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Old 08-22-2013, 06:53 PM   #21
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My start date was 8/6 and already I'm down around 20k in value hangin tough
I retired January 2008 and almost immediately lost over 30% of my stash so 20K is a walk in the park . I cut expenses and despite one stupid move I have fully recovered and then some .
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Old 08-22-2013, 07:19 PM   #22
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I like the idea of living on your retirement income for a year or two. Except for the mortgage (and large extra principal payments). DW and I largely do that ... we are not extravegant people. But I really need to formalize the exact budget and get DW on board with it.
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Old 08-22-2013, 08:09 PM   #23
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Originally Posted by Steelart99 View Post
I like the idea of living on your retirement income for a year or two. Except for the mortgage (and large extra principal payments). DW and I largely do that ... we are not extravegant people. But I really need to formalize the exact budget and get DW on board with it.
Keep track of all expenses for at least two years. I also retired in Jan 2008 but took only a 17 % hit the first year due to my AA. Since I had tracked expenses for about 4 years prior to retiring, I knew what to expect and therefore lived off less than a 2% WR. Things have recovered nicely, but I am still living with a less than 2% WR (and that is without a formal budget!).
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Old 08-23-2013, 06:38 AM   #24
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I'd like to ER in about 1-2 years at age 55-56 at which point we should have about $650K (401k, IRA) plus $100K real estate and $220K home equity. At that age, I could take early withdraw from my 401K. At 58+, I could also start using 2 non-COLA pensions although I'd like to postpone those some to get a somewhat higher rate. My DW is 8 years younger, and also has a non-COLA pension that is at minimum of 10 years away. What is really driving us is trying to get our mortgage paid off to minimize our post-ER expenses. We pay triple principal now and have some real estate we could sell in a couple of years to put towards that goal.

So, my various FireCalc (and other program) calculations keep putting me at being marginal based on what I expect our yearly expenses to be ($55K-$60K pre-tax). I do have a hobby/side business that I'll be pursuing that might provide enough income, but that is not assured. So, I keep coming back to minimizing expenses and the respones here are encouraging that.

The marginal nature of my calcualations is why I started this thread to see how well the various programs projected "reality".
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Old 08-23-2013, 09:04 AM   #25
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I'd like to ER in about 1-2 years at age 55-56 at which point we should have about $650K (401k, IRA) plus $100K real estate and $220K home equity. At that age, I could take early withdraw from my 401K. At 58+, I could also start using 2 non-COLA pensions although I'd like to postpone those some to get a somewhat higher rate. My DW is 8 years younger, and also has a non-COLA pension that is at minimum of 10 years away. What is really driving us is trying to get our mortgage paid off to minimize our post-ER expenses. We pay triple principal now and have some real estate we could sell in a couple of years to put towards that goal.

So, my various FireCalc (and other program) calculations keep putting me at being marginal based on what I expect our yearly expenses to be ($55K-$60K pre-tax). I do have a hobby/side business that I'll be pursuing that might provide enough income, but that is not assured. So, I keep coming back to minimizing expenses and the respones here are encouraging that.

The marginal nature of my calcualations is why I started this thread to see how well the various programs projected "reality".

Just a couple of points (or so). Most on the forum do not count personal residence as part of their "invested assets" - that is, those assets from which we plan to draw at what ever level FIrecalc says we may (and also at what ever level we feel comfortable drawing). IF you plan to cash out your residence, it's probably okay to include the total in your "stash" number, but keep in mind that rent would need to be added to expenses. If I'm covering old ground for you, I apologize.

While Firecalc may be saying "Just about there" or "Nearly okay", if it were me (and it is NOT), I would either try to trim the budget significantly, w*rk longer, establish that "hobby business" first, or maybe some combo of these and others you might think of. Point is, you do not appear to have a lot of slack. Now, many on the forum live on less and I'm sure you could adapt. You just need to be certain that it would be okay if, at some time, you had to cut back your spending by say 20 to 40% or more for a few years (to get through a rough patch in the markets or unexpected HC expenses, etc., etc. etc..

Not actually offering advice except perhaps to think about these things (and what others may well add).

