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firecalc problem
Old 01-09-2011, 06:01 PM   #1
gone traveling
Join Date: Oct 2010
Posts: 141
firecalc problem

I was messing around with firecalc and trying to come up with a way to input our scenario.

We hopefully will have 1.5 million net worth in 5 years at age 46 and would like to partially ER at that point and work some odd jobs in different parts of the country (seasonal or contract work). I guestimate we could get by on $25,000 from our portfolio and $25,000 from working odd jobs. We would like to do this for maybe 10 years before retiring completely. No other income like pensions will be coming.

The problem is that firecalc runs your retirement duration in years across a continuous portion of history assuming a constant withdrawal (adjusted for inflation). It will not work to put in $25,000 withdrawal for 10 years using the $1.5 million portfolio and then take the worst case end run balance after that and use it as the portfolio for a $50,000 withdrawal for 30 years. You end up getting a much higher failure rate than you would if you just put in 1.5 million, $50,000 withdrawal, 40 years (100% success then).

Any good way to run our simulation with our proposed plans?

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Old 01-09-2011, 06:26 PM   #2
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Join Date: Jun 2006
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What I would do is this:

1. Put $1.5 million in as the starting portfolio.
2. Put $25k in for the annual spend.
3. Put $25k in as "off chart spending" starting in 2020 in the bottom of the "Other Income/Spending" tab (second tab from the top left).

Not sure on the inflation adjusted checkbox in that case (I would guess yes, since it inflates your spending each year), but the above would be pretty close.



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Old 01-09-2011, 06:47 PM   #3
gone traveling
Join Date: Oct 2010
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Thanks, that worked I think.

"Here is how your portfolio would have fared in each of the 100 cycles. The lowest and highest portfolio balance throughout your retirement was $1,372,313 to $23,527,679, with an average of $6,619,431. (Note: values are in terms of the dollars as of the beginning of the retirement period for each cycle.) "
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Old 01-11-2011, 09:23 AM   #4
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Join Date: Aug 2005
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Originally Posted by 79protons View Post
I was messing around with firecalc and trying to come up with a way to input our scenario.

We hopefully will have 1.5 million net worth in 5 years at age 46 and...
Net worth is not always easily convertible to income; you might consider not counting things like cars, furniture, part of your house value, etc.
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