Use the Actuarial Financial Planner and Actuarial Process to Successfully Implement a Coast-Fire Strategy

 In his June 25, 2025 Kitces.com post, Adam Van Deusen encouraged financial advisors to help their clients understand when they may have enough retirement savings to “Coast-Fire” and keep working without necessarily saving more. The present value calculations required to implement this strategy are relatively straight-forward, but financial advisors (and DIYers) would be wise to use a tool like the Actuarial Financial Planner to perform the required calculations and an actuarial valuation process to manage assets, spending liabilities and risks for clients (or households) who actually choose to Coast-Fire. 

Valuing Your Hard-to-Value Retirement Assets

As indicated in many of our prior posts, the key metric for managing your spending, assets and risks in retirement is your Funded Status--the present value of your assets divided by the present value of your spending liabilities. The greater this measure, the healthier your financial status, all things being equal. As discussed in our post of June 3, 2025, you may wish to consider increasing your spending once your Funded Status exceeds 120% and you probably should be increasing your spending once your Funded Status reaches about 150% if you wish to avoid leaving an unintended legacy at death.

Eliminating the Cap on Social Security’s Taxable Wage Base

In 2025, the maximum taxable wage for determining payroll tax (FICA tax) contributions to Social Security (OASDI) is $176,100. This is also the maximum taxable wage for 2025 for determining an individual’s lifetime benefit (primary insurance amount) payable from the system. Under current law, the “cap” is adjusted annually based on the increase in the national average wage index.

Eliminating the cap is perhaps the most popular solution suggested these days for solving most of the system’s short and long-term funding problems. Since it only affects relatively wealthy working Americans, it is a solution that tends to have wide support among lower-paid workers and retirees, consistent with the famous Russell B. Long quote from 1973, “Don’t tax you, don’t tax me, tax the fellow behind the tree.” In this post, we will take a quick look at the pros and cons of eliminating the cap on Social Security’s taxable wage base.

Actuaries Live for Mortality

In this weekend’s Kitces.com Weekend Reading for Financial Planners (July 5-6), Adam Van Deusen discusses three articles concerning the importance of selecting reasonable lifetime planning period assumptions when decumulation planning, as well as stress-testing these assumptions when measuring longevity and mortality risks. He says,

“Ultimately, the key point is that creating a plan based on how long a client will live is most effective when both mortality and longevity risk factors are considered. Actuarial science offers tools that can help advisors assess these considerations so that they can adjust mortality assumptions and longevity expectations as part of an ongoing process of monitoring and updating a plan. And by making these adjustments collaboratively and regularly, advisors can help clients develop a relevant and realistic strategy to manage their mortality and longevity risks as they journey into retirement!”

We totally agree with Mr. Van Deusen, and in this post, we will highlight the mortality/longevity related actuarial tools in our “Actuarial Approach” website that can be of value to advisors and their clients.

Should Your Plan Anticipate Future Social Security Benefit Cuts?

In light of the recent release of the 2025 OASDI Trustees Report, there has been considerable news concerning Social Security’s financial status and the possibility that if Congress does not act prior to the projected exhaustion of the trust fund (2033 for OASI and 2034 for OASDI), benefits may effectively be reduced in the first full year of trust fund exhaustion by about 20% (for OASDI) or about 23% (for OASI). Reductions could increase in subsequent years absent any action by Congress.