Experience with FIREcalc 10 years out

[Rianne]

FIREcalc has given me some astonishing results. I've played with the numbers over and over. Put in ridiculous spending (for us). All, but one result, came out 100%. We have 2 separate pools of $ for retirement. One with 60% in index stocks for at least 5 years. 10% in individual stocks and the rest in bond index funds. The other pool is basically cash for 5 year survival and emergencies.

Has anyone actually lived through the predictions of FIREcalc. I realize you'd have to be in your 90's for a true answer, but a 10 year example would suffice. Our income is based on 5-6% gains and SS and a small pension of $10,000/year. I used the 62 SS numbers instead of the 66.5 SS numbers and still 100%. I blew the yearly spending to 100,000 (not our style at all) Pool total is $1,650,000 or $1,350,000 and I manipulated those numbers for worse scenario, like a onetime $50.000 over spending for an emergency or new car.

 

[REWahoo]

Has anyone actually lived through the predictions of FIREcalc. I realize you'd have to be in your 90's for a true answer, but a 10 year example would suffice.

Here you go: http://www.early-retirement.org/forums/f28/firecalc-vs-rew-64705.html

 

[ERD50]

I don't understand the question.

If you run FIRECalc, you get these results. What would someone's personal experience tell you? I'm sure any one person had different spending year to year, and other variables in their life. Nothing is ever text-book perfect in real life.

What do you mean "Our income is based on 5-6% gains"? Are you entering expected returns into FIRECalc, or using the historical data? I have no interest in selecting data (other than to run 'experiments' for reference), because who knows? If you run the historical data (default), then you get a sample of what really happened in the past. I think that tells you more than some artificial assumption of 5-6% gains.

-ERD50

 

[Midpack]

FIREcalc has given me some astonishing results. I've played with the numbers over and over. Put in ridiculous spending (for us). All, but one result, came out 100%. We have 2 separate pools of $ for retirement. One with 60% in index stocks for at least 5 years. 10% in individual stocks and the rest in bond index funds. The other pool is basically cash for 5 year survival and emergencies.

Has anyone actually lived through the predictions of FIREcalc. I realize you'd have to be in your 90's for a true answer, but a 10 year example would suffice. Our income is based on 5-6% gains and SS and a small pension of $10,000/year. I used the 62 SS numbers instead of the 66.5 SS numbers and still 100%. I blew the yearly spending to 100,000 (not our style at all) Pool total is $1,650,000 or $1,350,000 and I manipulated those numbers for worse scenario, like a onetime $50.000 over spending for an emergency or new car.

There's no need to reveal your numbers, but what is the withdrawal rate (spending / portfolio) when you enter "ridiculous" spending new how many years? That would make it easier to provide a meaningful reply.

And what anyone's "ten years in" history has been is far less useful than FIRECALC's result with ALL 146 years is a much better insight. FIRECALC outputs past data in spreadsheet form so anyone can look at how they've fared since they retired, whether 10, 2 or 30 years - but it's not very useful IMHO.

 

[Rianne]

Here you go: http://www.early-retirement.org/forums/f28/firecalc-vs-rew-64705.html

Thank you, this is good info. The unrealistic spending I referred to is $100,000 per year for 40 years. We're way more frugal than that. I'm trying to get a realistic picture of taking SS out early. The SS would more than cover our medical if we take it at 62, then I could rely on the numbers based on our savings alone.

This thread is what I was looking for even though in 2013.

 

[GravitySucks]

Here you go: http://www.early-retirement.org/forums/f28/firecalc-vs-rew-64705.html

My all time favorite thread REWahoo!

 

[Ed B]

I certainly understood the question and why someone would ask it. Even if I had the ability to open up the hood and look at the FireCalc mechanisms I wouldn't understand them. In other words some of us are taking the results of FireCalc on faith. So asking people who used FireCalc and got a 95 to 100% likely success ratio for their assumptions, and then lived out 5 or 10 years of retirement, how they fared compared to what FireCalc predicted, doesn't seem like a crazy thing to ask. It may not be information people wish to share, but I totally understand why she is asking the question.

