked in 2008-2009?
If I bought 2 year options in the beginning of 2007…I would have been close to wiped out in 2009. Right?
Actually the current book I’m going through is on commodity trading by Kevin Kerr. What little I had learned about it prior to this left me completely scared, based on how I interpreted futures trading to work - looked highly leveraged on margin. But this guy says there are options on commodity futures that seem a bit more conventional in what’s at risk. Has anyone done any options on futures, and is this something you need to do with a different broker/exchange? I haven’t gotten to that part of the book yet.
PHDs can make very big mistakes.
You have to click on a ten year chart.
You will see a drop larger than 50 percent…high to low…
You are wiped out.
@Dadof3, I’ll see your PhD Econ profs at Yale, and raise you a couple of Nobel laureates
http://www.nytimes.com/2008/09/07/business/worldbusiness/07iht-07ltcm.15941880.html?pagewanted=all
Absolutely. I would modify to 50s, as the distance to retirement starts to shorten.
Were I to talk to my 20-something self, I’d be happy to have started with S&P 500 Index and, if I had been allowed, some individual stocks. Chance enough for me.
Now, if I were managing funds for the next 30 years, it’s a similar consideration if they’re funds that I don’t need to live on.
But just on the issue of the small retirement basket to be touched decades later, what I can’t get over is how I feel that a target fund with 10-20% bonds is too conservative, but something with a leverage of even 20% makes me uneasy. This is what makes me feel that my reluctance to go over 100% is irrational, especially that I’m totally comfortable being around 80% at my age - 60+.
@Dadof3,
If indeed it’s a “small retirement basket” you can afford to lose, then I certainly see it.
If it’s 80% in equities, I can see that too.
The leverage risk might cause a bleeding to exceed the “small retirement basket,” wouldn’t it? That, I can’t do comfortably, emotionally.
Ok…but how do we go from the above to 200 percent in equities? I don’t know what the phds actually said…but you can go broke if you are 2x in equities.
If you have a ton of money, you can be more aggressive. You can afford losses. If you have pensions, you can be more aggressive with equities. I am sure there are other scenarios where you can be more aggressive.
Options on commodity futures is gambling,
Interesting proposal from Christie,
http://finance.yahoo.com/news/christie-propose-overhaul-social-security-132358598.html
I dislike that proposal. We already paid into the social security system.
That’s a hit of several hundred thousand dollars for many people.
Going to have to get the retirement calculator out.
I am giving the guy who proposed this one of my fingers.
@dstark, it’s not political, but we live in the next town over from him, the kids go to school in that town, and I’m willing to wager that very few who are not on his payroll, directly or indirectly, think very much of him on a personal level.
If his budget is strained, maybe he can stop taking a state helicopter to his son’s baseball games.
Even if the social security is purely an insurance policy, an issue is that those who have do not want to be in the same “insurance pool” as those who have not.
We may say the same for those who have a good health insurance policy from their job, and those who have not.
There is no easy solution.
No kidding!! And don’t those things have a weight limit anyway??
Phasing out medicare for wealthier retirees? Oh thats gonna win him a lot of votes (cue sarcasm detector)
This is the most drastic measure so far. I am not surprised people don’t like it.