Use this sheet next year to Recalculate your Safe Spending Amount for 2026.
Posted on December 6, 2024

Last week I recalculated to a real increase in our Safe Spending Amount (SSA) for the upcoming calendar year (see Chapters 2 and 9, [NEC]). My post included a pdf of a detailed spreadsheet that shows ten years of recalculation of our SSA. This post contains a “short form” spreadsheet you can download: once you’ve set up the parameters for the first year and your appropriate Safe Spending Rate (SSR%; Chapter 2, NEC) for the following year, you have to enter five numbers next December 1: you will find if you Recalculate to a real increase in your Safe Spending Amount (SSA) for spending for 2026.

 

== Two versions ==

 

• First version. You calculated to a real increase in your SSA as Patti and I did. The short form from last year showed 3% real increase in our SSA. That matches the detail on the long form from last week’s post. This pdf may be easier to read.

 

 

You are starting on a “new plan.” Patti and I jump from following a sequence that started with 5.05% SSR% (5.05% constant dollar withdrawal amount) and we start anew, in effect, and now ride a sequence of returns that uses this year’s age-applicable 5.50% SSR%.

 

You don’t need to add another column to the table you used last year (although you could). You can start a sheet that reflects this new ride. If you start this new sheet on the basis of $1,000,000 starting investment portfolio, you’d update your multiplier (Chapter 1, NEC). Your calculation at the end of this year will tell you if this sequence is potentially a MOST HARMFUL sequence or not.

 

• Second version. You continue to use your current sheet. You use this sheet because you DID NOT recalculate to a real increase in your SSA: perhaps your SSR% did not change as much as ours did over the three years and/or your mix of bonds was greater than ours; bonds have badly lagged stocks and your total portfolio returns were lower if you have more bonds than we do.

 

This version adds a fifth column to the form for last year. If you don’t calculate to a real increase next year, you’ll add another column.

 

== Double-check life expectancy and SSR% ==

 

I use Social Security’s (SS’s) life expectancy calculator to get Patti’s years of life expectancy. SS uses an algorithm that predicts future life expectancy. Life expectancy typically increases when they run the algorithm. I found this year that life expectancies for Patti in future years changed slightly. When I round Patti’s years of life expectancy to whole years, her life-expectancy years increased by one year in one or two cases in the future. That translates to a slower increase in age-applicable Safe Spending Rates (SSR%s. Table in Appendix D, NEC).

 

== Gain for a real increase next year? ==

 

I can calculate that Patti and I need a +5.8% real increase in our portfolio to calculate to a real increase for spending in 2026. Our SSR% will not change which means we have to earn back more than we withdrew. (In some years, you are aided because your SSR% increases; you don’t have to earn back all that you withdrew to calculate to a real increase in your SSA. You can use this spreadsheet if your SSR% changes.)

 

 

 

Conclusion. In December – just after I get the 12-month returns ending November 30 from the Morningstar site – I calculate to see if Patti and I earned a real increase in our Safe Spending Amount (SSA) for the upcoming year. I showed the history of ten years of calculations in the post last week. This week I provide a simpler, short form calculation spreadsheet that shows our calculation for this year, and I set up it up for the calculation next year. You can download this simpler spreadsheet for your calculation.