HSAT, I have a lot of faith in FireCalc. I have played with enough other calculators including Ed Jone's while I corrected all the mistakes my Ed Jones lady was making, that I can see it is pretty solid. And about the Ed Jones Lady.... since studying on the subject, stepping out with self directed brokerage account through my 401K and learning more about the mechanics of investing and moving money to and from investment accounts and my personal checking account, I will not be doing business with the Ed Jones lady. i may send her a nice plant for meeting with me a few times over the years, but I aint paying 1.5% to have her be my fiduciary.

 

[Midpack]

I certainly understood the question and why someone would ask it. Even if I had the ability to open up the hood and look at the FireCalc mechanisms I wouldn't understand them. In other words some of us are taking the results of FireCalc on faith. So asking people who used FireCalc and got a 95 to 100% likely success ratio for their assumptions, and then lived out 5 or 10 years of retirement, how they fared compared to what FireCalc predicted, doesn't seem like a crazy thing to ask. It may not be information people wish to share, but I totally understand why she is asking the question.

FWIW, I fully understand why she's asking. The trouble is, looking at someone's history ten years in won't tell you much if anything about what she might expect for her retirement. If the future falls within the history from 1871 to present and your spending/withdrawals are as you entered, the results will always fall within the results lines FIRECALC provides. And no calculator, including FIRECALC, can predict if the future will fall outside all past performance.

 

[ERD50]

So asking people who used FireCalc and got a 95 to 100% likely success ratio for their assumptions, and then lived out 5 or 10 years of retirement, how they fared compared to what FireCalc predicted, doesn't seem like a crazy thing to ask. ... .

As others have pointed out, FIRECalc doesn't predict anything. The thread that REW shares his data in has just 3 lines from three years in the 1970's for comparison (which is all he is trying to show). A full FIRECalc run shows ~ 100 different lines. So I think they are asking how someone 10 years in has fared compared to FIRECalc's entire history of data? Just run it for 10 years then (you'll get even more squiggly lines). I have no doubt that someone who spent according to the entries fell somewhere in between the max and min lines.

I certainly understood the question and why someone would ask it. Even if I had the ability to open up the hood and look at the FIRECalc mechanisms I wouldn't understand them. In other words some of us are taking the results of FIRECalc on faith.

Sure, it is reasonable to question whether FIRECalc displays the results of that historical data correctly. Open sourcing the code would allow people to study it (but that's up to the owner). But also, a lot of people have thrown numbers at it, compared to other studies (like the Trinity Study), compared it with controlled, more predictable scenarios, and it seems to be doing things correctly ( a few minor bugs in what it outputs versus the description, but nothing that significant).

I have a reasonable amount of faith that it gives accurate results relative to the historical data and the inputs provided, based on the testing and evaluations I and others have done, and comparisons with other similar tools. Since it can't predict the future, that's really all you can ask from it.

-ERD50

 

[ejman]

My understanding of the FIRECalc output is that as long as the future doesn't have a worse financial period than the worst that has occurred in the US since 1871 then the lines have meaning. Otherwise all bets are off. I understand that in the case of Japan for example even a .1% WR would have cratered.

 

[ERD50]

My understanding of the FIRECalc output is that as long as the future doesn't have a worse financial period than the worst that has occurred in the US since 1871 then the lines have meaning. Otherwise all bets are off. I understand that in the case of Japan for example even a .1% WR would have cratered.

That doesn't sound right. I will question your understanding (and prove me wrong if you can).

But a 0.1% WR? If the portfolio kept up with inflation, it would last 1000 years!

If the portfolio dropped to 10% immediately, it would last 100 years!

Check your math (and my math), please!

-ERD50

 

[ejman]

That doesn't sound right. I will question your understanding (and prove me wrong if you can).

But a 0.1% WR? If the portfolio kept up with inflation, it would last 1000 years!

If the portfolio dropped to 10% immediately, it would last 100 years!

Check your math (and my math), please!

-ERD50

I stand corrected. Not possessing NWbound's superior memory I misquoted Japan's WR rate. According to this article it was .47% https://www.aicpa.org/interestareas...nloadabledocuments/kitcesreport-march2012.pdf

 

[ERD50]

I stand corrected. Not possessing NWbound's superior memory I misquoted Japan's WR rate. According to this article it was .47% https://www.aicpa.org/interestareas...nloadabledocuments/kitcesreport-march2012.pdf

Well 0.47% is pretty scary as well! That would be some deep, deep cuts for me.

