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Old 06-30-2010, 09:56 PM   #21
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I'm sure it will come as no surprise that the guy who wrote FIRECalc has retired.
Did he ever share his SWR?


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Old 06-30-2010, 10:01 PM   #22
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Did he ever share his SWR?
Not that I recall, but you can check out his posts and see what you find: Dory36 posts
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Old 06-30-2010, 10:19 PM   #23
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I trust trust a hammer 100%
I trust a hammer, but how about the person striking the hammer?
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Old 07-01-2010, 06:51 AM   #24
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I had the wooden handle of a hammer I was using break once.

Although FIRECALC contains a number of periods of strong growth it also contains a number of periods of negative growth including the Great Depression.

I imagine if it were around in the late 1920's and you were retired through the 1930's it would have probably shown many here could survive financially, I rather doubt any of us here would have enjoyed the ride in the 1930's even though they came out the other end "OK".
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Old 07-01-2010, 08:57 AM   #25
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Not so much a matter of 'trust' I guess, but I have wondered about just what those 105 (or so) data cycles really represent. To make a weather/climate analogy, are we looking at:

A) 105 temperature measurements, taken in one month.

B) 105 temperature measurements, taken in one season.

C) 105 temperature measurements, taken in one year (capturing some of the seasonal variation).

D) 105 temperature measurements, taken over several decades (capturing the seasonal variation, plus some hot/cold years).

There really are only a handful of 'cycles' in the data. Do they really represent typical cycles, are are there cycles of a type we have never seen before?

Of course, as has been said in many threads, we can wait until we have enough money to be certain of just about everything, but that probably means work until the day you die. So I'm still going with the combined output of FIRECALC and other models, with some reserve thrown in ( a reserve that could quickly be wiped out by individual circumstance, unrelated to any economic cycles). It's all a crap shoot of one sort or another, but I plan on enjoying the ride, but applying some reasonable prudence along the way.

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Old 07-01-2010, 08:59 AM   #26
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I trust FIREcalc to tell me whether my plan would have worked in the past. I don't trust FIREcalc to tell me whether my plan will work in the future, though I think it gives me a good reference point.
I'll take a weak version of this. Note that FIREcalc does not recognize the market value loss on bonds - that was a big deal for people who were retired when rates were going up.
Also, there are only two non-overlapping 30 year periods since WWII, so you have to decide how much credibility to give historic results.

That said, I'm sure that FIREcalc and its relatives have done a great public service by keeping people from blindly assuming that they can invest in stocks and withdraw 6% or 8% per year without invading principal.
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Old 07-01-2010, 09:19 AM   #27
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Originally Posted by ERD50 View Post
Not so much a matter of 'trust' I guess, but I have wondered about just what those 105 (or so) data cycles really represent. To make a weather/climate analogy, are we looking at:

A) 105 temperature measurements, taken in one month.

B) 105 temperature measurements, taken in one season.

C) 105 temperature measurements, taken in one year (capturing some of the seasonal variation).

D) 105 temperature measurements, taken over several decades (capturing the seasonal variation, plus some hot/cold years).

There really are only a handful of 'cycles' in the data. Do they really represent typical cycles, are are there cycles of a type we have never seen before?

Of course, as has been said in many threads, we can wait until we have enough money to be certain of just about everything, but that probably means work until the day you die. So I'm still going with the combined output of FIRECALC and other models, with some reserve thrown in ( a reserve that could quickly be wiped out by individual circumstance, unrelated to any economic cycles). It's all a crap shoot of one sort or another, but I plan on enjoying the ride, but applying some reasonable prudence along the way.

-ERD50
It's worse than you indicate. Just how many (statistically) independent 30-year (or so) retirement spans are contained in that 105 year data segment ? Maybe 3 to 3.5 or so. Firecalc and all the financial calculators then assume that past is prologue and extrapolate forward from this (statistically) tiny amount of data.
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Old 07-01-2010, 09:31 AM   #28
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I imagine if it were around in the late 1920's and you were retired through the 1930's it would have probably shown many here could survive financially, I rather doubt any of us here would have enjoyed the ride in the 1930's even though they came out the other end "OK".
The two tough periods for the historical models are the periods spanning the Great Depression and the 70's inflation/malaise. That's where many of the runs fail. If your inputs make it through those 2 periods then you most certainly have a successful run.

