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10-26-2018, 05:15 PM
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#21
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,584
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When I first used FIRECalc we were at around 80% success rate (portfolio survival). That seemed adequate at the time - I had already quit working, we were living off the portfolio and I had no desire to go back to work. Last year it hit 100%, and now it's down a bit to around 95% or so, as we've increased our travel spending.
My guess is my longevity calculator will fail long before the portfolio calculator.
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10-26-2018, 05:31 PM
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#22
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2017
Location: City
Posts: 10,334
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I think retirement calculators are a variation of the old problem: Garbage in, gospel out.
First, they cannot predict the future. The best they can do is to assume the future will be like the past. But what past? Looking back 30 years average inflation is like 2.6%. Look back another ten years, incorporating the late 70s/early 80s excitement and you get a 40 year average of 4.1%. And were the 2000s like the 1980s? And will the dollar still be the world's reserve currency in 20 years?
Second, by delivering multidigit numbers they mislead as to their accuracy. I think 80% is probably the same as 100% and anything in that range could reasonably be reported as "looking good" followed by a page of fine print disclaimers.
Third, by nature they cannot be validated. In the case of FireCalc there would have to be a statistically significant number (1,000?) of forum users dead and reporting their results before you could evaluate the accuracy of its predictions.
So, I think they can be a lot of fun but (with respect to the OP) I don't think the numbers mean all that much beyond very general categories like "probably not," "maybe but dicey," "maybe and optimistic," and "looking good."
Nate Silver, in " the signal and the noise" tells a story about WWII weather forecasters who were asked for a D-Day weather forecast some months ahead of the date. They said they had no idea. Word came back from on high ordering them to produce a forecast because it was needed for planning.
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10-26-2018, 05:47 PM
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#23
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,151
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My favorite posts involve folks who are wailing and gnashing their teeth over how absolutely miserable they are working at their jobs and how they can't wait for the next few years to pass. Yet, they calculate the savings nut they want to reach with highly conservative numbers such as:
1. exaggerated spend rates
2. long, long life expectancies
3. all possible black swans and catastrophic events occur (some more than once)
4. investment returns and inflation rates worse than any historically
5. etc., etc.
Maybe their working lives aren't as bad as they portray? Or why would they wildly spend their most precious commodity, time, when they can easily afford to FIRE?
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
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10-26-2018, 05:47 PM
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#24
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Recycles dryer sheets
Join Date: May 2013
Posts: 327
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I do not disagree - file calculators under "the best tool we have."
It may not be great, but it's all I got.
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10-26-2018, 05:51 PM
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#25
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Posts: 5,342
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Quote:
Originally Posted by youbet
My favorite posts involve folks who are wailing and gnashing their teeth over how absolutely miserable they are working at their jobs and how they can't wait for the next few years to pass. Yet, they calculate the savings nut they want to reach with highly conservative numbers such as:
1. exaggerated spend rates
2. long, long life expectancies
3. all possible black swans and catastrophic events occur (some more than once)
4. investment returns and inflation rates worse than any historically
5. etc., etc.
Maybe their working lives aren't as bad as they portray? Or why would they wildly spend their most precious commodity, time, when they can easily afford to FIRE?
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I have often wondered the same thing. It seems like the majority of people on this forum are very likely to die millionaires. To me that just means they worked several years too long.
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10-26-2018, 06:02 PM
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#26
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,006
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Quote:
Originally Posted by MichaelB
When I first used FIRECalc we were at around 80% success rate (portfolio survival). That seemed adequate at the time - I had already quit working, we were living off the portfolio and I had no desire to go back to work. Last year it hit 100%, and now it's down a bit to around 95% or so, as we've increased our travel spending.
My guess is my longevity calculator will fail long before the portfolio calculator.
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Bernstein had a series of articles called "The Retirement Calculator from Hell" where he postulated that 80% success rate was good enough, because anything could happen wreaking however carefully modeled a retirement might be. This is in Part III of The Retirement Calculator from Hell.
