Change in recommended consumption after upgrading
I upgraded to version 2.14.0 and found my recommended consumption had risen by ~4% / year. This is entirely based on changes in Medicare Part B premiums and taxes. This seems to match changes in the update:
Computation Engine:
* Update the Schedule A worksheet and form 6251 to match the 2008 forms.
* Add 2008 and 2009 medicare B premiums.
I worked through hundreds of models to optimize and a 4% gain for doing nothing is a great bonus. However, I'm concerned that this could easily be reversed (or worse) in future updates (with new specifics on future taxes, Medicare Part B premiums, etc.).
My question is what safety margin in consumption do other ESPlanner users assume? I had planned on spending a few percent less than the recommended consumption levels just in case various negative scenarios turn out to be true (per sensitivity testing). Given the new, higher recommendations for consumption, I'm not quite sure what to do. The whole purpose of ESPlanner is consumption smoothing and optimization so I don't want to under spend, but I'm a bit nervous that this "gift" could be taken away. Perhaps splitting the difference between extra consumption and safety margin is a decent alternative?
Regards,
Brian
RSS
As you should be.
As I've said elsewhere, I view ESPlanner's recommendations as floors and ceilings. Below the floor and above the ceiling, my personal economy isn't sustainable.
Equally clearly as, I believe Mark Twain observed, no man's life or property is safe while the legislature is in session.
Changes in the tax code will be transient. A good portion of the 4% you're seeing is probably the fact that Medicare B payments are treated as medical deductions now, so eventually you start getting a tax deduction you weren't getting before.
So if you were happy with the older numbers, lower your standard of living by 4 or 5% and use that in your planning.
Best,
Dick Munroe