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Old 01-05-2013, 09:40 AM   #21
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Divorce
Or death of spouse.
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Old 01-05-2013, 09:42 AM   #22
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Don't you think Jarts98 deserves some serious answers along with the humor?
Sure. Here's one.

Spending too much.
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Old 01-05-2013, 09:52 AM   #23
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One spouse dying is a commonly missed scenario that can easily wipe out your 100% success rate. Your expenses will not suddenly be reduced by one half. Your taxes will move to the higher single rates. You may have reduced or lost pension income. You may have reduced or lost SS benefits. The financially savy spouse may be the one that goes first, perhaps leaving a spouse that is not willing to execute things like rebalancing, Roth conversions, and tax complexities.

Another growing concern is your own financial capability as you age. My dad was the financial wiz but had Alzheimer's through his late 60's. Mom was pretty much financially clueless, but was set up with annuities so that she didn't need to worry about her portfolio. Not exactly optimum by FIRECalc, but something you need to consider.
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Old 01-05-2013, 10:19 AM   #24
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Old 01-05-2013, 10:26 AM   #25
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Truth is, trying to figure out "what else could go wrong" is an exercise in futility - the list is limitless and the future is unknowable.
I agree (and apologize for my earlier attempt at humor).

But if you hope that FIRECALC or any other crystal ball can give you 100% certainty, then you're playing the wrong game.

Most times, life is about doing your homework as best as you can and then just jumping. Stuff will happen...or not.

The only thing a spreadsheet really does is make sure the math is right.
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Old 01-05-2013, 10:27 AM   #26
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Why would we expect to have our future 100 percent guaranteed? Who needed a firecalc-ish tool to decide any other paths in our lives--school, job, spouse, kids? Most of us may have been reasonably analytical in those decisions (okay, not I) but the future is promised to no one (well, maybe to noone) and at some point you just close your eyes and leap.

(Marko made the same better-said point as I was composing.)
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Old 01-05-2013, 10:39 AM   #27
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the future is promised to no one (well, maybe to noone)
And I intend to make good on that promise.

As for the rest of you trying to determine what could go wrong with your retirement, remember this: noone said it would be easy.
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Old 01-05-2013, 10:50 AM   #28
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Post #9 was a totally serious answer.
So was post 11.

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Don't you think Jarts98 deserves some serious answers along with the humor?
But when the OP brought in disease, famine, epidemics, civil war, et, well, that sort of invited a range of responses. Besides, noone knows if the apocalypse will happen.

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And I intend to make good on that promise.

As for the rest of you trying to determine what could go wrong with your retirement, remember this: noone said it would be easy.
Seriously, I think the single biggest risk we all face is early death. What we can do about that is care for our health, save and retire as early as possible, and enjoy what life we have.
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Old 01-05-2013, 11:37 AM   #29
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Zimbabwe style hyperinflation.
While I'll assume you are kidding, it should be pointed out that it doesn't take "hyperinflation" to put your retirement funding on the skids. A few years of 10% - 14% inflation, such as we had in the late 70's and early 80's will do it. Check FireCalc and note that failures due to that modest period of inflation occur even with portfolios that would have survived the market crash of the Great Depression.
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Old 01-05-2013, 11:47 AM   #30
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A 100% probability of success is not a guarantee, counterintuitive as it may seem. There are too many variables and too many unknowns. Just as you could not predict the course of your life before retirement, that does not change just because you retire, that's life. You can retire when you have enough to allow you to sleep at night, for some people that's a 75% success rate, for others it's "200%" (2X the 100% $ amount). And in either case you have a plan B, C and D in mind, and you're prepared to adjust for better or worse (you'll probably experience both).

As we all know "past performance is no guarantee of future results".
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Old 01-05-2013, 12:32 PM   #31
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You come to a point where ER is simply a leap of faith. You can do a lot of study, perform the calculations, devise a plan that has some reasonable comfort level for you - but then you still have to jump (or wait 'one more year').