Quote:
Now, let’s return to the above table. The historically naïve investor (or academic) might consider reducing his monthly withdrawals to a very low level to maximize his chances of success. But history teaches us that depriving ourselves to boost our 40-year success probability much beyond 80% is a fool’s errand, since all you are doing is increasing the probability of failure for political, economic, and military reasons relative to the failure of banal financial planning.
Mind you, this is not a call for wild abandon. The above table constrains the retiree desiring a theoretical 97% success rate (of portfolio survival) from spending more than 3% per year of the initial real amount of his nest egg. Taking the accident propensity of the species into account would allow him to spend about 4%. But if you believe that we’re about to encounter a bad returns sequence or simply wish to leave a few baubles to your heirs, you’re right back to 3% again.
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The Retirement Calculator from Hell, Part III
Now about 9 years later, Bernstein seriously backpedals on his advice about AA oriented retirement investments in general, because he discovered that a large number of his clients were spooked out of the market in 2008/2009 and never got back in. Thereby ruining their chances of recovery.
Instead, he now recommends covering at least 20 years of (after pension, SS) income needs with high quality low-volatility investments - CDs, short-term bonds, TIPs, SPIAs and only when that was covered should you invest additional money in equities.
https://www.whitecoatinvestor.com/be...-win-the-game/
__________________
Retired since summer 1999.
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10-26-2018, 06:04 PM
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#27
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Recycles dryer sheets
Join Date: May 2013
Posts: 327
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Expect we who are likely to die millionaires get
OUTSIZED gratification from:
1) Sleeping well
2) Being able to weather downturns
3) Knowing we can withstand rather severe misfortunes
4) Enjoying itty-bitty "splurges" (like this foot massager I got this week and let me tell you it is so awesome)
I accept that others may not value these benefits as much as I do. (And I'm WAY on the low-end of these folks portfolio-wise-speaking.) Vade in pace
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10-26-2018, 06:06 PM
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#28
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,006
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Quote:
Originally Posted by aaronc879
I have often wondered the same thing. It seems like the majority of people on this forum are very likely to die millionaires. To me that just means they worked several years too long.
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Yet that can easily happen with just a series of good market runs after one retires. Something that absolutely cannot be determined in advance of retiring.
The alternative is not pleasant - not quite enough and then experiencing a series of bad market runs right after retiring.
You've got to do the best you can when you retire. Because you are truly rolling the dice. You don't really get a do over. You can go back to work - but it's not going to be the same - it may be hopeless returning to the same type of job and income when you left a couple of years earlier. The longer time passes, the tougher it's going to be.
__________________
Retired since summer 1999.
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10-26-2018, 06:10 PM
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#29
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Recycles dryer sheets
Join Date: May 2013
Posts: 327
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Quote:
Originally Posted by audreyh1
Yet that can easily happen with just a series of good market runs after one retires. Something that absolutely cannot be determined in advance of retiring.
The alternative is not pleasant - not quite enough and then experiencing a series of bad market runs right after retiring.
You've got to do the best you can when you retire. Because you are truly rolling the dice. You don't really get a do over. You can go back to work - but it's not going to be the same.
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I really wish this infrastructure had a "like" button. Because that would save me a hogshead of time.
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10-26-2018, 06:18 PM
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#30
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,202
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I can't even remember what it was but it was probably 100% to 95 or 100. I like the buffer. It not only protects against a bad market, but also unexpected expenses. I'm pretty sure I will die with a lot of money, but I would've absolutely hated going back to work if things started off badly, a lot more than milking the last few years of part-time income. 80% is probably good enough, but not good enough for me to sleep well. I probably was at at least 80% in late 2007, and I'd have been sweating bullets for a few years if I'd have pulled the trigger then.
