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Old 01-17-2014, 03:57 PM   #21
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Isn't the problem with homegrown charts the sequence of returns thing? That is, if you have a couple of really bad years particularly early on it may deplete the portfolio enough that you can't recover even if you have good returns after that and your "average" return is good. That is why Firecalc is helpful.

You might also try the Fidelity Retirement Income Planner which is pretty detailed.

Originally Posted by Z3Dreamer View Post
Not my post, but what are people comfortable with on a Firecalc %? Is 90% good or do you continue OMY until 95%? Lets say a 35 year retirement with 60/40 AA.
As mentioned, lots of people vary on this. In our case, I'm about a 95-98% person providing I can actual see ways that are not to painful to adjust spending if we fall in the 2% or 5%. DH, on the other hand, is fine with about an 80% success rate. He thinks that it is hard to ever get more precise than that and he figures he can adjust and make anything work if he had to. As it turns, out we actually currently get 100% from Firecalc so it is sort of a moot point for us whether to do it my way or his way.

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Old 01-19-2014, 08:32 AM   #22
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Originally Posted by Theseus View Post
And a fourth - meteorites
Yes, my comment was kind of stating the obvious. I guess I was struck by the impact of your assumption that SS would lose 1.5% of its purchasing power every year. That seems like a plausible way to model the SS risk, but it's important to your bottom line.

My "meteorite" was expenses that we hadn't anticipated. Stuff happens.


interesting way to look at the problem as a spending gap - thanks for the thoughtful analysis. I'll admit to being somewhat baffled by the SS claiming variations, for now I'm just using either age 62 or FRA values, guess I'll need to wrap my head around the PIA (aptly named, if I must say say) formulas. Tried that more than once, and gave up in disgust. To me, the real risk is dismal market returns, and that is what the FireCalc success rate looks out for, what are the odds of the worst possible past scenarios occurring. Inflation - yes I recall the seventies, although at the time it seemed kind of neat to be getting raises so often, as I wasn't so much into buying staples other than beer back then. Runaway inflation in the future; well that is kind of like Armageddon, zombies, or meteorites in my book - everyone will be hurting, preparation for that is about more than the pocketbook.
I don't think you need to worry about PIA formulas. I was just using that as a shorthand for "benefit if you retire at your full retirement age". That number isn't going to move (other then some indexing adjustments) after you retire. The claiming strategies are based on what fraction of the PIA you get if you retire before or after your FRA, and the ability of a surviving spouse to "step into the shoes" of the person who died earlier. My impression is that there's not a lot of gold there, but maybe a little marginal gain.

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