Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 12-02-2015, 07:40 AM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,424
According to Vanguard, a 60/40 portfolio has gained in 68 out of 89 years (over 3/4 of the time)... hardly a leap of faith... more akin to playing the averages.

https://personal.vanguard.com/us/ins...io-allocations
__________________

__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-02-2015, 07:55 AM   #22
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,318
Quote:
Originally Posted by pb4uski View Post
According to Vanguard, a 60/40 portfolio has gained in 68 out of 89 years (over 3/4 of the time)... hardly a leap of faith... more akin to playing the averages.

https://personal.vanguard.com/us/ins...io-allocations
+1.

You will now get the rebuttal from the risk averse crowd that future interest rates will be lower, global economies are different, liability matching strategy and cutting expenses are the only ways for portfolio survival.

I will stick with my balanced portfolio and spend in retirement without worrying about drastically cutting expenses until the market drops by 50%.
__________________

__________________
Corporateburnout is online now   Reply With Quote
Old 12-02-2015, 07:59 AM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,424
Quote:
Originally Posted by Corporateburnout View Post
...You will now get the rebuttal from the risk averse crowd that future interest rates will be lower, global economies are different, liability matching strategy and cutting expenses are the only ways for portfolio survival. ....
you forgot.... the sky is falling down too.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
Old 12-02-2015, 08:10 AM   #24
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Eagan, MN
Posts: 3,047
Quote:
Originally Posted by sansha View Post
Early Retirement, as opposed to working until you drop in the traces, is something of a leap of faith.

Sort of like jumping out of an airplane with a parachute that no one has ever tried before. The concept is there, and the chute should open, but it may be a hard landing. Or get tangled in wires. Or a nice soft landing.

Or it may not open at all in a very small percentage of cases.

You have to pick your happy path plan with plenty of redundancies, have a risk mitigation plan, and a disaster recover plan. FireCalc will help you see what would have happened, not what will happen.

It will not predict your future expenses growth, or unforeseen situations where you might get into trouble.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is offline   Reply With Quote
Old 12-02-2015, 08:44 AM   #25
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,318
Quote:
Originally Posted by Senator View Post
You have to pick your happy path plan with plenty of redundancies, have a risk mitigation plan, and a disaster recovery plan.
This made me cringe because it brought back memories from my working days in plant management.
__________________
Corporateburnout is online now   Reply With Quote
Old 12-02-2015, 08:48 AM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,424
+1 sounded way too corporate for my liking.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
Old 12-02-2015, 08:52 AM   #27
Dryer sheet aficionado
 
Join Date: Nov 2015
Posts: 31
Quote:
Originally Posted by Senator View Post
Sort of like jumping out of an airplane with a parachute that no one has ever tried before. The concept is there, and the chute should open, but it may be a hard landing. Or get tangled in wires. Or a nice soft landing.

Or it may not open at all in a very small percentage of cases.

Sort of like life. But few stop living out of fear. Ditto for ER - though I think fear stops more here. But some still evaluate the odds as reasonable and jump.
__________________
sansha is offline   Reply With Quote
Old 12-02-2015, 08:53 AM   #28
Recycles dryer sheets
 
Join Date: Aug 2013
Posts: 402
Hi Sansha, the $37,800 is my projected expenses or $3,150 per month. Some will be withdrawn from nest egg and some will be supported by social security and liquid savings in bonds. So, basically, expenses = withdrawal for income.

My wife is an organic nut and very anti-GMO, so we barely eat out now and just cheap home cook meal. We can spend $16 - $21 eating lunch total for both of us when we eat out at restaurants because our area is cheap, and we do that maybe 2x or 3x a month, so we'll never spend more than $80/month eating out. We never go out for dinner, as we stay home after 6:00 pm, and make our dinner. We're not night people. Our lifestyle is pretty frugal.


To the rest of the people, thanks for you feedback. Yes, I know firecalc is only a model. But I just wanted to know if those who retired 10 or more years ago, it's still a successful model for you when you run it a couple of years back.

BIG TICKET ITEMS:

As for big ticket items. I plan to earn from part-time work if I decide to really retire next year, and save for those too. I'm still looking for another job for next year. A job that I love to do, not one which I loath now. I'm still looking to have more than $1 mil liquid nest egg for me and my wife,and still hoping for a good job offer. But I'm just calculating a conservative estimate just in case I'm not that lucky on that job hunt next year.

As for maintenance, our house is solid brick, about 13 years old, and very well made. So far, we have repaired the water heater ($150), repaired the microwave for a blown part ($130), re-stained the deck twice ($350), and replaced clothes washer ($450). So, about $1000 in 13 years for major stuff. And yeah, I replaced the lawn mower last year - $400. It's low maintenance.

As for car, I just bought a brand new car 2.5 years ago with about 14,000 miles now. I barely drive more than 6,000 miles a year, because my work commute is 12 minutes, and we vacation in 2 or 3 spots a year about 3-3.5 hours from us every year. So, I project I will be driving much less in retirement, and my car will last another 15 years. 15 X 6000 = 90,000 miles in addition to my 14,000 = 104,000 mileage. By that time, I will downsize my 3,400 sq.ft. home. to a 1,500 sq.ft. house, or even sooner, so we can save some more.


