Podcast Episode 9 – Using Firecalc.com For Real Retirement Analysis

You’re thinking of retiring at 60. You wonder what the consequences will be on your Social Security benefits.

By special request from a subscriber I show you EXACTLY what will happen. I even show you some of my very own Social Security numbers. Don’t tell anyone though!

The net result is that if you have a pension, say you are a firefighter, or a governmental employee, and can hang it up at 60. Should you continue to work for the next 6 years or so until your Full Retirement Age?

Well, in my example I show you how by doing so you could net an extra $500 a month at Full Retirement Age.

BUT! I think you should look at it another way. To work an extra 6 years to gain an extra $6,000 a year doesn’t seem like a good trade-off to me. Well, unless you really enjoy your job, or desperately need that extra cash.

Think about it like this. A 40 hour work week is 2080 hours of labor a year. To put in an extra 2080 hours for 6 more years is 12480 hours lost to work.

Say you live until 86, or 20 years after you reach full retirement age of 66. $6000 times 20 years = $120,000. So that 12,480 hours earned you all of $120,000 in extra benefits or $9.61 an hour.

Not a good tradeoff, in my opinion. Especially when there are tons of other things you could be doing to make $9.61 an hour. Youtube videos. Raise chickens out back and sell the eggs. Play weekends in a bluegrass band etc. Stuff you enjoy!

Or donate your labor to help your grandkids. Something.

So, I leave it up to you to figure out the best way to spend your years after 60 years old. But if you have a pension already, it’s just hard for me to see that extra $500 a month is going to make a huge difference in your life.

No pension and lots of debt? A ENTIRELY different story, of course.

But it’s for you to decide.

If you are using a simple Monte Carlo analysis to analyze your retirement projections, you could be setting yourself up for a HUGE disaster. Worst off, is that this disaster may occur when it’s just too late to change anything!

Why is this? Because Monte Carlo analysis doesn’t include investment fees or taxes.

As I stated repeatedly, investment fees and taxes are the biggest detriments to your portfolio strength.

So, consider using this FREE tool at Firecalc.com. While it won’t give us insight into taxes you may pay, it most certainly can allow you to adjust your portfolio for the fees you pay.

In this example I show what a retirement portfolio with a .18% looks like as compared to a more typical portfolio with a fee of 1.50%.

It’s not a pretty comparison. Not in the least.

Factor in taxes and it’s going to get even uglier. When it comes to retirement planning, ugly is not your friend; we want the prom queen. The easiest way to dance with her? Reduce fees and taxes!

For the video on this topic click here.

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