Strategies for consumption smoothing
I can smooth our consumption profile by withdrawing all of our assets (regular and tax deferred) by age 65-67 in order to delay collecting Social Security until then. I have noticed though that the regular assets start to grow then decrease again using this strategy.
Is there another angle I should try? We have good pensions and SS benefits. Spending down all the assets to delay SS seems to give the best result, but I don't understand why the regular assets start to build then decrease again with time.
Thanks
RSS
Well, the program is designed to eventually use up all of your regular assets. When you get to 100 you should see those at zero in the last year. You can effectively work around if this if you desire for some reason by specifying a special expenditure in your last year. But there's no reason to do that in this case.
Do you mean your reg assets build prior to this and then decrease? That's easy: they build in order to provide for that needed gap. But perhaps you mean they build after this. There could be different reasons. They build in order to meet the need for special expenditure or while waiting on the pension or some other special receipt or retirement withdraw?
You can try compacting your retirement withdraws if you want to see what that does. Put the date of last withdraw say five years prior to your death. That will push more money up front.
That's not unusual. You draw assets to hold off social security. Your total income, including social security, is big enough to allow you to store up regular assets to smooth your standard of living later in life (if it weren't, you would have a lower standard of living). You can think of your regular assets acting as a ballast that allows you to keep on an even financial keel.
Best,
Dick Munroe