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01-17-2018, 11:23 PM
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#1
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Recycles dryer sheets
Join Date: Feb 2014
Posts: 329
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FIRE success rate
So how low a success rate using the FIRE calculator would you take and pull the trigger?
Were you at 100%? 90%? 80%? Lower?
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01-17-2018, 11:52 PM
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#2
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Recycles dryer sheets
Join Date: Jan 2018
Posts: 103
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One way to look at it:
It largely depends on the amount of flexibly you have. For example, could you ramp up income or ramp down expenses if needed.
Another way:
"But history teaches us that depriving ourselves to boost our 40-year success probability much beyond 80% is a fool’s errand, since all you are doing is increasing the probability of failure for political, economic, and military reasons relative to the failure of banal financial planning."
The context is important, and can be found in Bernstein's article here:
The Retirement Calculator from Hell, Part III
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01-18-2018, 04:17 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Dec 2015
Location: Michigan
Posts: 4,942
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I really don't know. I was at 100% so I didn't have to make that choice.
__________________
"The mountains are calling, and I must go." John Muir
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01-18-2018, 04:24 AM
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#4
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Full time employment: Posting here.
Join Date: May 2015
Location: Atlanta suburbs
Posts: 633
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I never heard of the FIRE calculator before I retired. Fidelity Retirement Income Planner (RIP) suggests a 90% success rate using their calculator.
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01-18-2018, 04:50 AM
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#5
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Thinks s/he gets paid by the post
Join Date: Sep 2016
Location: Acworth
Posts: 1,214
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During a prolonged bull market like we've been experiencing, I'd be wary of retiring with less than 90%. If I was at 80% following a significant downturn, however, then I'd be much more likely to be okay with that.
Sure, "technically" a bad sequence of returns early is possible in either scenario, I'd just find it less likely in the latter scenario (and I'd be more marketable to go back to work if it looked necessary then since it would likely be fairly obvious early into retirement that it would be necessary).
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01-18-2018, 05:14 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2013
Location: Texas
Posts: 10,836
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100%, well actually more than that but the FIRECal speedometer was pegged....
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01-18-2018, 05:24 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
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I was at 100%, or very close to it. I also assumed my living expenses would double, and my income would be half of what I projected.
It all depends on what your fallback plan is.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
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01-18-2018, 05:44 AM
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#8
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gone traveling
Join Date: Mar 2015
Location: Greenville
Posts: 653
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Quote:
Originally Posted by Senator
I was at 100%, or very close to it. I also assumed my living expenses would double, and my income would be half of what I projected.
It all depends on what your fallback plan is.
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With those assumptions, weren't you almost 200%?
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01-18-2018, 06:08 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Jan 2013
Posts: 3,405
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I have never used a retirement calculator. They don't deal with real estate income very well. I knew at the time I retired in March 2007 that I had two relatively small immediate pensions. I had an inherited IRA. In addition, I had relatively small IRA's of my own plus a 457 plan. Social Security was at least nine years in the future but was guaranteed, at least in my mind. Plus I lived in a $1.2 MM Silicon Valley house. I could always sell that, right? Then there were the rentals...
By early 2009, my net worth was down over 50 percent. The Arizona real estate was in the tank, and the inherited IRA was down over $500k. My neighbor's house sold for $800k. Even though there was no required RMD in 2009, I took it anyway, because I was worried about cash flow.
As it turns out, I did not need to be worried. Because I did not have to SELL anything, the asset values were irrelevant. Rents actually went up because there was so much competition for rentals from the foreclosure and short sale refugees.
I'm not a fan of living off paper assets. The paper asset markets have only been around for maybe 150 years. The general public has only been investing in them for maybe 60 years. All the detailed analyses of the past do not take into account that past performance does not measure future performance. You can improve the precision, but not the accuracy of your forecast.
To me, decumulation based on past performance is asking for trouble. I live on income only and do not decumulate, at least not in aggregate. The complaint about this approach is you have to work longer to create a paper asset base that provides enough income in interest and dividends. I diversified and accelerated both the growth of the asset base and my income by buying leveraged real estate. It's not for everyone, but it has worked out ok for me.
That's the long way around to my conclusion. I relied on common sense and my analysis of the likelihood that my asset base would be enough to support me in the future. No retirement calculator used or needed. The future turned out to be different and a lot worse short term, but I was just fine anyway.
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01-18-2018, 06:18 AM
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#10
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Recycles dryer sheets
Join Date: Dec 2007
Posts: 482
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100%
__________________
Retire date Jan. 10, 2018
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01-18-2018, 07:59 AM
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#11
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Confused about dryer sheets
Join Date: Mar 2017
Location: Tampa Bay
Posts: 6
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The FIRE Cal shows me at 96% but if I add a small inheritance that I will likely receive down the road it puts me at that coveted 100%. I am considering retiring at age 59.5 later this summer 2018 but I confess to be still somewhat unsettled about the numbers. Perhaps I am just too cautious by nature.