Best of luck. Sounds like you are getting close and have a fairly good handle on where you are going and how to get there. Don't forget that YMMV.
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Old 08-24-2013, 09:33 AM   #26
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I'd thrown in the residence more for an indicator of what I still owed to get this darn thing paid off. We love where we live and plan to stay here. I have a seperate plot of land worth about $100K that I'll sell at some point (I hope) to pay off the remaining mortgage when the remainder is about $100K. That I do consider as an asset. We'd love to not have a mortgage upon retiring (or shortly thereafter).

My post-retirement budget is coming in lower than our current expenditures, but not by a huge amount. I'd added in $5K per year as an emergency fund and about $800/month medical (total for DW and I). We've been fairly frugal other than all the gifts we give to our extended family for birthdays, X-mas, etc. One thing I just found out ... and I feel stupid ... is that SS and Medicare is not charged on withdraws from retirement accounts (This is right ... right?).

My side business was fairly established at one time, but has languished a bit over the last several years. Easily "revived" I believe. Something I enjoyed doing and made a fair income. I should get it moving again before I pull the trigger along with living on my reduced budget. All good points!!! I like the point you made ... what would I do if I had to further reduce my budget by 20-40%. Hmmmmmm .... gonna think on that one.
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Old 08-24-2013, 05:53 PM   #27
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When you say Firecalc is marginal different people consider it differently. There are some people here who would think 99% was marginal. I personally tend to shoot for 95% and I was going over it with DH a couple of months ago and he felt 80% was good enough.

I have found that if I run a place it come out at say 95% I can get it to 100% with very minor changes in the plan. Even getting from 90% to 100% doesn't take a whole lot.

On the other hand if by marginal you mean your plan is at 45% then getting to even 90% is going to be challenging.

So how marginal is marginal in your plan?
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Old 08-24-2013, 09:06 PM   #28
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So how marginal is marginal in your plan?
I read an interesting perspective once on ER and "success rates". The claim was that looking at history - there is about a 20% chance of a dramatic change in economic & political conditions within a given 30-40 year period. The takeaway being - success rates computed by a calculator based on our present societal conditions have no way of taking that into account and it may be naive to strive for greater than ~80% success rates.
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Old 08-25-2013, 05:34 AM   #29
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Katsmeow, I tended to be marginal when I set goals for 100%. Ususally I ended up in the 80s to llow 90s ... yeah, I tend to be a bit conservative and my DW is a cronic worrier. When I first started using FC, I had 100% success in many of the scenarios I built, but then I started using the Manual Entry of Spending Changes to accomodate the out year purchases (cars) and to cover 2-3 years of accelerated mortgage payments (3X principal) along with adding in about $5K per year for emergency expenses.

I obviously have "issues" in the early years of my "planned" ER date before I can hit any of our pensions or SS. I'd be relying on early disbursement of my 401K and my hobby business which I know will bring in some income. DW may also keep working for a few years ... she doesn't think it's "fair" that she can retire long before the time that her parents did. I started this thread to get some insight into how the various programs projected success, knowing all the caveats. I'm getting some great perspectives!!!
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Old 08-25-2013, 06:03 AM   #30
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My post-retirement budget is coming in lower than our current expenditures, but not by a huge amount. I'd added in $5K per year as an emergency fund and about $800/month medical (total for DW and I). We've been fairly frugal other than all the gifts we give to our extended family for birthdays, X-mas, etc. One thing I just found out ... and I feel stupid ... is that SS and Medicare is not charged on withdraws from retirement accounts (This is right ... right?).
Correct, payroll taxes were collected on your income when it was earned, even as you allocated it to tax deferred accounts, so your only remaining liability is income tax, both state and federal.

$800 per month for medical looks a bit light. The national average is about twice that amount just for premiums.
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Old 08-25-2013, 06:27 AM   #31
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Correct, payroll taxes were collected on your income when it was earned, even as you allocated it to tax deferred accounts, so your only remaining liability is income tax, both state and federal.