Though I also remember a conversation that the people in Japan don't seem all that desperate. So maybe a combination of family social support, and government social support has taken much of the sting out of that?

-ERD50

 

[ejman]

Well 0.47% is pretty scary as well! That would be some deep, deep cuts for me.

Though I also remember a conversation that the people in Japan don't seem all that desperate. So maybe a combination of family social support, and government social support has taken much of the sting out of that?

-ERD50

Perhaps. I think the meaningful take away for me from this article is that primarily total war conditions (and being on the loosing side) resulted in such abysmal WR rates. And really, if such conditions were to arise (God forbid) I think WR rate would be the least of one's concerns. One can only hope that particular horseman is not let loose on us...

 

[pb4uski]

I stand corrected. Not possessing NWbound's superior memory I misquoted Japan's WR rate. According to this article it was .47% https://www.aicpa.org/interestareas...nloadabledocuments/kitcesreport-march2012.pdf

An outstanding example of cherry-picking (in this case rotten cherries):

And notably, a few countries experienced far more catastrophic results; the historical safe withdrawal rates for Germany and Japan were only 1.14% and 0.47%, respectively, associated with those who retired in the years shortly before those countries lost World Wars I and II.

(emphasis added) AKA ancient history

Outside of countries directly impacted by one of the two World Wars, the only country with a safe withdrawal rate below 3.6% was Spain, and in fact the average of the safe withdrawal rates amongst countries not directly damaged by World Wars was approximately 4%.

Overall, it appears that in the case of countries that do not experience significant wars on their soil, and experience merely "normal" economic cycles that do not fundamentally break their growth engine, a safe withdrawal rate in the range of 3.6% to 4.4% is consistent with the international historical data. However, in the event of a significant war, or a sustained breakdown in a country's economy beyond "normal" recessions or a moderate depression, all bets are off.

 

[Koolau]

Heh, heh, some folks here have kept records - wow! They can draw the graphs and show that FIREcalc worked and how well. About all I can say is that FIREcalc said we were "good to go" and almost 12 years later we WERE "good to go" even though we retired into the Great Recession. We never obsessed about WDR and sometimes we went over 4% and sometimes we went under 4%. We're financially better off than when we retired, so I guess that would be a vote for FIREcalc, but YMMV.

 

[marko]

Heh, heh, some folks here have kept records - wow! They can draw the graphs and show that FIREcalc worked and how well. About all I can say is that FIREcalc said we were "good to go" and almost 12 years later we WERE "good to go" even though we retired into the Great Recession. We never obsessed about WDR and sometimes we went over 4% and sometimes we went under 4%. We're financially better off than when we retired, so I guess that would be a vote for FIREcalc, but YMMV.

I think the OPs question was a simple one: Is FireCalc a reasonably solid tool or is it fluff?
Yes, everyone's mileage will vary but when I first found FC I had the same question in mind. "How comprehensive are the calculations? In ten years will I be sorry that I (loosely) followed the results?"

For me--and maybe for many here--FireCalc gave me a 'windage' of a WD rate; never to be taken literally. At the very least it gave me an idea of how much I could WD which, at the time I had no idea.

I still run into friends thinking of RE who believe that they can WD 10% and make it 30 years.

The best part of discovering FC for me is that it led me to this forum!!

 

[Rianne]

Great discussion. I bulldozed onto FIRE with a somewhat irritating question without getting into the meat of the many forums offered here. I'm so glad I keep returning because these are the discussions I will never approach, face to face, with family and friends, sad but true.

Vanguard gave us a detailed 40+ year plan (about 25 pages of detail) at no cost because we are over 1M with them. I was skeptical about FIREcalc but FIREcalc gave similar results. VG uses Monte Carlo simulations. FIREcalc was somewhat kinder when I juggled numbers, changed spending, changed RR, figured in SS collapsing, figuring huge payout one year for catastrophic event. VG would not take the time for all the number manipulations, but I could play on FIREcalc for hours.

We've been roped into schemes over the years...an annuity when we were 35. Huge upfront
expense, boy were we naive! Then I got into a whole life policy LOL. I have to give Bob Brinker credit for turning us on to VG. Forget the Market Timer. Jack Bogle made sense to us. Then I read an article where Warren Buffet said Bogle was the best thing that happened to the small investor. So here we are FIRE.