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My FIRECalc 100% = What am I missing?
Old 07-13-2019, 07:23 AM   #1
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My FIRECalc 100% = What am I missing?

Hi FIRE community,
First, I'd like to thank everyone for making this organization such a fantastic source of ideas, insight, experiences, and information.

I value the benefits of this organization so much that I have put a precondition on my nephews' and niece's university graduation gifts ($1000); they need to enroll in early-retirement.org to receive the gift!

Hopefully, they'll understand the magnitude of money in their young lives.

Okay, my FIRECalc conundrum:
I putz around with the calculator and it is staying 100% every time. I am single, no kids, no debt, have Tricare healthcare until Medicare, whatever is left will go to the aforementioned nephews and niece, I own nothing, and I live minimally.

Tab 1:
Spending: $120,000/year $10,000/month
Portfolio: $1,126,000
Years: 47 (I'm 53, financial planning to 100)
Tab 2:
SS: $20,676 @2035 age 70, I'm rounding down the SS estimate.
Pension: $75,000 (I already receive this military and VA stipend annually.
Tab 3:
Retire in 2021 @ 55 years old.
Tab 4:
Inflation 3% CPI
Constant Spending Power
Tab 5:
Total Market 70% equities 30% Bonds
Tab 6 and 7: N/A

I will probably never spend $10,000 a month, will probably live abroad somewhere cheaper than USA (Thailand, Costa Rica, etc).

I do have a 93 year old mother who will be out of money in 2 years. Us five siblings will pay for her expenses after that, if need be. This is probably (as I reflect) the only reason why I haven't FIRE'd yet.

What am I missing?
Can I pull the plug in 2 years?

I'm prepared for the 'murder board'...
Fire away!
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Old 07-13-2019, 08:24 AM   #2
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You aren't missing anything. You have a floor of $75k/year under you with the pension, so the $1.126M only needs to generate 4%/year without touching the principal until age 70. Then when your SS kicks in, the portfolio only needs to generate 2%, again, without touching the principal.

You can pull the plug today if you like.
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Old 07-13-2019, 08:48 AM   #3
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Originally Posted by njhowie View Post
You aren't missing anything. You have a floor of $75k/year under you with the pension, so the $1.126M only needs to generate 4%/year without touching the principal until age 70. Then when your SS kicks in, the portfolio only needs to generate 2%, again, without touching the principal.

You can pull the plug today if you like.
Yup, your numbers look good.

One question, I assume your pension is COLAed (inflation adj in FIRECalc), correct?

Also note that the inflation assumption is CPI or 3.0% (or whatever fixed rate you want to investigate).
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My FIRECalc 100% = What am I missing?
Old 07-13-2019, 09:13 AM   #4
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My FIRECalc 100% = What am I missing?

I’m coming up with similar results. On the Investigate tab I set the success rate to 100% and checked your maximum spending level. Using the CPI as the basis for your spending level adjustments, you are maxed out at $120,000 per year.

Questions to consider:

So how big of a financial impact would helping your mom potentially be? Have you tracked your actual current spend? How solid is that number? If you haven’t tracked it, download your activity from your bank for the last twelve months and see what you actually spent this past year.

Be sure to adjust that amount, if necessary, for any large unusual one time amounts (perhaps a car purchase), or if you perhaps travel for business and get reimbursed for expenses run through your personal account. Both of those will skew your spend rate.

Does your pension have COLA (cost of living adjustments)? The FIRECalc default assumes YES. If your pension doesn’t have COLA, then uncheck the associated box on the Other Income/Spending tab.

Likewise will you be adding to your portfolio between now and retirement (payroll deductions to a savings plan or any other savings)? Those dollars can be added to FIRECalc on the Not Retired tab.

Additionally you can also adjust for any future large one-time additions to or subtractions from your portfolio such as receiving an inheritance or perhaps buying a house.

Lastly there is talk about SS payments getting a significant haircut somewhere around 2034 based upon current actuarials. Estimates I’ve see run in the range of around 25% give or take. Would you be able to adjust your spend for the shortfall from SS?
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Old 07-13-2019, 09:18 AM   #5
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Yup, your numbers look good.

One question, I assume your pension is COLAed (inflation adj in FIRECalc), correct?

Also note that the inflation assumption is CPI or 3.0% (or whatever fixed rate you want to investigate).
Agreed, especially on that 3% inflation assumption.

IMO, the power of FIRECalc is in using historical data. Don't enter assumptions, use the historical CPI. Do you know inflation was in the teens in the 80's? Do you know that retiring around 1966 was the worst timing, largely because you hit the 80's inflation?

-ERD50
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Old 07-13-2019, 09:36 AM   #6
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Op, your numbers look great. To change it up a bit, instead solving for the success rate, try solving for max spending. You do this by going to the investigate tab and solve for spending level at 100% success. What this will do is show you how much over your $120k you could spend. This lets you know how much, based on history, you are over funded. IWO, if the max spending is $130K, you are slightly over funded. If it comes up at $180K, you have a pretty good cushion in case the future is worse than the past.
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Old 07-13-2019, 09:41 AM   #7
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Op, your numbers look great. To change it up a bit, instead solving for the success rate, try solving for max spending. You do this by going to the investigate tab and solve for spending level at 100% success. What this will do is show you how much over your $120k you could spend. This lets you know how much, based on history, you are over funded. IWO, if the max spending is $130K, you are slightly over funded. If it comes up at $180K, you have a pretty good cushion in case the future is worse than the past.
+1 This gives more resolution that % success, and as pointed out, can tell you how much cushion you have above 100%.