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01-18-2018, 08:13 AM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2016
Posts: 9,373
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I was actually at 100% but if I was at 95% I don't think I would of RE.
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01-18-2018, 08:47 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Location: Southern California
Posts: 3,995
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I'm at 200% and it still makes me nervous, but I worry a lot.
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01-18-2018, 08:55 AM
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#14
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Thinks s/he gets paid by the post
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,393
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I didn’t discover FIRECALC until well after retiring. I figured I would just spend my divs and pension. Probably still a good plan.
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01-18-2018, 09:17 AM
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#15
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Full time employment: Posting here.
Join Date: Mar 2017
Posts: 629
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Both Fidelity and Firecalc showed 100%. I think any less than that and I wouldn't have FIRE'd.
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01-18-2018, 09:21 AM
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#16
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Recycles dryer sheets
Join Date: Oct 2015
Location: Fairfield
Posts: 206
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Quote:
Originally Posted by Human
One way to look at it:
It largely depends on the amount of flexibly you have. For example, could you ramp up income or ramp down expenses if needed.
Another way:
"But history teaches us that depriving ourselves to boost our 40-year success probability much beyond 80% is a fool’s errand, since all you are doing is increasing the probability of failure for political, economic, and military reasons relative to the failure of banal financial planning."
The context is important, and can be found in Bernstein's article here:
The Retirement Calculator from Hell, Part III
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I agree with this line of thinking, though 80% would not make me feel comfortable. I am 46 and the only adjustments to the firecalc were: 41 year period, include social security for me and wife at 67, and changed portfolio allocation from 75% equities to 80% equities. This put me at 99.1% success rate.
What this means is that had I retired in any year except 1929, I would have been successful. If I say I lower my expenses by 5% in 2032 when I sell my house with 33k in taxes, I go to 100%.
Anything over 90% is good, 95% excellent, 100% and you are probably depriving yourself somewhat but some people like the comfort factor of knowing they could have retired even at the worst time in history, though this is probably more psychologically comforting than empirically meaningful.
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01-18-2018, 09:45 AM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,201
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IMO 95-100% is ideal; 90-95% is ok. IOW, if one was laid off and is in the 90-95% range then go with the flow: or if you can't stand working then 90-95% may be good enough but 95-100 is even better.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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01-18-2018, 09:50 AM
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#18
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Thinks s/he gets paid by the post
Join Date: Jan 2011
Location: Fair Lawn
Posts: 2,936
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I, too, was at 100%. But I think - in my specific case - I would have been comfortable at 90-95%. I cite "my specific case" for several reasons:
- I have 2 modest pensions, and DW will have a more substantial pension when she retires in a couple of years. Plus, S.S.
- We have a nest egg, basically at 50-50 allocation, we are comfortable with.
- Finally, and most importantly, our lifestyle is such that in a serious market downturn, if need be we could easily cut back and still be happy.
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01-18-2018, 09:50 AM
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#19
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Full time employment: Posting here.
Join Date: May 2013
Posts: 756
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In my opinion, there are so many variables that will either improve or disrupt your "plan" going forward, that being specific about 1%, 5%, or even 10% "success" is taking time away from other things you could be doing (unless you've got a lot more spare time than I do!).
What's the probability you entered in the right inflation percentage?
What's the probability your budget will come out to be what you entered?
What's the probability that you used the right percent annual increases in your assets?
What's the probability that SS will be what you think?
Now, MULTIPLY all these probabilities together that all of those will happen correctly - simultaneously - and then try to choose between a few percentage points for a result? I'm not sure this makes sense.
IMHO - 90%, 95%, or 100% are all the same given the myriad of unknowns that await......
__________________
“Believe me, my young friend, there is nothing - absolutely nothing - half so much worth doing as simply messing about in boats.” ― Kenneth Grahame, The Wind in the Willows
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The Survivor Plan is different from the Couple's Plan
01-18-2018, 10:14 AM
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#20
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Thinks s/he gets paid by the post
Join Date: Oct 2016
Location: The Shire
Posts: 1,504
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The Survivor Plan is different from the Couple's Plan
I have to shoot for more than 100%, because I'm also planning for DW to outlive me. Since a substantial chunk of our retirement income will die with me, I have to base our target on resources that don't include my pension or her SS. (Not to mention the extra cost of what she'll spend on toy boys once I'm gone!)
But just in case I don't take my dirt nap early, then our total number yields comfortably in excess of 100%.
I also have a little less confidence that our expenses will be as predictable as other posters here suggest. I fear that extra free time in retirement may translate into extra costs for activities I can't pursue while w*rking but would engage in vigorously once my days are open. So I add a phantom expense load which, if it does NOT arise, would also put me beyond 100%.
__________________
Paying it forward is the best investment.
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