Quote:
Originally Posted by sansha View Post
when you say 37,800 a year income, do you mean spending/withdrawal, or income, like a pension, extra income?








__________________
cyber888 is offline   Reply With Quote
Old 12-02-2015, 09:01 AM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,018
Quote:
Originally Posted by cyber888 View Post
Yes, I know firecalc is only a model. But I just wanted to know if those who retired 10 or more years ago, it's still a successful model for you.
Unfortunately, the answer to this question may be subject to survivor bias. I've been reading this site since 2006. I recall several people who ERd based on projections that included historical success on FireCalc, but no longer post. Some of them may have "failed" at ER.
__________________
Meadbh is offline   Reply With Quote
Old 12-02-2015, 09:19 AM   #30
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,405
Quote:
Originally Posted by Meadbh View Post
Unfortunately, the answer to this question may be subject to survivor bias. I've been reading this site since 2006. I recall several people who ERd based on projections that included historical success on FireCalc, but no longer post. Some of them may have "failed" at ER.
But then, they might have panicked and sold out at the bottom in 2008-2009 instead of buying stock or rebalancing as the FIRECalc model does. We will never really know.

In the case of the OP, his withdrawal rate is so low because his expenses are not much more than SS. If he can stick with the low posted expenses, he is golden.

It is only at higher WR rates approaching the 3.5-4% WR, or generally higher than the current average 2% dividend of stocks that one should be concerned.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 12-02-2015, 09:25 AM   #31
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,102
Quote:
Originally Posted by cyber888 View Post
But I just wanted to know if those who retired 10 or more years ago, it's still a successful model for you.
Retired for 10+ years, FIRECalc still tells me that my withdrawal rate would have survived 95%
of the time based on history, the same as
it told me prior to pulling the plug.
Draw your own conclusion about whether you think this
constitutes being a successful model
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 12-02-2015, 09:28 AM   #32
Full time employment: Posting here.
hesperus's Avatar
 
Join Date: Aug 2013
Location: colorado
Posts: 522
Quote:
Originally Posted by REWahoo View Post
Once again, FIRECalc doesn't predict anything, it only tells us how a specific set of inputs (portfolio size, asset allocation, annual withdrawal amount, etc.) would have fared historically.
Yes, I'll reiterate what I said. I would like to see how someone who used it a decade ago compares the result to where they are now. People use it to see the probability of success in the future based on past returns. How's that different than seeing how one 'fared' historically? The idea underlying firecalc is that you are using it as a probability predictor of success in the future.

From Firecalc webpage:
Quote:

How it works - the philosophy:
FIRECalc makes a single fundamental assumption:
If your retirement strategy would have withstood the worst ravages of inflation, the Great Depression, and every other financial calamity the US has seen since 1871, then it is likely to withstand whatever might happen between now and the day you no longer have any need for your retirement funds.

Look closely at the phrase "then it is likely to withstand whatever might happen between now and the day you no longer have any need for your retirement funds." Still say they're not promoting it as a predictor??
If that doesn't promote the use of firecalc as a predictor, than what does? Get serious. The site is littered with references to using it as a predictor. Bottom line is people ARE using it as a predictor. Period.

You guys are too enamored with nitpicking semantics, that you miss the underlying point
__________________
hesperus is offline   Reply With Quote
Old 12-02-2015, 09:31 AM   #33
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,102
Rather than follow up with nitpicking semantics, I'll bid you a good day.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 12-02-2015, 09:32 AM   #34
Recycles dryer sheets
fosterscik's Avatar
 
Join Date: Jun 2013
Posts: 182
Quote:
Originally Posted by daylatedollarshort View Post
That isn't much less than average expenditures for age 65+ households ($39,173, 2011 figures):

http://www.bls.gov/cex/2011/Standard/sage.pdf
That's great baseline info. and it's always nice to see what average expenditures are. However it's from 2011 and more recent data have been tabulated. The latest (2014) values can be found here:
http://www.bls.gov/cex/2014/combined/sage.pdf
Total average expenditures for this age group rose to $43,635 for 2014.
__________________
fosterscik is offline   Reply With Quote
Old 12-02-2015, 09:35 AM   #35
Full time employment: Posting here.
hesperus's Avatar
 
Join Date: Aug 2013
Location: colorado
Posts: 522
Quote:
Originally Posted by Midpack View Post

FIRECALC gives you the success rate using the inputs/assumptions the user provides based on more than 100 years of actual past history - it does not predict anything. It's entirely up to the user to decide whether past history is of any use as a predictor for the future...
nonsense. Firecalc promotes the use of the tool as a predictor of future success all over the site. See my previous post. Why else would the majority of people use it?
__________________
hesperus is offline   Reply With Quote
Old 12-02-2015, 09:40 AM   #36
Recycles dryer sheets
 
Join Date: Aug 2013
Posts: 402
Quote:
Originally Posted by meierlde View Post
For an example assume you lived in germany in 1912 and ran the german equivalent of fire calc back then (if it had existed), you would have been spectacularly wrong it had been 100 years since a really destructive war had been fought in Germany. The Pre WW1 german firecalc would not have modeled WW1 or the great inflation after it. Or assume that Yellowstone had a catastrophic eruption in 10 years etc. Firecalc being historically based does not have a long enough time baseline to include the financial effects of these disasters.