-ERD50
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Old 07-13-2019, 10:04 AM   #8
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+1 here too... in fact, I think you could retire now and not wait until 55 if you want to.
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Old 07-13-2019, 10:11 AM   #9
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Originally Posted by nvgs123 View Post

... I am single, no kids, no debt,

... have Tricare healthcare until Medicare

... Pension: $75,000 (I already receive this military and VA stipend annually
You don't need no stinkin' retirement calculator, FIRECalc included.

Just the above info is enough for most people to pull the rip cord, and they would need no SS or personal savings either, though those are very nice icing on the cake.
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Old 07-13-2019, 11:13 AM   #10
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Agreed, especially on that 3% inflation assumption.

IMO, the power of FIRECalc is in using historical data. Don't enter assumptions, use the historical CPI. Do you know inflation was in the teens in the 80's? Do you know that retiring around 1966 was the worst timing, largely because you hit the 80's inflation?

-ERD50
On a related note, it appears that at the default assumptions, when one uses 3% vs. CPI, the numbers come out a bit worse.
So mechanically if one uses 3%, does the 3% rate effectively substitute for the actual CPI in those 80's inflation years?
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Old 07-13-2019, 11:36 AM   #11
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On a related note, it appears that at the default assumptions, when one uses 3% vs. CPI, the numbers come out a bit worse.
So mechanically if one uses 3%, does the 3% rate effectively substitute for the actual CPI in those 80's inflation years?
Yes I think so. The worse result is from the magic of compounding.

Contrary to a lot of commenters here and on BH who seem to think 4-5% is "normal" based on overweighting the 1970s experience, the long-term inflation rate for the U.S. is less than 3%. https://www.multpl.com/inflation

EDIT - "long-term" approximating the period considered in FIRECalc.
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Old 07-13-2019, 11:51 AM   #12
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Originally Posted by Dtail View Post
On a related note, it appears that at the default assumptions, when one uses 3% vs. CPI, the numbers come out a bit worse.
So mechanically if one uses 3%, does the 3% rate effectively substitute for the actual CPI in those 80's inflation years?
I guess I don't care if it comes out better or worse, CPI reflects reality far better than any static average. If you want to take something from the "scary dips" in your portfolio that FIRECalc shows you, you need to include the contemporaneous inflation component to show the erosion in buying power.

You wanna do revisionist history, that's up to you.

That said, it's interesting to see how a static average compares, but not very useful.

Recall the story of the 6 foot tall statistician drowning in the pool of average 3' depth.

-ERD50
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Old 07-13-2019, 12:08 PM   #13
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I guess I don't care if it comes out better or worse, CPI reflects reality far better than any static average. If you want to take something from the "scary dips" in your portfolio that FIRECalc shows you, you need to include the contemporaneous inflation component to show the erosion in buying power.

You wanna do revisionist history, that's up to you.

That said, it's interesting to see how a static average compares, but not very useful.

Recall the story of the 6 foot tall statistician drowning in the pool of average 3' depth.

-ERD50
Relax ERD50, I agree with you. Just interested in the math and what ifs.....
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Old 07-13-2019, 12:31 PM   #14
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Congratulations.
Nice pension.
Looks like your time in service paid off. Don't think my captain rank would have done that well. Probably should have stayed in the army.
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Old 07-14-2019, 06:43 AM   #15
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I value the benefits of this organization so much that I have put a precondition on my nephews' and niece's university graduation gifts ($1000); they need to enroll in early-retirement.org to receive the gift!
A gift with conditions is no gift, IMO. Besides, how are you going to enforce this? Stand over them while they sign up? How will you force them to read the forums?
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Old 07-14-2019, 06:49 AM   #16
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A gift with conditions is no gift, IMO. Besides, how are you going to enforce this? Stand over them while they sign up? How will you force them to read the forums?
Slightly OT, but in the last ten years I have referred many people my age to this board. I'm fairly certain not one of them even stopped by for a look. I'm OK with that because 1) it's their loss and 2) as the years go by I have talked about more personal and intimate things and I prefer the anonymity.
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Old 07-14-2019, 06:50 AM   #17
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^^^ +1
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Old 07-14-2019, 06:59 AM   #18
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A gift with conditions is no gift, IMO. Besides, how are you going to enforce this? Stand over them while they sign up? How will you force them to read the forums?
I am just pointing them in a direction that can help...if they do nothing with the website that is their choice. I told them the money is theirs to do as they wish...but just look at and sign up for the site.
I'm sure one will, I'm sure one wont, and I'm not sure about the third...
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Old 07-14-2019, 10:30 AM   #19
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I dunno about telling younguns to frequent this forum.

People who still have many long years of toiling 8 to 5 would go crazy reading about posters here putzing around all day, exchanging info on foreign travel, how to blow dough.

They would go totally nuts, sulk in despair inside their cubicle, cry all over their keyboard.
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Old 07-14-2019, 12:01 PM   #20
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I dunno about telling younguns to frequent this forum.

People who still have many long years of toiling 8 to 5 would go crazy reading about posters here putzing around all day, exchanging info on foreign travel, how to blow dough.

They would go totally nuts, sulk in despair inside their cubicle, cry all over their keyboard.
Ah ha, but they can get great advice on the financial end. I am guessing my retirement could have been at least 2 years earlier and more efficient use of my 401k going forward, if I knew about this site upon inception.
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