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10-26-2018, 06:22 PM
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#31
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Recycles dryer sheets
Join Date: May 2013
Posts: 327
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Quote:
Originally Posted by RunningBum
I can't even remember what it was but it was probably 100% to 95 or 100. I like the buffer. It not only protects against a bad market, but also unexpected expenses. I'm pretty sure I will die with a lot of money, but I would've absolutely hated going back to work if things started off badly, a lot more than milking the last few years of part-time income. 80% is probably good enough, but not good enough for me to sleep well. I probably was at at least 80% in late 2007, and I'd have been sweating bullets for a few years if I'd have pulled the trigger then.
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Honestly did not expect most respondents to vote "100%!"
but this is exactly why I set this as my goal.
Sleeping well is the best medicine.
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10-26-2018, 06:24 PM
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#32
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Recycles dryer sheets
Join Date: May 2014
Posts: 412
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Quote:
Originally Posted by footenote
If you have used retirement calculators, what success percentage are you comfortable using / targeting?
Do you prefer historical (firecalc, ********) or Monte Carlo?
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I prefer historical and I use my own RIP tool that I developed.
Our withdrawal amount is low enough that the success rate is 100%.
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10-26-2018, 06:37 PM
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#33
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,151
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Quote:
Originally Posted by OldShooter
Third, by nature they cannot be validated. In the case of FireCalc there would have to be a statistically significant number (1,000?) of forum users dead and reporting their results before you could evaluate the accuracy of its predictions.
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I think Nate Silver would approve of the FireCalc methodology. It doesn't try to make predictions and emphatically says so in the instructions. It's just back-testing and needs to be taken strictly in that light. On this forum, we used to talk a lot about "if the future has no worse investment returns and inflation rates than the past" FireCalc output should be useful. Lately, however, that isn't mentioned as frequently.
But, again, FireCalc makes no predictions and there is nothing to validate. It's simply a back testing algorithm and data base.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
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10-26-2018, 06:38 PM
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#34
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Thinks s/he gets paid by the post
Join Date: Sep 2012
Posts: 1,568
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About 85%.
__________________
You know that suit they burying you in? Thar ain’t no pockets in that suit, boy.
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10-26-2018, 06:48 PM
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#35
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: Independence
Posts: 7,280
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My whole life I've done Eeyore probability. On Firecalc I figure a 95 year lifespan, inflation at 3.25%, portfolio at 3%, annual expenditures at about double what we are spending, selling all rentals right now and being left with 70% of the value the tax man calls "True Cash" value.
This while looking at my 69th birthday, NOT having sold the rentals, and having our net worth grow by about double the inflation rate. For unknown reasons I'm just happier pretending like I'm close to the edge.
__________________
"Be kind whenever possible. It is always possible." Dalai Lama
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10-26-2018, 06:58 PM
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#36
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,151
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Quote:
Originally Posted by audreyh1
Yet that can easily happen with just a series of good market runs after one retires. Something that absolutely cannot be determined in advance of retiring.
The alternative is not pleasant - not quite enough and then experiencing a series of bad market runs right after retiring.
You've got to do the best you can when you retire. Because you are truly rolling the dice. You don't really get a do over. You can go back to work - but it's not going to be the same - it may be hopeless returning to the same type of job and income when you left a couple of years earlier. The longer time passes, the tougher it's going to be.
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It's a matter of degree. What aaron879 and I are talking about are folks who go far beyond safety by vastly overstating desired spending and vastly understating sources of income while whining about being miserable at their jobs.
For example, in the past week or so I came across a post where the poster said he/she could live nicely on either a low WR from their FIRE portfolio or from their pension and SS. Either/or. Currently, he/she is retired and still saving because pensions and SS exceed spending. To me, that would be OK as long as time spent in the last few years of employment was enjoyable. But if that person was one of the folks who claim to be miserable while working......... well, what a waste of our most precious resource.
IOW, if you're truly miserable on the job and you're calculations include excessive padding of the numbers, you ought to consider that time is running through the hour glass...........
