FIRECalc says 95% ... Forum says???

[USK Coastie]

Looking for some feedback on my Advanced FIRECalc assumptions. Here is what I'm putting in. Am I correct in my assumptions?

Annual Expenses $60,000 Includes COBRA/Purchased Medical INS. and FIT
MY SS at 2012 $16,000
DW SS at 2014 $ 8400
Reduction in spending $29,000 ( USCG Retirement and Tricare Medical to replace Purchased Medical) 2010
Portfolio $210,000 FIRECalc defaults 75% stocks/25 % bonds. Income 10% stocks 4% bonds
Expense ration 1.0 %
Portfolio reduction 2007 $30,000 Actual Retire date July 1, 2007
Retire date in FIRECalc 2008.

With these inputs I get a 95% success rate.
Actual expenses in 2006 were $45,000. Cobra from my employer is $10K/per yr and FIT will be about $4500 on the reduced income in 2008 etc.
I have identified about $8K worth of variable expenses from the $45k i.e. gas money for commuting and "fun" money that can be adjusted to fit the UP/Down of the markets.

BTW house and all vehicles are free and clear. House appraised last month at $610,000. 20 acres with 400 ft of riverfront. Its value is NOT figured into the FIRECalc assumptions. Down sizing from here would be the safety net should things go wrong.

So the question is are my assumptions correct and I can FIRE or have I missed a step or two. I know I'll get comments about risk tolerance etc.etc. If Firecalc is correct, I can certainly live with 95 % up side and a 5% down side risk. Just want to make sure I put the numbers in the right places.

Comments please.

Thanx

 

[USK Coastie]

Oh yea one more thing the Plan End was 35 years. I.E. I'll be dead ar 92

 

[Gone4Good]

I certainly wouldn't second guess FIRECalc or your assumptions. Once you get out to 2014 you seem to be in the clear. But if I'm reading this right, you'll be pulling a heck of a lot of money out of your portfolio ($150K of $210K?) between now and 2010 and smaller, but still healthy, withdrawals until SS kicks in for both of you in 2014.

That doesn't sound like a 95% success scenario for FIRECalc, so I assume I'm either missing something or reading your post wrong.

 

[REWahoo]

I'll be dead ar 92

Hey, is it "Talk Like A Pirate" day again?

 

[Corporateburnout]

Am I missing something?

You want to spend 60K from 2008 through 2010 then decrease that to 31K per year on a 210K starting portfolio that will decrease by 30K. You are spending over a 1/3 of your portfolio in the first year of retirement.

I don't know how you get a 95% success rate.

 

[USK Coastie]

One more tid bit I used the Bernike Spending reductions with a start age of 57.

Corporate I too look at the spending rates and wonder. Thats why the post. Is there a glitch in FIRECalc or do these inputs give me a 95% success rate??


As Goonnie jumped out of the plane while strapping on his chute I'd hate to jump out of the plane and find I'd forgotten it.

 

[jdw_fire]

Looking for some feedback on my Advanced FIRECalc assumptions. Here is what I'm putting in. Am I correct in my assumptions?

Annual Expenses $60,000 Includes COBRA/Purchased Medical INS. and FIT
MY SS at 2012 $16,000
DW SS at 2014 $ 8400
Reduction in spending $29,000 ( USCG Retirement and Tricare Medical to replace Purchased Medical) 2010
Portfolio $210,000 FIRECalc defaults 75% stocks/25 % bonds. Income 10% stocks 4% bonds
Expense ration 1.0 %
Portfolio reduction 2007 $30,000 Actual Retire date July 1, 2007
Retire date in FIRECalc 2008.

With these inputs I get a 95% success rate.

I get a 2% success rate, however instead of starting the portfolio @ $210K and puting in a negative addition of $30K I started the portfolio at $180K.

One more tid bit I used the Bernike Spending reductions with a start age of 57.

Corporate I too look at the spending rates and wonder. Thats why the post. Is there a glitch in FIRECalc or do these inputs give me a 95% success rate??

When I checked Bernike I got a 95% success rate also but I also saw this note

(Caution: The portfolio failed, or went negative, during some of the years in your scenario, but scheduled adjustments brought it back above zero before the end of the 35 years.)

Which explains the situation. I some (probably most) of the 35 yr periods you ran out of money but since your spending was not keeping up with inflation you CPI adjusted pension and SS eventually erased the negative portfolio. The problem here is that in the years that your portfolio went negative you, in reality, wouldn't be able to continue your spending at the rate FIRECalc used (i.e. you would have to cut back on your expenses).