$800 per month for medical looks a bit light. The national average is about twice that amount just for premiums.
Interesting ... EhealthInsurance gave me a quote of $516/mo with $1K deductible for myself and family. My company has a retiree health insurance plan, but they won't give me any sort of quote until I'm actually within 90 days of retirement. How helpful is THAT for planning to retire? Here, I thought I was being a bit conservative by putting in $800/mo. I'll have to research this some more.
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Old 08-25-2013, 12:03 PM   #32
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Interesting ... EhealthInsurance gave me a quote of $516/mo with $1K deductible for myself and family. My company has a retiree health insurance plan, but they won't give me any sort of quote until I'm actually within 90 days of retirement. How helpful is THAT for planning to retire? Here, I thought I was being a bit conservative by putting in $800/mo. I'll have to research this some more.
Was the eHealth quote underwritten? Usually what they give you is not so much a quote, as in firm offer, but a price that might be if you meet all the underwriting requirements. To get this you must apply.

You can get an idea of healthcare costs using one of the new calculators, here Subsidy Calculator | The Henry J. Kaiser Family Foundation and here National Health Care Calculator . The national average health care premium for large group coverage in 2012 was $5.6K individual, $15.7K family. This number does not include any type of cost sharing, such as co-pays or deductibles.

If I were building a budget or projecting future expenses I would use the national averages, or perhaps a bit more, unless I had a reliable alternative already approved or available.
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Old 08-25-2013, 02:20 PM   #33
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Was the eHealth quote underwritten? Usually what they give you is not so much a quote, as in firm offer, but a price that might be if you meet all the underwriting requirements. To get this you must apply.

You can get an idea of healthcare costs using one of the new calculators, here Subsidy Calculator | The Henry J. Kaiser Family Foundation and here National Health Care Calculator . The national average health care premium for large group coverage in 2012 was $5.6K individual, $15.7K family. This number does not include any type of cost sharing, such as co-pays or deductibles.

If I were building a budget or projecting future expenses I would use the national averages, or perhaps a bit more, unless I had a reliable alternative already approved or available.
Excellent links, Thanks. I need to make sure that I have this covered appropriately in my budget. Crazy what the cost of Health Insurance is these days.
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Old 08-25-2013, 03:10 PM   #34
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The takeaway being - success rates computed by a calculator based on our present societal conditions have no way of taking that into account and it may be naive to strive for greater than ~80% success rates.
My view is a little different. Given that growth rates may possibly be more moderate over the next few decades than in the past, I tend to think that it may be naive to strive for anything less than a 100% success rate in Firecalc. This is a reflection of my own financially conservative nature.

Of course, Firecalc doesn't predict the future, so we are all free to interpret it's results in the manner that best suits our own individual outlooks.
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Old 08-25-2013, 03:37 PM   #35
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I read an interesting perspective once on ER and "success rates". The claim was that looking at history - there is about a 20% chance of a dramatic change in economic & political conditions within a given 30-40 year period. The takeaway being - success rates computed by a calculator based on our present societal conditions have no way of taking that into account and it may be naive to strive for greater than ~80% success rates.
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My view is a little different. Given that growth rates may possibly be more moderate over the next few decades than in the past, I tend to think that it may be naive to strive for anything less than a 100% success rate in Firecalc. This is a reflection of my own financially conservative nature.

Of course, Firecalc doesn't predict the future, so we are all free to interpret it's results in the manner that best suits our own individual outlooks.
I'm with Major Tom, and I've commented on this before. Yes, you can't think in terms of 85%, 90%, 95%, or 100% as absolute values going forward (and how would we ever know, even after the fact? Like the weather forecast for a 50% chance if rain - 'right' no matter what?). But how can it not be true that a plan that had 100% historical success would not be safer in the unknown of the future than one with 85% historical success?

I am also not comfortable with a plan that I know has failed in past scenarios. Again, that is no guarantee of future success, but given that the worst future scenarios may be worse than the worst past scenarios, why not build in some safety factor?

How is that 'naive'? It seems prudent to me. Others may be fine with the higher risk of a historically 80% safe plan, but it is a higher risk. I don't see how that can be denied.

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Old 08-25-2013, 04:17 PM   #36
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Agreed ERD50 - and another reason I'd like to build some extra safety into my plan over what, say, a 90% success rate would give me is that I'd like, as much as possible, to avoid the outcomes that take my portfolio down to a level that might cause me to lose sleep.