Or, as I suspect, these folks aren't as miserable working as they sound. They like to sound off about tough jobs, bad bosses, stress, etc., etc., but in fact that's just their nature and time spent in the harness suits them pretty well.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
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10-26-2018, 07:10 PM
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#37
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,202
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Quote:
Originally Posted by youbet
It's a matter of degree. What aaron879 and I are talking about are folks who go far beyond safety by vastly overstating desired spending and vastly understating sources of income while whining about being miserable at their jobs.
For example, in the past week or so I came across a post where the poster said he/she could live nicely on either a low WR from their FIRE portfolio or from their pension and SS. Either/or. Currently, he/she is retired and still saving because pensions and SS exceed spending. To me, that would be OK as long as time spent in the last few years of employment was enjoyable. But if that person was one of the folks who claim to be miserable while working......... well, what a waste of our most precious resource.
IOW, if you're truly miserable on the job and you're calculations include excessive padding of the numbers, you ought to consider that time is running through the hour glass...........
Or, as I suspect, these folks aren't as miserable working as they sound. They like to sound off about tough jobs, bad bosses, stress, etc., etc., but in fact that's just their nature and time spent in the harness suits them pretty well.
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Well, your example wasn't actually a valid example, so I'm not sure those people really exist.
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10-26-2018, 07:11 PM
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#38
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Recycles dryer sheets
Join Date: May 2013
Posts: 327
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Quote:
Originally Posted by calmloki
My whole life I've done Eeyore probability. On Firecalc I figure a 95 year lifespan, inflation at 3.25%, portfolio at 3%, annual expenditures at about double what we are spending, selling all rentals right now and being left with 70% of the value the tax man calls "True Cash" value.
This while looking at my 69th birthday, NOT having sold the rentals, and having our net worth grow by about double the inflation rate. For unknown reasons I'm just happier pretending like I'm close to the edge.
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Loving Eeyore - you go!
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10-26-2018, 07:32 PM
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#39
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,006
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Quote:
Originally Posted by youbet
It's a matter of degree. What aaron879 and I are talking about are folks who go far beyond safety by vastly overstating desired spending and vastly understating sources of income while whining about being miserable at their jobs.
For example, in the past week or so I came across a post where the poster said he/she could live nicely on either a low WR from their FIRE portfolio or from their pension and SS. Either/or. Currently, he/she is retired and still saving because pensions and SS exceed spending. To me, that would be OK as long as time spent in the last few years of employment was enjoyable. But if that person was one of the folks who claim to be miserable while working......... well, what a waste of our most precious resource.
IOW, if you're truly miserable on the job and you're calculations include excessive padding of the numbers, you ought to consider that time is running through the hour glass...........
Or, as I suspect, these folks aren't as miserable working as they sound. They like to sound off about tough jobs, bad bosses, stress, etc., etc., but in fact that's just their nature and time spent in the harness suits them pretty well.
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Aaron simply stated that a lot of folks here will likely die millionaires and thus they have worked to long.
I simply pointed out that there is no way to know at retirement time whether you've worked too long or not as you have no way to anticipate market events once you retire, so of course folks are going to err somewhat on the side of caution.
Your example is far more extreme - ultra low WR.
Once retired and experiencing a positive market situation for several years - you can't go back and retire earlier. But you can adjust your withdrawals up.
__________________
Retired since summer 1999.
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10-26-2018, 07:34 PM
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#40
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Thinks s/he gets paid by the post
Join Date: Dec 2016
Location: DC area
Posts: 2,479
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>100% on FIRECalc to age 95, with a few conservative assumptions like 25% haircut on SS and ignoring inheritances.
Be careful with Monte Carlo simulators - the edge cases in those represent 30 or 40 years of declining markets. Essentially impossible in an economy that simply keeps up with inflation and population growth. In Monte Carlo I am fine with 90%+.
__________________
FI and Semi-ER March 24, 2017
Consulting to stay engaged
"All models are wrong, some are useful." - George Box
“There is always a well-known solution to every human problem: neat, plausible, and wrong.” - H.L. Mencken
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