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Is this really excess funds?
Old 10-03-2005, 09:04 PM   #1
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Is this really excess funds?

My retirement portolio survives 98% in the McRetire monte carlo analysis using 6% return, 8. standard deviation, 3.75 inflation rate out to age 92. I used a portfolio balance about $200,000 less than what is in there. Using the Firecalc I get 100% survivability, again using $200,000 less than the actual portfolio. Question- given these results can I rely on* the $200,000 as surplus funds not needed for retirement or is that too risky? Knowledgeable comments appreciated.
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Re: Is this really excess funds?
Old 10-03-2005, 09:13 PM   #2
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Re: Is this really excess funds?

Quote:
Originally Posted by oldcrowcall
Question- given these results can I rely on* the $200,000 as surplus funds not needed for retirement or is that too risky?
Sounds like you've just self-funded your own long-term care insurance. Or else you'll make some beneficiary very happy. Dory's had his eye on a new server...

You COULD go out and spend the $200K on a woo-hoo time, but it's a little hard to guarantee anything more than 20-30 years... including FIRECalc. Take a look at the five-part "Retirement Calculator From Hell" on Bernstein's website:
http://www.efficientfrontier.com/ef/998/hell.htm
http://www.efficientfrontier.com/ef/101/hell101.htm
http://www.efficientfrontier.com/ef/901/hell3.htm
http://www.efficientfrontier.com/ef/103/hell4.htm
http://www.efficientfrontier.com/ef/403/hell5.htm .

I believe part 3 addresses the futility of long-range planning from retirement calculators.
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Re: Is this really excess funds?
Old 10-06-2005, 11:06 PM   #3
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Re: Is this really excess funds?

Nords, thanks for that reply. Very informative links!!
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