I guess with this apocalyptic scenario, even with a $2 million nest egg might not be enough.
Here are other scenarios that can wipe you out, even without war:
1) Hackers hack wall st. and empty your retirement account. So, your $2 million = will become $0.00.
2) Terrorist will blow up Wall St. big database sites containing your financial data - wipe your retirement balance to zero.
3) A big Tsunami will wipe out New York and Wall St from the face of the earth, or California will be wipe out with the San Andreas fault breaking off.




__________________
cyber888 is offline   Reply With Quote
Old 12-02-2015, 09:40 AM   #37
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
Quote:
Originally Posted by Senator View Post
Sure, trust it... After all, the stock market will always go up 6%-8%. Just ask the Japanese investors.
Point taken, but Firecalc does not assume returns will be 6-8%/yr. In fact, it doesn't assume anything...
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is online now   Reply With Quote
Old 12-02-2015, 09:42 AM   #38
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,405
Quote:
Originally Posted by hesperus View Post
nonsense. Firecalc promotes the use of the tool as a predictor of future success all over the site. See my previous post. Why else would the majority of people use it?
I use it as a guide.

Let's think in simpler terms. If you can manage to keep up with inflation, then for 30 years of retirement you can draw 3.33% each year. 30 years X 3.33% = 100%.

FIRECalc and other calculators say that by investing in stocks and bonds you can get a bit higher, perhaps 4% WR. It's because over long periods stocks and bonds give you some real returns. Not much magic there to go from 3.33% to 4%.

Sounds reasonable, doesn't it?

PS. Remember that success here means that your balance could be near 0 at the end of the 30 years. It does not mean that your stash stays intact.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 12-02-2015, 10:58 AM   #39
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,495
Quote:
Originally Posted by hesperus View Post
nonsense. Firecalc promotes the use of the tool as a predictor of future success all over the site. See my previous post. Why else would the majority of people use it?
If "people" (whoever they are) are using any tool as a "predictor", they are making a mistake. There are no guarantees. As noted above, all calculators are models, and all models are wrong. Some are useful.

I use Firecalc/CFIRE as tools based on historical MC models, and use FIDO's calculator based on MC. It took me a while to get over FIDO'S referencing their calculator as for "educational" purposes only, until I saw it in this light.

Being risk adverse, I also use liability matching to a certain extent until 70, and use SS for pseudo liability matching thereafter. Part of my risk mitigation/disaster recovery methodology is the possibility of laddered or deferred annuities at a later date, if needed.
__________________
Options is offline   Reply With Quote
Old 12-02-2015, 11:11 AM   #40
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,973
Quote:
Originally Posted by hesperus View Post
nonsense. Firecalc promotes the use of the tool as a predictor of future success all over the site. See my previous post. Why else would the majority of people use it?
Because the past is the only quantifiable metric we have, and we don't have a better guide. But it is the past. Not sure how they promote the tool as a predictor, the website plainly states otherwise...

It's a starting point in the decision making process, after we all apply our own risk tolerances, safety factors, personal predictions/expectations, etc. - that's all. People here have concluded they need anywhere from 75% to 200% (2X the 100% nest egg) of the & FIRECALC results provided - there isn't anything remotely like a right answer.

The OP opened with "wrong" and "trust" - those terms don't apply.

Quote:
How can I be sure these results will work in the future?
FIRECalc's standard model uses the overall US stock market performance. Most 401k and similar retirement plans offer investment choices ("index funds") that are closely tied to the overall market performance, and the others generally tell you how they compare.
If the next few decades are even worse for the stock market than the worst that has ever been seen, including the Great Depression, then all bets are off.
But as one early retiree pointed out, there isn't much anyone can do to prepare for a comet hitting us!

How can FIRECalc predict future returns from past performance?
It can't. And it doesn't try. In fact, it tries to predict what will not happen. This might sound confusing, but it's really simple.
Consider an analogy: Suppose you are building a house in Honolulu. How do you decide how much heating and air conditioning capacity you will need?
We know that the lowest it has ever been there was 52, on a day in February 1902 and again on another day in January 1969, and the hottest it has ever been was 95, in 1994. Buying a system suitable for an Anchorage-style winter and a Phoenix-style summer would be a major waste of money that could be better used elsewhere.
FIRECalc works the same way, using stock market history and your portfolio and spending plan instead of weather history and furnace capacity. No one could predict the temperature for any specific given future date during the decades that house will be used, and no one can predict the future returns of your investments. But by knowing the historical worst cases, you'll have the information to judge if your savings are sufficient to handle the winter.
__________________

__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Has FIRECalc been producing better results for you recently? nico08 FIRE and Money 2 03-09-2015 08:17 PM
Has your computer ever been hacked into? easysurfer Other topics 9 04-24-2010 06:14 PM

 

 
All times are GMT -6. The time now is 01:05 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.