FIRECalc vs REW

[Major Tom]

Quite inspiring REW.

Actually, scratch that - very inspiring.

 

[David1961]

Yes, very inspiring. Does the green line represent the best 30 year scenario in FireCalc?

 

[REWahoo]

David, no it doesn't. You'll find a description of the graph here: FIRECalc: A different kind of retirement calculator

 

[NW-Bound]

Year 1: 4.8%
Year 2: 9.8%
Year 3: 7.9%
Year 4: 6.1%
Year 5: 5.4%
Year 6: 4.2%
Year 7: 3.9%
Year 8: 3.5%

Total = 45.6% or an average of 5.7%/yr. Yet, REW's principal remains intact.

Forget about 4%SWR. The new normal is 5.7%. Take that, the Trinity study's authors!

Or is it that 5.7%SWR is reserved for Wellesley share holders, while the rest will have to be happy with 4%? Hmm... I have to look into this.

 

[haha]

Yes, very inspiring. Does the green line represent the best 30 year scenario in FireCalc?

1975 I think.

Ha

 

[ejman]

Great job! That green line is a tough competitor. By my calculation Wellesley's annual rate of return from 12/31/2005 to 12/31/2013 has been about 7.6%. Considering this includes about 3-4 years of very low bond returns - quite encouraging.

 

[Lsbcal]

Nice presentation Rewahoo. Our experiences were quite similar with a current portfolio value 6% above the starting one. Took SS at 64, earlier then planned. No regrets either. Now on vacation trip in the Utah canyon lands.

 

[Sittingduck]

Thanks for updating your original post which I had not seen.

I am looking at retiring this year at 58 & I am going to be in a very similar position as you were starting out. I am looking to take SS at 62 also. (This drives many of the financial planner people I have talked to crazy). It's very comforting to see you prosper on a similar withdrawal rate glide slope I am planning on taking - and during a very tough market.

Thanks again for sharing!

 

[fisherman]

Thank you for sharing such good and useful info. I always read your posts for the info and humor.

 

[REWahoo]

Thank you for sharing such good and useful info.

Happy to do it. I'm hoping seeing some real-world experiences (warts and all) will be educational, especially for those who suffer from chronic OMY symptoms.

 

[CaliforniaMan]

Thanks for posting the update. I had not seen it before. Nice to see real life experience and a very good withdrawal rate for a tough retirement date. I originally planned a 4.5 percent withdrawal rate, and then as I got closer to retirement it went down to 4. Now that I am actually there (for a little over a month), I am having a tough time convincing myself to take more than 3. I am so happy to see the real life experiences of those who have done this before me. Thanks for updating your post. (and yes I do know that past performance....)

 

[REWahoo]

Thanks for updating your post. (and yes I do know that past performance....)

+1

I think my experience should serve as a reminder that the failure rates in FIRECalc and the 4% withdrawal rate in the Trinity Study are worst case scenarios. History tells us we can withdraw considerably more than 4% and still end up doing well.

But as you point out, there are no guarantees.

 

[BBQ-Nut]

So, my case is similar when in the early phases of my planned ER - my WR exceeds the 4% recommendation, but then drops below 4% when SS kicks in. But also, it varies depending on what returns I use.

Using Firecalc, Fidelity's Retirement Planner, my own calculations - my portfolio (mix of after tax, 401k, and Roth) does survive, so, I will probably break the 4% rule and make do.

 

[Ready]

Now that I am actually there (for a little over a month), I am having a tough time convincing myself to take more than 3. I am so happy to see the real life experiences of those who have done this before me. Thanks for updating your post. (and yes I do know that past performance....)

CaliforniaMan, I'm curious...Are you withdrawing 3% because that is all you comfortably need at this point, or are you holding back on spending money on things you would really enjoy because you don't want to bump up your WR to 4%?

