Hello:
This question is in regard to FIRECalc. Based on the equation used by FIRECalc, will the amount that I am able to withdraw year-to-year in retirement depend on the annual value of my investment portfolio?
For example, assume that I have a portfolio value of $1,000,000 and annual retirement expenses of $40,000. Assume FIRECalc tells me I have a high chance of success based on these numbers. Now, assume in Retirement Year 1, the portfolio has $1,000,000, so I withdrawal $40,000. Assume in Retirement Year 2, the portfolio only has $800,000 due to market fluctuation. Can I still safely withdraw $41,200 (the $40,000 plus the cost of living/inflation adjustment of $1,200) in Year 2, or would I be limited in Year 2 to withdraw $32,960 which represents $32,000 (four percent of the current value of the portfolio) and $960 (the cost of living/inflation adjustment based on the $32,000).
In other word, when using FIRECalc, can I assume that I can withdraw my established retirement expenses plus a cost of living adjustment when my investment portfolio is both underperforming and overperforming?
Thank you for your advice.
This question is in regard to FIRECalc. Based on the equation used by FIRECalc, will the amount that I am able to withdraw year-to-year in retirement depend on the annual value of my investment portfolio?
For example, assume that I have a portfolio value of $1,000,000 and annual retirement expenses of $40,000. Assume FIRECalc tells me I have a high chance of success based on these numbers. Now, assume in Retirement Year 1, the portfolio has $1,000,000, so I withdrawal $40,000. Assume in Retirement Year 2, the portfolio only has $800,000 due to market fluctuation. Can I still safely withdraw $41,200 (the $40,000 plus the cost of living/inflation adjustment of $1,200) in Year 2, or would I be limited in Year 2 to withdraw $32,960 which represents $32,000 (four percent of the current value of the portfolio) and $960 (the cost of living/inflation adjustment based on the $32,000).
In other word, when using FIRECalc, can I assume that I can withdraw my established retirement expenses plus a cost of living adjustment when my investment portfolio is both underperforming and overperforming?
Thank you for your advice.
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