I currently have an ~2.5% WR which gives me a much better than 100% success rate over 40 years (is there such a thing as better than 100%? Well, you know what I mean) - and that is not even including my SS, which gives me more of a safety factor.

I'm thinking that if you use a WR that gives you an 85% success rate, for example, while your portfolio may well always support your desired WR, you are running a greater risk of it sinking to some rather scary low levels while continuing to support you. I want to avoid those scenarios if at all possible.
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Old 08-25-2013, 06:05 PM   #37
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Agreed ERD50 - and another reason I'd like to build some extra safety into my plan over what, say, a 90% success rate would give me is that I'd like, as much as possible, to avoid the outcomes that take my portfolio down to a level that might cause me to lose sleep.

I currently have an ~2.5% WR which gives me a much better than 100% success rate over 40 years (is there such a thing as better than 100%? Well, you know what I mean) - and that is not even including my SS, which gives me more of a safety factor.

I'm thinking that if you use a WR that gives you an 85% success rate, for example, while your portfolio may well always support your desired WR, you are running a greater risk of it sinking to some rather scary low levels while continuing to support you. I want to avoid those scenarios if at all possible.
My intent in posting that comment wasn't to say you shouldn't plan conservatively. The idea I mentioned came from Bill Bernstein in a series of articles that he wrote ~10 years ago (before FireCalc existed) where he stated that the retirement calculators and assumptions which were available at that time were too optimistic.

So I think we're on the same page - optimize to the extent you can with the tools you have. Mr. Bernstein just reminds us that at some point your true of risk failure is dominated by factors that are not estimable by simulations like FireCalc.

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Old 08-25-2013, 06:35 PM   #38
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I read an interesting perspective once on ER and "success rates". The claim was that looking at history - there is about a 20% chance of a dramatic change in economic & political conditions within a given 30-40 year period. The takeaway being - success rates computed by a calculator based on our present societal conditions have no way of taking that into account and it may be naive to strive for greater than ~80% success rates.
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So I think we're on the same page - optimize to the extent you can with the tools you have. Mr. Bernstein just reminds us that at some point your true of risk failure is dominated by factors that are not estimable by simulations like FireCalc.
Because most of us here are extremely bought-in to the current system, we don't often stare-down the beast that would be "dramatic change". It's just too uncomfortable. So we spend our time putting finer and finer points on FireCalc inputs when the whole graph could be shifted down by 40% with the stroke of a pen or the sudden loss of faith in creditworthiness. I wish it wasn't a house of cards, but I do think it is. The good news is that societies tend to be pretty resourceful, so even in the face of dramatic change, we can get through it. But I'd be real surprised if my real personal FireCalc line follows any of the badjillion lines it dutifully plots for me.
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Old 08-25-2013, 06:42 PM   #39
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My intent in posting that comment wasn't to say you shouldn't plan conservatively. The idea I mentioned came from Bill Bernstein in a series of articles that he wrote ~10 years ago (before FireCalc existed) where he stated that the retirement calculators and assumptions which were available at that time were too optimistic.
Understood now. As is my wont, I was interpreting your comment through the narrow filter of my own experience, as opposed to attempting to understand the context in which you made it.

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when the whole graph could be shifted down by 40% with the stroke of a pen or the sudden loss of faith in creditworthiness.
...or as Bernstein puts it, we could be visited by "the ghosts of Hitler, Lenin, and Attila the Hun"
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Old 08-25-2013, 10:00 PM   #40
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Because most of us here are extremely bought-in to the current system, we don't often stare-down the beast that would be "dramatic change". It's just too uncomfortable. So we spend our time putting finer and finer points on FireCalc inputs when the whole graph could be shifted down by 40% with the stroke of a pen or the sudden loss of faith in creditworthiness. ...
Sure, 'dramatic change' could happen (heck, I've already seen my portfolio down ~ 40%). But wouldn't it still be better to have about a third more after that drop (roughly - the portfolio to support 3% versus 4% WR)?

This is getting to sound a little like saying that I decided not to carry a spare tire, because I could have two flats at the same time, and then that single spare won't help me. But the single spare will help in most cases.

There is no certainty, and we can't plan for every possible future extreme. I've decided to plan for at least what we have seen, and not ignore history.

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