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Has Firecalc ever been wrong for you? Do you trust it 90%?
Old 12-01-2015, 04:13 PM   #1
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Has Firecalc ever been wrong for you? Do you trust it 90%?

So I run Firecalc with $680,000 nest egg, $37,800/year income ($3,150/month income), 37 years of retirement, Social Security income at 62 - $1,370 for me & $1,100 for wife (present value). It came out to 100% I initially started with $720,000 and kept lowering it, until I hit $680,000. Firecalc still says 100%

I know most of you here have a $1mil or more. Well, I don't have kids or nor do I plan to leave money for any relatives - it's just me and wife and live in a low cost southern state. I will surely try to continue to hit that $1 mil mark, but Firecalc says I have enough? Should I trust it 90% or 80% ..
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Old 12-01-2015, 04:20 PM   #2
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I don't know of ANY retirement calculator that is going to give you 100% accuracy. It's just not how it works. All of them will give you a 'windage' but if you're looking for a "can I/can't I retire?" I'd suggest a lot more homework.

Having said that, I found that if I enter SS information with me taking SS at a date before today, I get a very odd result.
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Old 12-01-2015, 04:49 PM   #3
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when you say 37,800 a year income, do you mean spending/withdrawal, or income, like a pension, extra income?
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Old 12-01-2015, 04:56 PM   #4
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Originally Posted by marko View Post

Having said that, I found that if I enter SS information with me taking SS at a date before today, I get a very odd result.
Yep. Here is why: Use only current or future dates for FIRECalc!
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Old 12-01-2015, 04:57 PM   #5
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I don't know of ANY retirement calculator that is going to give you 100% accuracy. It's just not how it works. All of them will give you a 'windage' but if you're looking for a "can I/can't I retire?" I'd suggest a lot more homework.
....
+1

I see calculators as akin to a sawed-off shotgun, not a sniper rifle. Also, note the inherent limits: history teaches us that depriving ourselves to boost our 40-year success probability much beyond 80% is a fool’s errand, since all you are doing is increasing the probability of failure for political, economic, and military reasons relative to the failure of banal financial planning. The Retirement Calculator from Hell, Part III (e.g., systemic bank failures, plague, world wars, invasion of the Huns....)
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Old 12-01-2015, 05:08 PM   #6
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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.
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Old 12-01-2015, 05:13 PM   #7
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I have always been interested in hearing from someone who ran firecalc a decade or more ago (or the earliest it was around) documented their findings, then checked in a decade later and reported how closely it had predicted where they'd be at this stage.
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Old 12-01-2015, 05:15 PM   #8
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Should I trust it 90% or 80% ..
You're talking about a major life decision, and that needs to be an informed decision. FIRECalc can give you one piece of information, but that's all.

I highly recommend reading the full description of what FIRECalc is and how it works. That will answer a number of questions for you.

FIRECalc: A different kind of retirement calculator
FIRECalc: Why another retirement calculator?
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Old 12-01-2015, 05:36 PM   #9
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FIRECalc is nothing more than a model. All models are wrong; some models are useful.
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Old 12-01-2015, 05:42 PM   #10
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Originally Posted by hesperus View Post
I have always been interested in hearing from someone who ran firecalc a decade or more ago (or the earliest it was around) documented their findings, then checked in a decade later and reported how closely it had predicted where they'd be at this stage.
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.
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Old 12-01-2015, 05:47 PM   #11
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I highly recommend reading the full description of what FIRECalc is and how it works.
^ What he said...
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Old 12-01-2015, 05:58 PM   #12
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Originally Posted by cyber888 View Post
So I run Firecalc with $680,000 nest egg, $37,800/year income ($3,150/month income), 37 years of retirement, Social Security income at 62 - $1,370 for me & $1,100 for wife (present value). It came out to 100% I initially started with $720,000 and kept lowering it, until I hit $680,000. Firecalc still says 100%

I know most of you here have a $1mil or more. Well, I don't have kids or nor do I plan to leave money for any relatives - it's just me and wife and live in a low cost southern state. I will surely try to continue to hit that $1 mil mark, but Firecalc says I have enough? Should I trust it 90% or 80% ..
I'm not sure how FIRECALC could be "wrong" or what "trust" has to do with it?

