Personal Investments • End of plan and prob of success

Wondering if I’m thinking retirement spending correctly … and its relationship to Probability of success (POS) and the end of plan (EOP) balances.

We just had our annual check-in with our TIAA advisor using updated (and improved inputs) compared to previous year: portfolio increased by + 20% and retirement income projections (pensions and social security) improved by + 5%. I retired 10 months ago (except for some monthly retainer income that declines thru end of ‘25) and spouse retired 2 years ago. We’re in our mid 60’s and in good health. Family longevity is somewhat incomplete but suggests we probably have at least 20 years before “end of plan”.

Over the 30 year plan, the plan showed Probability of success (POS) in funding all goals was 99% and the end of plan (EOP) balances in the wide range of Monte Carlo scenarios ranged between leaving a surprising $2.0M - $10M in CURRENT dollars. This despite budgeting for a late-plan long-term care expenses and our desire to NOT plan for legacy gifts to our adult children.

The high EOP balances got us thinking we could, and should, live it up and spend more now. So we’re “squeezing the balloon” and exploring different spending and EOP balances options. Round #1 of this iterative process was to increase our already very comfortable spending budget by 20% and doubling our moderate travel budget for 15 occurrences (years) —all other things remaining equal. This resulted in POS of 85% and EOP balance that ranged between $600k-$6.0M (current dollars).



Are we thinking about this—the relationship between spending / probability of success / end of plan balances —correctly?

Is 85% POS good enough?


85% POS feels Okay to me. Especially given:
- that we will adjust our regular and travel spending along the way in event of market calamity
- factors that influence my decision include: no debt, equity in home equal to about + 20% of our retirement savings and we have lifetime access to federal retiree group health insurance to supplement medicare.
- the guaranteed income components in our plan (our pensions, social security and a small part of our portfolio) are more than enough to safely provide for a comfortable retirement.

Appreciate your comments—

Thanks for looking.

Statistics: Posted by chassis — Tue Apr 23, 2024 6:38 am — Replies 6 — Views 1049