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Reaching FIRE: another way to view progress
Old 10-22-2009, 11:11 AM   #1
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Reaching FIRE: another way to view progress

I ran a quick calculation in FIREcalc today.

Based on the money I have saved for retirement so far, assuming zero future contributions and zero Social Security payments, and assuming I need a FIRE stash that will last me to age 100, I will reach 100% success rate for retirement at the age of 62.

I know I could trim some fat from my budget, and I don't believe Social Security will be zero when I reach old age (although I know it will be reduced from today's values). I also (unfortunately) don't expect to live to the ripe old age of 100, and I think 80% success rate is probably enough for me when it comes time to pull the trigger on FIRE. So the calculation I made in FIREcalc was very conservative. Of course, using more realistic inputs gets my FIRE-ready age much lower, but as a baseline the conservative inputs are nice to know.

It's nice to think that even if I don't save another dime, my "traditional" retirement will be covered, even if Uncle Sam completely pulls the plug on Social Security, and even if I live way longer than the average person.

As I continue to save, I will continue to make this calculation and expect (hope) to see the FIRE age falling as my actual age rises ... and hope they will meet in the middle somewhere before long!

Sometimes I look out ahead toward FIRE so much that it's refreshing to look "backwards" like this, counting down from 62 to see how low I can get that retirement age before my actual age reaches it.
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Old 10-22-2009, 11:31 AM   #2
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What a sigh a relief you can breathe. Knowing we were set for the target date made the waiting easier for us; and if you can move the target date up, even better!
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Old 10-22-2009, 11:41 AM   #3
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I love to do that exercise too! Assuming zero future contributions, zero social security payments, a conservative 50/50 portfolio (with 5 year treasuries as fixed income), and CPI as the selected inflation rate, FIREcalc says that we should be able to retire at age 57 with a 100% success rate until age 100.

It really puts me a peace. Our jobs are far from secure and knowing that our income could fall 80% tomorrow and we would still be able to retire comfortably at age 57 is indeed very reassuring. I am glad we started saving aggressively in our 20's!
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Old 10-22-2009, 12:34 PM   #4
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At 7% real returns and zero additional contributions, our current portfolio would take roughly 17 more years to make us FIRE. I'll be 46. That IS a nice feeling and a nice way to look at it. It certainly makes me think seriously about the low cost perpetual traveler lifestyle and/or semi-retiring to do just enough to pay the bills each month. Add in "free"* government healthcare, and make it age 43. Don't give me govt healthcare and only give me 5% real returns, and make it age 53.



*not trying to start a debate here.
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Old 10-23-2009, 12:23 PM   #5
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This thread reminds me that I need to get my head and heart back in the game. We've been on autopilot for a year or so and I'm glad I had us in a good spot to do that, but now it's time to break out FireCalc and run some real numbers.
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Old 10-23-2009, 12:45 PM   #6
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Quote:
Originally Posted by FUEGO View Post
At 7% real returns and zero additional contributions, our current portfolio would take roughly 17 more years to make us FIRE. I'll be 46. That IS a nice feeling and a nice way to look at it. It certainly makes me think seriously about the low cost perpetual traveler lifestyle and/or semi-retiring to do just enough to pay the bills each month. Add in "free"* government healthcare, and make it age 43. Don't give me govt healthcare and only give me 5% real returns, and make it age 53.



*not trying to start a debate here.
Young pup.......... Why are you assuming 7% returns? That may seem low in recent experience, but I think 7 or 8 is quite optimistic..........by "real returns", it sounds like that is AFTER inflation, correct?
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Old 10-23-2009, 01:12 PM   #7
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Young pup.......... Why are you assuming 7% returns? That may seem low in recent experience, but I think 7 or 8 is quite optimistic..........by "real returns", it sounds like that is AFTER inflation, correct?
Well, if I had a financial advisor, I'd assume more like 5%.

7% is just a number I picked. Note I also did some sensitivity analysis for 5% returns in the same post you are quoting.

Yes, I mean real returns, after inflation. Nominal I'd guess 10% returns (3% for inflation, the rest real return).

Maybe it is optimistic. I'll let you know in 17 years. Or 24 years. I also have a fairly risky portfolio, and if the theory on risk premiums hold up long term, I should be compensated for taking on more risk by getting more return.
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Old 10-24-2009, 11:01 AM   #8
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"I know I could trim some fat from my budget, and I don't believe Social Security will be zero when I reach old age (although I know it will be reduced from today's values)."

http://www.ssa.gov/OACT/TRSUM/tr09summary.pdf

Projected OASDI tax income will begin to fall
short of outlays in 2016, and will be sufficient to finance
76 percent of
scheduled annual benefits in 2037, after the combined OASDI Trust Fund
is projected to be exhausted.
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Old 10-26-2009, 09:45 AM   #9
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Add in 75% of today's Social Security and things looks even better, of course.

For those of you who are making the calculation based on a set % of return on investment, just curious -- why aren't you relying on the default FIRECalc numbers (e.g. for a 75% equities portfolio)? I've toyed with the idea of trying to guess my own real rate of return, but have just used the default FIRECalc numbers based on 75% equities.
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