But getting up in the morning is also a leap of faith. The alternatives to ER are a leap of faith (odds of getting in a car accident on that daily commute?).

Maybe I'm just rationalizing to make myself feel better (or less bad?), but when I think about the things that could derail a conservative ER plan, it strikes me that those things would likely derail me even if I worked another few years or so. Major medical bills? Ammo and MRE level of economic collapse? Zombie Apocalypse? Asteroid? Might as well enjoy the time I have left if any of those come to pass.

If we are talking the kinds of things that would wipe out a portfolio, working longer to have a larger portfolio might just mean you had more $ wiped out, and nothing left in either case. If someone sues you for 'all you are worth', that's still 'all'. Some risks you just have to accept.

And just because I love this quote:" Dogs and cats, living together! Mass hysteria!"

-ERD50
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Old 01-05-2013, 12:54 PM   #32
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You come to a point where ER is simply a leap of faith. You can do a lot of study, perform the calculations, devise a plan that has some reasonable comfort level for you - but then you still have to jump (or wait 'one more year').

But getting up in the morning is also a leap of faith. The alternatives to ER are a leap of faith (odds of getting in a car accident on that daily commute?).

Maybe I'm just rationalizing to make myself feel better (or less bad?), but when I think about the things that could derail a conservative ER plan, it strikes me that those things would likely derail me even if I worked another few years or so. Major medical bills? Ammo and MRE level of economic collapse? Zombie Apocalypse? Asteroid? Might as well enjoy the time I have left if any of those come to pass.

If we are talking the kinds of things that would wipe out a portfolio, working longer to have a larger portfolio might just mean you had more $ wiped out, and nothing left in either case. If someone sues you for 'all you are worth', that's still 'all'. Some risks you just have to accept.

And just because I love this quote:" Dogs and cats, living together! Mass hysteria!"

-ERD50
Good points. Said differently: you can't hedge the apocalypse.

Though I do think it is smart to consider that we are entering times that are fundamentally different than the last 100 years. Our govt was never on the brink of insolvency driven by consumption borrowing rather than war borrowing. Our demographics are fundamentally different than anything we've seen. The combination of an entitlement state and demographics is unique (though maybe Europe can be used as a leading indicator). The global economic situation is fundamentally different because China, India, and large parts of South America have embraced capitalism...the world is now "flat" to borrow Thomas Friedman's metaphor.

I'm not saying the world is going to end or that people shouldn't aspire to FIRE. Rather, just that we probably need to be a bit more cautious about driving through the rearview mirror...the things that "bailed us out" of stupidity in the past may prove unavailable or insufficient to the task going forward.

Happy New Year.
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Old 01-05-2013, 01:33 PM   #33
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Thanks for all of the replies. I certainly agree (and didn't mean to imply otherwise) that 100% per FIRECalc means there can be no chance for failure in the future (thus the reason for my question). It's easy (at least for me) to over emphasize tools like FIRECalc and not consider the limitations of such analytics.

At the end of the day, ER is a leap of (educated) faith, and no tool, spreadsheet, analysis, etc. can fully eliminate the leap.

Thanks again for the replies.

jarts98
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Old 01-05-2013, 03:05 PM   #34
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Though I do think it is smart to consider that we are entering times that are fundamentally different than the last 100 years.

...

I'm not saying the world is going to end or that people shouldn't aspire to FIRE. Rather, just that we probably need to be a bit more cautious about driving through the rearview mirror...

Happy New Year.
Agreed. Many posters point out that the past 100 years or so are largely a 'boom time' for the US, and not likely to be repeated. No way to tell, but I think it's a reasonable view.

But still, let's say you planned around a historical 99% success rate from FIRECALC. That 1/100 failure was the single worst time period in the data set. So, if the future on average is worse than the past, it still might be that the worst periods are only about as bad as the worst of the past. But there would probably be a lot more 'close calls'. But, (and this is all just hypothetical) if that 99% success rate looked more like 85% when we look back 30 years from now, that's still a pretty good chance of doing OK. And with some adjustments to spending one could probably do just fine, just with fewer luxuries.


