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Firecalc - Spending model $ assumed inflation
Old 07-07-2013, 07:05 PM   #1
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Firecalc - Spending model $ assumed inflation

Hello All,

I'm working on my retirement modeling and have a few questions.
1. Do links exist showing a poll of what percent of members use the Constant Spending Level option vs. the Bernicke's model? The former seems quite conservative and seems to be a worst case condition. The latter model gives a higher Spending Level. Or do members take an average of somewhere between the two? There's a big difference between the two results.

2. What inflation factor do most members use (eg 3%, 4%, CPI)?

3. What is the number of years used for retirement ( eg 30 years, 35 years)?


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Old 07-07-2013, 08:14 PM   #2
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1. I look at all spending variables. Everyone's situation is different and mine could change.
2. 3%
3. 40 years

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Old 07-07-2013, 09:03 PM   #3
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Constant Spending, CPI, and the worst case of 30, 35, 40 years.

Choosing an inflation % undermines the value of FIRECALC, IMO. With CPI, it used the historical values, which went ballistic in the 80's. 3% or 4% ain't even in the ballpark, and some of the failures pass through the 80's.

Long runs of 40 years result in fewer data points, as they don't include the last 39, 38, 37 etc starting years, as that won't be a complete 40 years.

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Old 07-08-2013, 08:43 AM   #4
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1 & 3. Since no-one can predict the future, we use & want to know how things will fare in a variety of scenarios to try to get an overall "feeling" for things.

2. Decade Inflation Chart
2. Historical Inflation Rate |

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Old 07-08-2013, 10:02 AM   #5
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When running FIRECalc, I generally use these inputs (although what you use is up to you, of course!)

1. Constant spending
2. CPI
3. 30 or 35 years (I am 65 years old right now)

I also take the results from any retirement calculator with a grain of salt.
"You can never cross the ocean until you have the courage to lose sight of the shore." - - - C. Columbus
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Old 07-08-2013, 10:50 AM   #6
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I am a supporter so get the option to set in manually spending per year since we will have much higher spending for the next few years (kids still in school) and then spending will go down a lot. I do set a constant spending amount for when it goes down.

I've run it variously with different inflation and different retirement lengths.
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Old 07-08-2013, 05:05 PM   #7
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1) Constant Spending
2) CPI
3) 50 years

You might want to read one of the two books by Henry K."Bud" Hebeler if you are leaning towards Bernicke's model. These books will convey a good bit of cautiousness to reflect on.


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