 

[USK Coastie]

I read that also. If I adjust the portfolio up to get 100 % success rate it still says the same thing. I tried it with the house as part of the portfolio and the same disclaimer came up. Maybe I'll try increasing the portfolio and see if it goes awayand if so at what ##

 

[USK Coastie]

The disclaimer goes away at 100% success. So can I assume that the disclaimer applies to only the failed 5% of the runs and the rest are OK? I.E. a 95% success rate.

 

[jdw_fire]

The disclaimer goes away at 100% success. So can I assume that the disclaimer applies to only the failed 5% of the runs and the rest are OK? I.E. a 95% success rate.

No, infact just the opposite the disclaimer only applies to the successfull runs.

I put your proposed spending in a spread sheet and the spending exceeds your pension + SS income up to about 2016 (I took some shortcuts to get this data so it maybe off by a year or so). Your portfolio starts going negative in 2012 and eventually goes negative by about $21K before it starts increasing again, so if you can fix the early years it might be ok. To this end how did you arrive a $4500 in taxes each year when you are drawing heavily from your portfolio? Is your portfolio in a pretax account? If not I wouldn't think your tax bite would be nearly that much for the first 2.5 years and that will make a difference. How willing are you to start your retirement at a lower expendature rate that will only last until your pension starts, when you can start bumping it up?

BTW I get 100% success rate (with no caution) if you wait until 2008 to retire with a portfolio of $220K (which you would have if you invested the $210K at 5% for one year) using a 100% FI portfolio (which you should do anyway since you are going to deplete the portfolio in the first 8 yeard of your retirement).

 

[USK Coastie]

JW, Yes the funds are from a 403b which are pre tax. I also got the same results by waiting until 2008. But the opportunity to retire 6 months earlier for a 5% risk is attractive to me. The numbers posted were in my estimates the worst case numbers. I.E. retire with no decrease in expenses and adding $15k for FIT and COBRA, Since COBRA will not get me to 60 I'll have to purchase insurance on the market. From what I can find it will be $4800 - $7500 for major medical with Rx. My plan is to look hard at medical in the next couple of months and buy a policy to start 30 days before FIRE.

I just tried to run a couple of calcs in Firecalc and all I got was the payment page!!!!! Is the new forum owner doing something to increase his revenue. Like pay for each calculation in FIRECalc

 

[cute fuzzy bunny]

Hmm...I got the same thing...just going to the firecalc link and clicking advanced firecalc and then results gets me just the donation link.

 

[Corporateburnout]

Ok I thought by donating some money I would gain access to Fircalc but I was wrong. I still get the donation page.

If the new admin is trying to raise additional revenues maybe he should charge a $10 annual subscription fee. I'm willing to pay...... heck I just paid and I still can't access it.

 

[USK Coastie]

me too I paid and still can"t get on.

 

[jdw_fire]

But the opportunity to retire 6 months earlier for a 5% risk is attractive to me. The numbers posted were in my estimates the worst case numbers. I.E. retire with no decrease in expenses and adding $15k for FIT and COBRA, Since COBRA will not get me to 60 I'll have to purchase insurance on the market. From what I can find it will be $4800 - $7500 for major medical with Rx. My plan is to look hard at medical in the next couple of months and buy a policy to start 30 days before FIRE.

Coastie, the caution FIRECalc is giving you is pointing out the problem with your plan. Its not that your plan has a 5% risk, its that your portfolio goes negative during the 1st ten years! You don't have a large enough portfolio to cover you cash needs during this time frame. Once you get to your pension + SS your estimated expenses are covered by this income so you just need enough portfolio to cover the shortfall until then. So if you don't want to wait until 2008, cut your expenses for the first few years and see what that does to your portfolio. For example when I cut your first 2.5 years of spending from a total of $150K to $125K it appears to work (since FIRECalc is offline I had to use the spreadsheet I mentioned earlier).

 

[Andy R]

We will need to wait for Dory36 to chime in here. Firecalc is still Dory's baby...

I think he had some upgrades done to his server last week and maybe this caused a problem with Firecalc.

 

[dory36]

Sorry about that - I moved it prior to decommissioning the server that the forum was on -- and something didn't survive the move.

I fixed it, but until your dns catches up, it might not work yet -- but you won't see a partial either.

Use firecalc.info for today -- it is the same thing on a different server.

Any donations in the past week have already been refunded.