Social Security, workers comp and disability pension inputs

[jmzf1958]

Hi. This calculator has been a great help to me. I have a question about the social security input. I am now receiving social security disability which will automatically convert to social security payments at age 65. I now make 26,000 per year. I am 53. When I am 65, with cola's, I should make around $36,000 per year. Should I put in the $26,000/year or the $36,000 per year?

I also receive a lifetime award for workers comp, non-taxable, no cola, $20,800/year, and I also receive a disability pension from new york state in the amount of $34,000/year with a cola of one to 3 percent up to $18,000/year. How do I input this?

Also, on the additional inputs, what does the start date mean? Does it mean the date I start receiving this income? I receive it now, but for retirement purposes, should I put age 65?

I receive a private disability check, nontaxable, until age 65, which I have earmarked to put all of it in taxable savings. I just want to be sure I come out with an accurate picture of what my retirement will look like.

Thank you. Judy

[jimr]

If the current $26k payment is indexed to inflation, then that's all you need to enter.

If your payment will be reset once you hit 65, then you'll need to figure out how much that future payment amount will be worth in today's dollars and enter it in the "additional inputs" section, starting at age 65. Also, you'll want to enter your current payment in the additional inputs section, and enter an ending age of 64.

I think your annual SS statement gives you a good estimate of what your future benefit will be worth in today's dollars. You might have to multiply it by 12 to get an annual amount. Then, you can enter that amount in the planner.

Hope that helps.

Jim

[jmzf1958]

Wow, that was fast! My social security payment won't be reset, it will just continue on, so I will put in the $26,000 figure. I edited my post and have a few more questions. Thanks for the quick reply!

[jimr]

OK, your situation sounds a bit complicated, but I'll take a crack at it. The key with this is to enter each thing carefully, then check the values for each year in the "Detailed View" tab of the planner after you run it. You want to convince yourself that the planner is handling your income and expense cash flows correctly each year. If something doesn't seem right, you'll want to go back and recheck the inputs and rerun the planner.

The "retirement age" that you set in the planner is mainly used to determine the start year for income and expense items that you set up on the main planner input page. I think in your situation it won't matter much what you set that to. You could set it to your current age.

I'd suggest leaving Annual retirement income, Retirement income start age, and Annual retirement spending blank on the main planner input page. Instead, click the Additional Inputs button and enter each of your retirement income sources separately in the lower half of that window (where it mentions cash flows). Enter "start of plan" for start year and "end of plan" for end year, unless the payment you're entering has a definite end year.

If your expenses are expected to be level and just keep up with inflation, enter them as "Other Expenses" with a start year of start of plan and an end year of end of plan. If you expect extra one-time expenses, you can enter those as "Other Expenses" as well, with a start and end year that's the same.

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[jimr]

I also receive a lifetime award for workers comp, non-taxable, no cola, $20,800/year,

I think this can be entered as "Income (no cola)" starting at start of plan and ending at end of plan.

and I also receive a disability pension from new york state in the amount of $34,000/year with a cola of one to 3 percent up to $18,000/year.

This one it tricky and the planner doesn't have a built in way to handle the complexity of this type of payment. The best you'll be able to do is approximate it. How is the annual cola calculated?

I receive a private disability check, nontaxable, until age 65, which I have earmarked to put all of it in taxable savings. I just want to be sure I come out with an accurate picture of what my retirement will look like.

In the additional input, you can enter this as cash flow type "Misc Income" with or without a cola and that should handle it.

Jim

[jmzf1958]

Hi, Jim. Thanks for the suggestions. I am using the detailed input tab to put in all of my income at age 65 to end of plan, also, my savings from age 53 to age 65, and a one time payment after I sell my house at age 65. I put my planned expenses on the front page. I did not put any income I receive from now until age 65, as I don't think it really matters. I'm just concerned with what I have in savings at age 65 to the end of the plan. Will this work okay? Also, I don't know how much my required minimum distribution will be at age 70. Would you know how to figure this, and also, does this planner compute that? Thanks for your help. Judy

[jimr]

Your plan has a lot of moving parts with difference types of retirement income, but it sounds like you have a pretty good handle on it and as long as you enter all the info correctly, the results should be good.

Also, the planner does have an option to include RMDs. You can enable it by clicking the Settings button, then selecting the "Take Required Minimum Distributions" box at the bottom of the settings popup window.

This is from the planner documentation:

A final option can be configured to cause the simulation to take required minimum distributions from IRAs and other tax-deferred accounts. When this option is selected, the simulation will withdraw the minimum IRS specified withdrawal percent each year after you reach the age of 70 (in the simulation), based on IRS published life expectancy tables. The funds from the withdrawals are used to pay expenses (and taxes) and any remaining funds are transferred to the taxable portfolio, after taxes are deducted.

Jim

[jmzf1958]

Thanks, Jim. This planner is awesome!