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fire calc advice
Old 01-12-2013, 10:48 PM   #1
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fire calc advice

DW and I continue piecing together our semi-ER plans. There will be a 20 year gap between the year we hope to switch to part time and the year that the pension/IRA era begins. We dont mind spending every last cent of our allocated savings to get us through the 20 yrs of semi-ER.

Our efforts to escape the day to day grind has made us desperate look to find the lowest amount of money needed. We have an idea in mind of the minimum amount needed to be saved.

However, when I play with Firecalc I see our savings goal having a 49.6% chance of success when not estimating taxes.

This rate drops to 23.1% when estimated taxes.

We have no idea what our taxes will look like in semi-ER.

Would anyone consider semi-ERing with firecalc showing such a low success percentage? keep in mind that it would be okay spend all of the allocated savings to make it through the 20yr period to the finish line.

Any advice/comments on this matter would be greatly appreciated. Thanks.
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Old 01-12-2013, 11:28 PM   #2
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Originally Posted by tmob View Post
DW and I continue piecing together our semi-ER plans. There will be a 20 year gap between the year we hope to switch to part time and the year that the pension/IRA era begins. We dont mind spending every last cent of our allocated savings to get us through the 20 yrs of semi-ER.

Our efforts to escape the day to day grind has made us desperate look to find the lowest amount of money needed. We have an idea in mind of the minimum amount needed to be saved.

However, when I play with Firecalc I see our savings goal having a 49.6% chance of success when not estimating taxes.

This rate drops to 23.1% when estimated taxes.

We have no idea what our taxes will look like in semi-ER.

Would anyone consider semi-ERing with firecalc showing such a low success percentage? keep in mind that it would be okay spend all of the allocated savings to make it through the 20yr period to the finish line.

Any advice/comments on this matter would be greatly appreciated. Thanks.
I assume you plan to work part-time during the semi-retired years. Are you including that income in firecalc?

If yes, then no I wouldn't do it.

If no, then I would see what firecalc says if you consider that income. And, then I would consider how confident I was that I would actually have the income.
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Old 01-13-2013, 11:44 AM   #3
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Quote:
Originally Posted by tmob View Post
DW and I continue piecing together our semi-ER plans. There will be a 20 year gap between the year we hope to switch to part time and the year that the pension/IRA era begins. We dont mind spending every last cent of our allocated savings to get us through the 20 yrs of semi-ER.

Our efforts to escape the day to day grind has made us desperate look to find the lowest amount of money needed. We have an idea in mind of the minimum amount needed to be saved.

However, when I play with Firecalc I see our savings goal having a 49.6% chance of success when not estimating taxes.

This rate drops to 23.1% when estimated taxes.

We have no idea what our taxes will look like in semi-ER.

Would anyone consider semi-ERing with firecalc showing such a low success percentage? keep in mind that it would be okay spend all of the allocated savings to make it through the 20yr period to the finish line.

Any advice/comments on this matter would be greatly appreciated. Thanks.
You have not provided a lot of information, but I am guessing that you are in your mid to late 30's. My binary answer is: No, I would not try it.

20 years is a long time to run with a 50% probability of success (FireCalc terminology). During those 20 years you could encounter some financial contingencies that could make your life very uncomfortable.

If you were 2 years, or, say, 5 years out, that would be an entirely different situation.

Quote:
Originally Posted by tmob View Post
We have an idea in mind of the minimum amount needed to be saved.
Not sure exactly what you mean by this statement, but what I get from it is that you would be running on minimums, and that would leave very little wiggle room to deal with unplanned events (or just a change in desires / tastes) that may happen during that 20 years.

This might be a little easier if you posted the portfolio value, your expected expenses, ages, and as many other details as you wish to, but some people do not like to post such detail.
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Old 01-13-2013, 08:26 PM   #4
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Thanks for the responses. I dont know how to link my first post with all my financial info to this response. Some of my numbers have changed since that post because we really wish to escape. Here are a few numbers.

-I am 31 and DW is 28 want to hang it up when I am 39-40.

-our semi-RE budget includes us continuing to max out our IRA's each yr.

-I am in the Air Force Reserves and considered this to be my semi ER j*b as its income and provides low health care costs. I am willing to do temp work as needed to keep us Semi-ER.

-our budget does not take into account DW bringing in money but she is looking to bring in some income to keep the mind sharp (possibly substitute teaching/tutoring)

-After I return from my deployment (I leave next month) we wouldve surpassed the $100k milestone

-Expenditure planning to include adding roth savings shows we need a lil less than $35,000/yr.

-The firecalc numbers posted earlier were based on us being debt free, $350,000 saved and pensions will not kick in until I turn 59.5.

We plan to spend the $350k down to 0 by the time my pension kicks in.We really want to get out and enjoy life and are willing to do some part time stuff as needed.

So what do you think?
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Old 01-13-2013, 09:29 PM   #5
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You do have to pay taxes from your FIRECalc withdrawal amounts. So you have a 23% chance of success. Most likely that's a failure. Figure your taxes using your expected retirement income in today's dollars, and add that to your required income as an estimate.

I think I'm one of the more daring posters here. I'm OK with 80% to 85% success rate, and willing to adjust spending if we need to. Many are firmly in the 100% camp. 23% is just a crossing your fingers gamble.
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Old 01-13-2013, 11:00 PM   #6
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When you ran FireCalc did you include any income from you or your DW during the semi-ER years? If you didn't, then I would think it is important to run it again and include that income. But, be realistic as to how much that income might be. Estimate low
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