Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Firecalc Entry of Many Spending Changes
Old 07-30-2019, 09:19 PM   #1
Confused about dryer sheets
 
Join Date: Mar 2018
Location: Overpriced Bay Area
Posts: 5
Firecalc Entry of Many Spending Changes

Hi,
Long time lurker here with my first question. I am about to pull the cord and retire but I keep running calculators to reassure myself. In doing that, I have come up with a question about whether I am using the manual entry of spending changes option in Firecalc properly.



I have a pretty good idea of my retirement income--DW's pension, my SS, an expected second house sale, a very likely inheritance and so on. I am 61 (expected retirement this year . . .) DW is 57 (expected retirement at 58). I am delaying SS until 70. DW doesn't get SS (she's a California teacher). That means for the next 8 1/2 years I will have to spend down my investments pretty rapidly.



I have tracked expenses over the last few years and developed a fairly detailed budget for retirement year by year. It shows we will spend quite a bit for the first years of retirement -- our house won't be paid off for another three years, for instance. With the sale of the second house and other one time chunks of income, our income and expenses vary a lot from year to year, at least for the next few years.



I didn't trust that I was getting these variations right by using the off the chart spending and pension entries--and there weren't enough entries for them anyway.



So instead of entering the pension and SS etc in the appropriate places on Firecalc, I made a spreadsheet that sums my expected expenses for each year and deducts that amount from the expected income for that year. (It is all done in today's dollars without inflation adjustments--including the future budgets and income). That leaves the amount I expect to have to withdraw from my portfolio for each year. I take the result for each year and enter it in the manual entry of spending changes.





Do you see a problem with this method rather than using firecalc's income entry sections?



Thanks for chiming in.
__________________

Hiram is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-30-2019, 10:22 PM   #2
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 3,559
I understand what you're saying.

I don't understand how, if the individual line items in your spreadsheet exceeded the offchart spending and pension number of entries, that your off-FIREcalc spreadsheet could have any fewer rows (and therefore fit, as you imply in your last paragraph). Unless, of course, two entries start in the same year and last the same duration. And if that's the case, then you could just combine those two entries into one (and repeat for any other pairs or triplets of sequences).

Personally I would suggest a couple of things:

1. Make sure you don't have any user errors in your off-FIREcalc spreadsheet. Duh.

2. I'd carefully consider whether the items were inflation-adjusted or not, and whether combining inflation-adjusted and non-inflation adjusted series in your off-FIREcalc spreadsheet might be making things murky.

3. I think there is an option to become a FIREcalc member by making a donation, and if you do that I think that you get more (unlimited?) income stream changes and portfolio changes.

4. Be sure that you understand that the "Other Income/Spending" tab adds a series of income or expenses from a given year into the future indefinitely, whereas the "Portfolio changes" tab is for one-time / one-year expenses or income.
__________________

__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is offline   Reply With Quote
Old 07-30-2019, 10:25 PM   #3
Recycles dryer sheets
 
Join Date: Sep 2017
Posts: 369
It’s a good question. Not sure of the answer, but I would wonder about the assumptions for cola increases for pensions and SS in firecalc. If the assumptions are different than inflation related spend that could be an issue.

If you’re paying off your house in a few years, it probably doesn’t matter as much, but over a longer time period I think you want to use the alternative options in firecalc so you can not adjust the expense for inflation.

In theory, your property taxes should be capped below inflation as well. Don’t know that this plays out in practice.
tb001 is offline   Reply With Quote
Old 07-30-2019, 11:09 PM   #4
Confused about dryer sheets
 
Join Date: Mar 2018
Location: Overpriced Bay Area
Posts: 5
Thanks for the replies.



I am a Firecalc member, SecondCor521, which is why I was asking about the manual entry of spending changes section under the Spending Models tab.


And, I can't be sure there are no errors in my spreadsheet, particularly in predicting my future budgets--but I included a lot of fat so in case things turn out badly, we have a lot to cut without having to sell our main home, move in with the kids or other more desperate moves like, horrors, going back to work.



The inflation adjusted aspect is a good point. I am using current dollars for all figures since Firecalc asks for those to be entered not future value. I think that also works for for the manual entry of spending changes pull down, right?


And tb001, the whole thing could be more complicated--for instance since medical expenses will likely increase faster than inflation, but Firecalc, I imagine, applies an across the board inflation rate to income and expenses, that might make the figures far less reliable.


I guess my main thought as I write all this, is that the whole purpose of the exercise is to see if the strategy of spending down my investments before taking SS has a good likelihood of working in my case. Nothing is certain, of course, but I do want to at least use the tool right!
Hiram is offline   Reply With Quote
Old 07-30-2019, 11:20 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Jul 2015
Location: Beaverton
Posts: 1,007
Along with using every online calculator known to man (free that is), I just made up my own spreadsheets with the appropriate formulas. One was for my portfolio income sources showing spend down and building in inflation and a modest investment gain. Second was my income statement for four different periods of time and adjusting spending for inflation and estimated taxes. Married the two up and review it yearly
__________________
Jump in, the water's warm.
Bir48die is offline   Reply With Quote
Old 07-30-2019, 11:20 PM   #6
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 3,559
I'm not a FIREcalc member, so I'm not sure what you can see in the members only area. Sorry I can't help more.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is offline   Reply With Quote
Old 07-31-2019, 05:37 AM   #7
Thinks s/he gets paid by the post
 
Join Date: Jan 2018
Location: Tampa
Posts: 4,016
Firecalc does apply the same inflation rate increase across the board.
Some other calculators like Fidelity apply a different rate for Medical (4.9%) for example. With Marketwatch calculator, you can apply your own inflation rates to a broader group of categories.
__________________
TGIM
Dtail is offline   Reply With Quote
Old 07-31-2019, 06:42 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 22,402
How long before your spending gets to a steady state? If the variability is just within the first 10 years, a workaround is to just reduce your portfolio for the difference.