Hmmm, I might simulate that in a FIRECALC run. Since we can't go for higher than 100% success, we could set our spending for say, 85% success, consider that 'safe' under past scenarios, and then set spending for 99% success. The % decrease in spending to go from 85% to 99% would give some idea how much you might need to hedge for a worse future. It's not really meaningful w/o a functioning crystal ball, but it might at least give some indication of the scale of such an assumption?

-ERD50
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Old 01-05-2013, 03:37 PM   #35
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Of the risks, death, taxes and zombie black swans are what I fear. Zombie black swan is the metaphor for that stuff that you don't expect that will blind side you and then try to suck the life from you.
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Old 01-05-2013, 04:25 PM   #36
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Thanks for all of the replies. I certainly agree (and didn't mean to imply otherwise) that 100% per FIRECalc means there can be no chance for failure in the future (thus the reason for my question). It's easy (at least for me) to over emphasize tools like FIRECalc and not consider the limitations of such analytics.

At the end of the day, ER is a leap of (educated) faith, and no tool, spreadsheet, analysis, etc. can fully eliminate the leap.

Thanks again for the replies.

jarts98
When all else fails, there's always one recourse - go back to work! Don't deny yourself ER because of fear of the improbable. As others have said, there's no guarantees in life.
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Old 01-05-2013, 04:33 PM   #37
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Before I retired, I checked several ER calculators (including FIRECalc). They all said "GO". Still, there were question marks similar to Jarts98's that nagged at me. So, I tried to build in some backups by imagining what might be most likely to go wrong. I have at least a mental list of how I would handle various scenarios from long-term "bad" financial performance, inflation or major governmental shifts in policy (e.g., "tax the rich" and the "rich" are those with savings and/or income.)

I can't say I ever arrived at a point of complete confidence in my retirement, but at least I do sleep well at night. The first thing I did was to plan an acceptable alternative to my current ER lifestyle which costs half as much. Actually, that was pretty easy because it's simply the lifestyle I lived before ER. But my point is that for the "black swans", everyone probably should have at least some idea how they might react prior to ER. If you are "married" to a given lifestyle and can't imagine any other, you may not become comfortable with the concept of "black swans". If you are adaptable and flexible by nature, not too much should sway you. After all, we can't prepare for everything. Always remember that YMMV.
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Old 01-05-2013, 05:54 PM   #38
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In addition to my plan, I have a plan B and plan C along with a real drastic plan if all else fails. Sooner or later I'm going to take the plunge.
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Old 01-05-2013, 06:17 PM   #39
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...my point is that for the "black swans", everyone probably should have at least some idea how they might react prior to ER. If you are "married" to a given lifestyle and can't imagine any other, you may not become comfortable with the concept of "black swans". If you are adaptable and flexible by nature, not too much should sway you. After all, we can't prepare for everything. Always remember that YMMV.
+1

I've got my little motorhome ready to go at a moment's notice. It may even be a more interesting life for me anyway.

Still, I like to see a bigger and bigger number at the bottom of the Quicken screen. It validates my understanding of the world economy and my interpretation of how history is unfolding.
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Old 01-05-2013, 08:36 PM   #40
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While I'll assume you are kidding, it should be pointed out that it doesn't take "hyperinflation" to put your retirement funding on the skids. A few years of 10% - 14% inflation, such as we had in the late 70's and early 80's will do it. Check FireCalc and note that failures due to that modest period of inflation occur even with portfolios that would have survived the market crash of the Great Depression.
I wasn't kidding, I was exaggerating.

I was getting down to exactly your point. Let's call it "significant inflation". This is a risk. It is such a risk that Firecalc itself on the first page with the infamous red-blue-green lines picked that early 70's period when both inflation and the markets were in turmoil. The inflation you mention had a lot to do with the failing scenarios of that time.

This is a good discussion here. I *should* have been thinking about things like death or divorce of spouse, but didn't. That's a pretty significant risk too.
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