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firealc success declines with pension
Old 08-22-2017, 09:57 AM   #1
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firealc success declines with pension

I don't understand why firecalc does not count my fixed pension as a fixed amount so that X is same probability as X + pension (given same number of years and initial balance).

These inputs are made up but the same principle should stand.

inputs
35k spending
650000
46 years
future retirement 2023, add 18k/yr until then
93% chance of success

change inputs to
58K spending, with 23k pension (not infl) begin 2023
success drops to 68

I know I am bad at math but 58K-23K should be the same 35K!
If someone could ELI5 I would be grateful.
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Old 08-22-2017, 10:21 AM   #2
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The first field is "spending". Not income.
Enter what you plan to spend here.
On the second tab there is a place near the bottom to enter your pension and the year it starts. This will reduce the amount taken from your portfolio and improve your success rate.
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Old 08-22-2017, 10:28 AM   #3
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Originally Posted by Geld ist Freiheit View Post
The first field is "spending". Not income.
Enter what you plan to spend here.
On the second tab there is a place near the bottom to enter your pension and the year it starts. This will reduce the amount taken from your portfolio and improve your success rate.


Oops. I think I misread that at first.
The difference is due to the fact that in the 2nd scenario, you are spending that extra during the years still working, drawing down your nest egg. You're bleeding off an extra 23k but only adding 18k.
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Old 08-22-2017, 11:56 AM   #4
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I'm tinkering around on FIRECalc this afternoon, and I want to be sure my inputs are valid.

How does FIRECalc account for the SS income that I am receiving ?? Should I subtract that amount from my annual spending ??

How does it correctly account for my Pension ??

Does FIRECalc just consider the Spending Input to mean "not covered by Pension & SS" or are the tabs the better place to enter them.
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Old 08-22-2017, 12:01 PM   #5
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Originally Posted by Geld ist Freiheit View Post
Oops. I think I misread that at first.
The difference is due to the fact that in the 2nd scenario, you are spending that extra during the years still working, drawing down your nest egg. You're bleeding off an extra 23k but only adding 18k.
Uh what? I set pension to start in the projected retirement year of 2023. The 18K should add to the portfolio total until 2023. Oh and I did mean spending not income.

While working I would of course spend my salary which is not part of the calculation.
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Old 08-22-2017, 12:01 PM   #6
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Originally Posted by FiveDriver View Post
I'm tinkering around on fireCALC this afternoon, and I want to be sure my inputs are valid.

How does fireCALC account for the SS income that I am receiving ?? Should I subtract that amount from my annual spending ??

How does it correctly account for my Pension ??

Does fireCALC just consider the Spending Input to mean "not covered by Pension & SS" or are the tabs the better place to enter them.
SS and pension income are accounted for on the second tab "Other Income/Spending." Input your numbers there.
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Old 08-22-2017, 12:12 PM   #7
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Just for fun I threw in a random SS number. Even with that (and holding spending to 58K) I do not get to the initial success rate.

Pension and SS in "other income" tab with appropriate dates.
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Old 08-22-2017, 12:21 PM   #8
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I ran it with my annual SS amount and then again with 0 in the SS Tab.

I get 100% both ways, and the total Portfolio amount at the end is the exact same number. I'm just not certain it's being counted correctly.
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Old 08-22-2017, 12:56 PM   #9
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In the second set of inputs, you're spending an additional inflation-adjusted 23K per year, but only adding non-inflation-adjusted 23K to your annual income.
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Old 08-22-2017, 01:00 PM   #10
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Fivedriver - are you putting a current or future date in for SS and/or pension on the Other Income/Pension tab? The tool acts unpredictably if you put a start year in the past. That's a known, er, feature. (What some would call a bug.)
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Old 08-22-2017, 01:03 PM   #11
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In the second set of inputs, you're spending an additional inflation-adjusted 23K per year, but only adding non-inflation-adjusted 23K to your annual income.
So somehow having a pension means I can't retire yet. . . I told you I was bad at math.

Is there a way to figure out what number between 35K and 58K I can really spend for a better success rate?
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Old 08-22-2017, 01:14 PM   #12
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Is there a way to figure out what number between 35K and 58K I can really spend for a better success rate?
Leave spending at 35k and put in the pension. You should get 100%. Add 5k spending at a time until you see < 100%. Then interpolate.
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Old 08-22-2017, 01:15 PM   #13
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So somehow having a pension means I can't retire yet. . . I told you I was bad at math.

Is there a way to figure out what number between 35K and 58K I can really spend for a better success rate?
I'm a little confused re: your inputs. But you can ask FIRECALC to solve for a spending number using the 5th button down on the last tab labeled "INVESTIGATE." It will use your portfolio $, your years, and solve for spending $ using the % success rate you choose.
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Old 08-22-2017, 01:26 PM   #14
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Fivedriver - are you putting a current or future date in for SS and/or pension on the Other Income/Pension tab? The tool acts unpredictably if you put a start year in the past. That's a known, er, feature. (What some would call a bug.)
I see, said the blind man. I was entering the true start year (in the past).....Whoopsie.

Setting a SS and Pension start date of next year seems to yield more accurate results.

So, Total Annual Spending in the Box on the Start Here Page. And true SS and Pension amounts with a near future date if I'm already collecting, correct ??
And FC will deduct the SS and Pension amounts from Spending.

FIRECalc will adjust for Inflation (3%).

Does FC make any attempt to account for Taxes ?? Or should that be included in Annual Spending ??
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Old 08-22-2017, 01:28 PM   #15
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Does FC make any attempt to account for Taxes ?? Or should that be included in Annual Spending ??
FIRECalc ignores taxes so you will have to include that as an expense in your annual spending.
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Old 08-22-2017, 01:33 PM   #16
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Thank you everyone! I really like the investigate tab. Somehow I completely overlooked that! Now I just have to figure out if I can live on the result!!
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Old 08-22-2017, 01:37 PM   #17
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Thanks also from me -- those little details are very helpful. I wonder if we should have a Primer Page on FIRECalc just so these issues are clarified.

I'm really enjoying these various results......I'm good for 30 years out !!
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Old 08-22-2017, 04:49 PM   #18
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I ran the exact parameters you mentioned - i got a 93.1% success rate for BOTH conditions. You enter the pension under "other income spending" - be sure to toggle the little circle on the left side !
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Old 08-22-2017, 08:03 PM   #19
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Thanks for trying but that only works if you do not UNCHECK the infl adjusted - which mine is not. Still has been interesting learning.
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Old 08-22-2017, 08:06 PM   #20
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Thanks for trying but that only works if you do not UNCHECK the infl adjusted - which mine is not. Still has been interesting learning.
I didn't run the numbers, but that seems to be the (unsurprising) key - inflation.

If you make the current numbers wash, fine. But w/o an inflation adjustment, those numbers will get worse over time, as the buying power of a non-inflation-adjusted pension decreases. So success rate falls.

Right?

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