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meaning of calculated portfolio balance
Old 12-19-2004, 03:52 PM   #1
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meaning of calculated portfolio balance

can someone answer my question: is the calculated mean firecalc portfolio balance to be understood in terms of todays
buying power?
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Re: meaning of calculated portfolio balancehttp://
Old 12-20-2004, 07:44 AM   #2
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Re: meaning of calculated portfolio balancehttp://

FIRECalc balances are all in nominal dollars. That is, they have no adjustment for inflation.

You can convert FIRECalc balances to real dollars (i.e., with constant buying power) by taking advantage of Yale Professor Robert Shiller's data. His data provide the inputs to FIRECalc and other historical sequence calculators

Professor Shiller's home page is:
http://www.econ.yale.edu/~shiller/
You can download his data from this address:
http://www.econ.yale.edu/~shiller/data.htm

Have fun.

John R.
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Re: meaning of calculated portfolio balance
Old 12-20-2004, 10:09 AM   #3
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Re: meaning of calculated portfolio balance

FIREcalc was derived from intercst's spreadsheet. * The spreadsheet has the additional option of giving you terminal values in real dollars.

http://retireearlyhomepage.com/re60.html
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Re: meaning of calculated portfolio balance
Old 12-20-2004, 12:48 PM   #4
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Re: meaning of calculated portfolio balance

Dory36 has discussed the comparisons between the Retire Early Safe Withdrawal Calculators and FIRECalc at this forum, the Technical Forum - Calculators.

Read FIRECalc - Retire Early Spread Sheet Comparison dated November 4, 2003.
http://early-retirement.org/cgi-bin/...num=1067992316

I have extracted the following:
Quote:
I can't answer for Intercst - but he is the author of the spreadsheet, so he certainly knows how it works.

Now, about why they differ:

They both used the same data when written, but they aren't the same program. In writing Firecalc, I worked from scratch in developing the algorithms, rather than trying to reverse-engineer Intercst's spreadsheet. There are probably a few differences in such things as when the expenses are deducted from the portfolio (before or after inflation is applied that year?), for example.

In addition, there were some deliberate differences, such as applying the first withdrawal immediately upon retirement rather than 364 days later..Also, I felt that the bad years of the late 60s were being left out of too many analyses for the 40 year runs many people were doing, so my analysis includes partial cycles, such as 1969-2001, when Intercst's spreadsheet stopped the analysis at 1961 for the 40 year runs. This lets me catch more failures for those years, but also changes the numbers used in the success rate equation.
..
Have fun.

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