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Vanguard Investment Plan v. FIRECalc Results
Old 05-18-2014, 01:40 PM   #1
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Vanguard Investment Plan v. FIRECalc Results

Hi. I have a follow up appointment with a Vanguard CFP tomorrow to discuss the investment plan that they prepared for me. I am concerned about the results when I compare their numbers to the numbers I have generated through FIRECalc.

There are a couple of variables where I understand why the Vanguard results may not show success as high as the results I obtain with FIRECalc. For example, Vanguard used 100 years as my life expectancy whereas I have thus far used 88 years in FIRECalc. And Vanguard used a 50% stock 50% bond allocation whereas I have run FIRECalc simulations with a 60% stock 40% bond allocation.

The Vanguard result says that I have a 57% likelihood of success if I implement my retirement as it stands today. FIRECalc says that I have a 65% likelihood of success. Not vastly different.

But Vanguard has my total annual retirement expenses much higher than I have been using. Vanguard is estimating that my federal and state tax liability will be about 17.5% in addition to my annual retirement expenses. Based on my own TaxCaster runs, I was approximating my retirement federal and state tax liability at approximately 5.5%.

Vanguard shows my fixed rate mortgage payments increasing slightly on an annual basis. Why would a fixed rate mortgage payment increase with time?

FIRECalc suggests that my current investment portfolio could support an annual retirement spending of $45,164 with 95% likehood of success. Vanguard suggests that my investment portfolio could only support $42,700 in annual retirement spending with 57% likelihood of success. I don't understand the drastic difference.

Is there someone willing to take a look at the Vanguard plan to give me some insight as to why the Vanguard plan is not as encouraging for my retirement goal as is the results I get with FIRECalc? If so, send me a private message, so I can show you the Vanguard plan. Thanks.
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Old 05-18-2014, 03:17 PM   #2
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Because you have more control over the variables going into FireCalc, why don't you change those variables to match the ones Vanguard used? Then see how far apart the two plans are.

Our federal taxes are currently in the 3% - 5% of gross range, but will increase by several times when RMDs and SS start (9 - 13 years from now); your 5.5% projection might be too low. Everybody's situation is different, though.
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Old 05-18-2014, 05:22 PM   #3
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Quote:
Originally Posted by Rustward View Post
Because you have more control over the variables going into FireCalc, why don't you change those variables to match the ones Vanguard used? Then see how far apart the two plans are.

Our federal taxes are currently in the 3% - 5% of gross range, but will increase by several times when RMDs and SS start (9 - 13 years from now); your 5.5% projection might be too low. Everybody's situation is different, though.
Yes, I may have estimated my retirement tax liability too low. It just concerns me that there seems to be such a difference in potential outcomes between the Vanguard plan and FIRECalc. I have read a few other threads involving Vanguard retirement plans and at least some people have reported that the Vanguard plan pretty much confirmed what they had planned through FIRECalc.
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