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...
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Old 12-01-2015, 05:58 PM   #13
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I don't use Firecalc at all. I use a spreadsheet with real interest rates and inflation as parameters and a liability matching strategy with mainly fixed maturity investments and also compare the results to the Fido RIP on conservative investment style settings.
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Old 12-01-2015, 06:08 PM   #14
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I think what he means by wrong is that he put the same information into Firecalc and it doesn't return consistent results (correct me if I'm wrong). I've seen that too. But I've never been sure if it is just me re - inputting the data wrong. Sometimes, I think that is it, sometimes, I think Firecalc might occasionally mis-fire -- returning different results with the same input. The only way to be sure would be if Firecalc repeated, on the results page, the data that was input. Right now it only returns part of the inputted data, and the rest is not stated.

I agree Firecalc is a useful tool, but it also seems to be that the 4% withdrawal rate has been around before Firecalc, (correct me again if I am wrong, I'm new). So if you assume the 4% withdrawal rate, it's mostly a question of can you get a handle on your spending to accurately calculate if 4% will be enough? And honestly, who can know what costs will be 30 years from now?

OTOH, I've been in my house 30 years, and I know what I spent then and what I spend now. Will that help me predict what I need to spend in the future? Maybe. Maybe not.

Early Retirement, as opposed to working until you drop in the traces, is something of a leap of faith. Perhaps it is better to think about it as an early sabbatical, a chance to re-evaluate and decide what you want to do with the rest of your life. It might mean working again, or creating something, or just living, perhaps more frugally than some would like, but on your own time.
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Old 12-01-2015, 06:17 PM   #15
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when you say 37,800 a year income, do you mean spending/withdrawal, or income, like a pension, extra income?
We have not heard back from the OP.

Let's look at his numbers.

Quote:
Originally Posted by cyber888 View Post
So I run Firecalc with $680,000 nest egg, $37,800/year income ($3,150/month income), 37 years of retirement, Social Security income at 62 - $1,370 for me & $1,100 for wife (present value). It came out to 100% I initially started with $720,000 and kept lowering it, until I hit $680,000. Firecalc still says 100%...
Let's assume that he wants to spend $37.8K/year. His SS is $16.44K/year and his wife's is $13.2K/year. Let's further assume that SS starts for them soon, like next year.

Then, it means that he only needs to draw $37.8K - $16.44K - $13.2K = $8.16K from his stash.

Even if his stash barely keeps up with inflation, meaning a real return of 0, over his 37-year retirement he only draws $302K out of $680K.

There, it's 100%. You do not even need FIRECalc to tell you that.
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Old 12-01-2015, 06:17 PM   #16
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Sure, trust it... After all, the stock market will always go up 6%-8%. Just ask the Japanese investors.

Look at a risk mitigation plan. Worst case, you become a greeter at Walmart or learn to up-sell to a larger portion for a combo meal. If you are already doing a job like that, not big deal.

If you have a decent job now, why not stretch it a year or two so you can be 100% sure.

$37,800 is really not that much money. A year or two of stagflation and you may well wish you worked longer. You may be too young to remember stagflation.
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Old 12-01-2015, 06:22 PM   #17
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You say your income is 37,800 per year? Do you mean expenses? With expenses that low, social security will cover 80%, so I trust firecalc saying you are good to go with a 680k portfolio. But I would re-think your retirement expenses. Did you consider expenses like new cars, new roof, new heating system, new teeth, new hip, etc.?
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Old 12-01-2015, 08:34 PM   #18
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You say your income is 37,800 per year? Do you mean expenses? With expenses that low, social security will cover 80%, so I trust firecalc saying you are good to go with a 680k portfolio. But I would re-think your retirement expenses. Did you consider expenses like new cars, new roof, new heating system, new teeth, new hip, etc.?
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
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Old 12-01-2015, 09:13 PM   #19
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Thanks for posting the link with the average expenditures. Very interesting and helpful.
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Old 12-02-2015, 01:01 AM   #20
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Early Retirement, as opposed to working until you drop in the traces, is something of a leap of faith. Perhaps it is better to think about it as an early sabbatical, a chance to re-evaluate and decide what you want to do with the rest of your life. It might mean working again, or creating something, or just living, perhaps more frugally than some would like, but on your own time.
I think it requires a leap of faith for those counting on growth from their portfolios to fund it. Otherwise maybe not so much for retirees who have simply saved up X years worth of expenses and get at least a zero real return, less whatever is realistically going to be funded by SS, pensions, rental or other retirement income.

You are welcome on the CES link. We used that quite a bit to help us reign in some of our expenses that were needlessly high.
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