 

[growing_older]

Thanks for the update. I also think you have hit on another aspect to the eternal "when do I take SS debate" which is that taking SS before FRA or before age 70 can be a "Plan B" alternative that gets used if a series of bad years shows up or portfolio starts showing depletion greater than planned. Because the timing of SS start can be to some extent in your control, you can exercise the option to start taking it only if you see a need. People who retire into a few years of good bull market can delay SS and get maximum longevity insurance value out of it. People who start seeing a bad sequence of down years, can deploy SS as their reserves at any age over 62 and slow down any portfolio depletion in the most critical scenario that could otherwise lead to running out of money late in life. We cannot predict future equity markets, but we can be ready with a boost in case an undesireable sequence shows up.

 

[MichaelB]

Happy to do it. I'm hoping seeing some real-world experiences (warts and all) will be educational

Thanks for the updates. Looking at this and reading the comments, one other thought comes to mind. A simple asset allocation and easy to manage portfolio is effective even (or especially) over a period that includes considerable market volatility.

 

[BBQ-Nut]

When I run out the numbers for taking SS at 62 or 70, I notice that - yes, my WR does go lower starting at 62 to be more in line with the 4% SWR 'recommendation', however, my 'ending balance' is lower past age 90 compared to if I take SS at 70.

So, it goes back to whether I plan for a long retirement into my 90's, or check out earlier.

I'm planning on the former

 

[REWahoo]

I also think you have hit on another aspect to the eternal "when do I take SS debate" which is that taking SS before FRA or before age 70 can be a "Plan B" alternative that gets used if a series of bad years shows up or portfolio starts showing depletion greater than planned.

+1

This is a great lesson for those who insist waiting until 70 is the only thing that makes sense. Delaying looked good on paper and for us would have likely been the best option - that is until the reality of seeing our portfolio (our only source of income at the time) decline by 35% and not knowing when (or if) that decline would stop. At that point all I wanted to do was stem the bleeding...

 

[REWahoo]

Looking at this and reading the comments, one other thought comes to mind. A simple asset allocation and easy to manage portfolio is effective even (or especially) over a period that includes considerable market volatility.

A simple, low cost, self-balancing AA also fits the bill for those of us who see a portfolio as something that tends to function far better when you don't meddle with it. Not to mention the fact portfolio management is work - and I'm retired!

 

[W2R]

As in most of these threads, I just can't help but compute and graph the same just to see how I am doing.

Here is my graph:

REWahoo was kind enough to use his considerable artistic abilities to provide a rendition of my graph, superimposed on the FIRECalc graph, for me, just as he did for his own data:

.............

Market behavior after I retired was very different from REWahoo's retirement situation, and these graphs show the other side of the coin, so to speak. I retired on 11/9/2009, and since that time we have experienced pretty terrific market conditions. IIRC REW's AA and investment approach are in the same ballpark.

My withdrawal rates as a percentage of my original portfolio value (without any CPI adjustment, to make them comparable with REW's percentages) have been:

2010.....2.61%
2011.....2.13%
2012.....2.30%
2013.....2.79%

I am hoping that my results might be helpful to those contemplating lower spending levels, to see that they might want to spend more.

 

[REWahoo]

I am hoping that my results might be helpful to those contemplating lower spending levels, to see that they might want to spend more.

<hand goes up> Me! Me!

But then based on my 5.7% average, maybe I should stick with trying to stay under 4...

You are off to an amazing start. You have enough wiggle room in your spending to dance the Watusi!

 

[W2R]

<hand goes up> Me! Me!

But then based on my 5.7% average, maybe I should stick with trying to stay under 4...

You are off to an amazing start. You have enough wiggle room in your spending to dance the Watusi!

Thank you! I am working on it pretty hard! As you can see, my spending has gone up each year for the past three years.

 

[Walt34]

You are off to an amazing start. You have enough wiggle room in your spending to dance the Watusi!

But please, please, do not say "Wheee!"

(I guess she'll never live that down!)

 

[Major Tom]

(I guess she'll never live that down!)

Yikes Walt. Even though that word can have a calamitous effect when said by W2R, it can still have a potentially injurious result if uttered by others.
Go easy please

 

[W2R]

Who, me?


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