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Although FIRECALC contains a number of periods of strong growth it also contains a number of periods of negative growth including the Great Depression.
That's true what you post.

I don't see those events happening going foreward. But considering the tremendous obligations and debt levels we have and will have, I just don't see growth periods like we had in the past.

How does your portfolio perform when there is no growth going foreward and taxes heading ever northward ?
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Old 07-01-2010, 10:33 AM   #29
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How does your portfolio perform when there is no growth going foreward and taxes heading ever northward ?
It wouldn't perform well and my plan could fail. Are you sure you are 100% correct because my crystal ball remains as foggy as ever.

I don't mean to dismiss you out of hand, far from it, I guess the real question everyone is asking secretly or otherwise is........."is it different this time?"

Could be, I don't know but I like rising markets better.
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Old 07-01-2010, 10:45 AM   #30
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Thank you all!

I probably focused too much on FIREcalc. Let me rephrase the question: if early retired 10-15 years ago and based on some assumptions, how did it work for you? what tools did you use and found good/bad in supporting your assumptions? what did not work and why? What would you do differently now, if you knew what you know know?
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Old 07-01-2010, 11:38 AM   #31
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That said, I'm sure that FIREcalc and its relatives have done a great public service by keeping people from blindly assuming that they can invest in stocks and withdraw 6% or 8% per year without invading principal.
At 4% SWR you are spending principal in most cases.
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Old 07-01-2010, 11:42 AM   #32
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At 4% SWR you are spending principal in most cases.
But presumably not depleting it. (I've "spent" 5 of my planned thirty years and still have more than 90% of it left. So far, so good... .)
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Old 07-01-2010, 11:47 AM   #33
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The two tough periods for the historical models are the periods spanning the Great Depression and the 70's inflation/malaise. That's where many of the runs fail. If your inputs make it through those 2 periods then you most certainly have a successful run.
I assume that you run your inputs thru FIREcalc then results reflect those 2 periods already. Is it correct?
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Old 07-01-2010, 11:55 AM   #34
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I assume that you run your inputs thru FIREcalc then results reflect those 2 periods already. Is it correct?
Yes.

Once again I suggest you read How FIRECalc Works. Sorry, it isn't available as an educational video game....
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Old 07-01-2010, 12:21 PM   #35
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At 4% SWR you are spending principal in most cases.
I've been withdrawing 4% for only 22 months; my portfolio has fluctuated between down 3% and currently up about 5% from the day I retired.
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Old 07-01-2010, 12:43 PM   #36
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At 4% SWR you are spending principal in most cases.
And the problem is

Just looking at my own/DW's situation (I'm retired - she may be shortly - her decision) according to using FIDO's RIP (the full version) it shows our current withdrawl in excess of 4% currently (at age 62).

It goes up to 10% at age 66 (in less than four years), and drops at than time due to her taking SS, along with two small pensions, along with my 50% claim against her SS (we're the same age) but stays above the "magic 4%" till age 70 at that time (when I draw my SS) and drops to less than 1% .

On the yearly expense/withdrawl forecast up till age 100 (end of our plan), we don't exceed 4% (in fact, it shows never more than 3%).

4% is a guide and use of principal is not a problem, as long as you have a plan, it meets your needs, and you adhere to the plan (e.g. make the plan - execute the plan).
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Old 07-01-2010, 05:41 PM   #37
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And the problem is

Just looking at my own/DW's situation (I'm retired - she may be shortly - her decision) according to using FIDO's RIP (the full version) it shows our current withdrawl in excess of 4% currently (at age 62).

It goes up to 10% at age 66 (in less than four years), and drops at than time due to her taking SS, along with two small pensions, along with my 50% claim against her SS (we're the same age) but stays above the "magic 4%" till age 70 at that time (when I draw my SS) and drops to less than 1% .

On the yearly expense/withdrawl forecast up till age 100 (end of our plan), we don't exceed 4% (in fact, it shows never more than 3%).

4% is a guide and use of principal is not a problem, as long as you have a plan, it meets your needs, and you adhere to the plan (e.g. make the plan - execute the plan).
I don't recall mentioning a problem with a 4% SWR just that people should not be misled into believing that they will not be spending principal over the course of a 30 yr retirement. Success for some would be to put their last 10 cents in the parking meter as they arrive at the funeral home and hop into the casket.
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