For example, let's say your steady state expenses are $75k a year in 2019 dollars, but in the first $10 years you expect to spend $1 million... run FIRECalc with $75k of spending and a $250k lower portfolio. It is as if you put $250k in a side fund to cover off the excess of planned spending over steady state spending... inflation is covered by interest from the side fund.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...60/35/5 AA
pb4uski is offline   Reply With Quote
Old 07-31-2019, 06:55 AM   #9
Thinks s/he gets paid by the post
 
Join Date: Jun 2016
Posts: 2,838
I ran into issues like this with FireCalc and I ultimately tried to create averages to fit in the limited number of boxes. I thought it at least would get me in the ballpark.

I like the Fidelity calculator better because it lets you set up date ranges for multiple income and expenses to kick in or fall off. In the end both tools gave me answers with enough cushion that I felt comfortable with the results.

These tools are a good guess anyway so trying to be super precise with them just isn’t worth the brain damage.
COcheesehead is offline   Reply With Quote
Old 07-31-2019, 07:39 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 22,402
Quote:
Originally Posted by COcheesehead View Post
.... These tools are a good guess anyway so trying to be super precise with them just isnít worth the brain damage.
+1 that is why I think the workaround previously described is "good enough".
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...60/35/5 AA
pb4uski is offline   Reply With Quote
Old 07-31-2019, 08:45 AM   #11
Confused about dryer sheets
 
Join Date: Mar 2018
Location: Overpriced Bay Area
Posts: 5
Good enough is good enough for me (Except when I wake up at 3am worried I forgot something big, "OMG--I didn't include food in my budget!" But that usually passes.) I just want to get general confirmation that my numbers are in the ball park.



I will try the subtracting the first ten years as a lump, as pb4uski suggests, from the portfolio since that is pretty much the period I expect variable expenses (did I mention the basement remodel and new roof?). I used the Fidelity planner when I started thinking in detail about all this but haven't used it in a while. Will give it another shot.


Thanks everyone for the suggestions.
Hiram is offline   Reply With Quote
Old 08-01-2019, 09:01 PM   #12
Confused about dryer sheets
 
Join Date: Mar 2018
Location: Overpriced Bay Area
Posts: 5
BTW I just tried the Fidelity Planner again. I got similar results so I am feeling better about the decision. Now I just have to tell my colleagues . . .
Hiram is offline   Reply With Quote
Old 08-02-2019, 04:34 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2011
Posts: 5,805
Quote:
Originally Posted by SecondCor521 View Post
I'm not a FIREcalc member, so I'm not sure what you can see in the members only area. .
After 15 years coming here almost every day, am I just learning that FIREcalc has a membership area where you can get more information than I have been getting?
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline   Reply With Quote
Old 08-02-2019, 04:42 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 22,402
I don't know what to say.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...60/35/5 AA
pb4uski is offline   Reply With Quote
Old 08-02-2019, 08:19 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2011
Posts: 5,805
Quote:
Originally Posted by pb4uski View Post
I don't know what to say.
Well, I just made a donation but it seems I had made one or two in the past as well. Running a quick calc, I don't see anything different.

So, per usual, it seems that I don't know what I'm doing.
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline   Reply With Quote
Old 08-02-2019, 08:26 AM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 22,402
IME the differences in the functionality of member vs non-member are fairly modest.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...60/35/5 AA
pb4uski is offline   Reply With Quote
Old 08-02-2019, 09:43 AM   #17
Confused about dryer sheets
 
Join Date: Mar 2018
Location: Overpriced Bay Area
Posts: 5
Yes, the only difference I have noticed is the pull down for the manual entry of spending changes. Is there anything else it does--other than support the good work of firecalc?
Hiram is offline   Reply With Quote
Old 08-02-2019, 11:26 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 22,402
That's the only difference that I'm aware of... and I don't really use that feature but am a supporter anyway.
__________________

__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...60/35/5 AA
pb4uski is offline   Reply With Quote
Reply

Tags
firecalc, variable expenses, variable income


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Manual Entry of Spending Changes kwix FIRECalc support 0 02-25-2018 08:19 PM
Question about FIRECalc Spending Entry LuckyDog FIRECalc support 2 12-27-2016 11:49 AM
Firecalc entry question jkern FIRE and Money 1 10-20-2014 02:51 PM
Clarification on 'off-chart spending' entry smurray5991 FIRECalc support 3 01-05-2013 07:30 PM
Firecalc Revisited for the Social Security entry MJ FIRE and Money 8 04-24-2006 03:05 PM

» Quick Links

 
All times are GMT -6. The time now is 02:29 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.