Simple Bucket in Firecalc

[phil70]

I have read some old posts about the problems with modelling a bucket strategy in firecalc. I am not trying to model a continuous bucket during the full term of my retirement. The plan I want to model is this: I have four years between expected retirement date and the beginning of a pension. One plan I am considering is to have enough cash to cover all expenses during this four year period. After the pension kicks in, I will draw from my portfolio (which excludes the above referenced cash) to cover expenses above the pension.

Could I model this in Firecalc by (i) deducting the cash from my portfolio amount on the start page, (ii) entering offchart reduction in spending equal to my total spending to commence in the year of retirement (reducing expenses to zero during this period), and (iii) enter the amount of net spending above my pension as an offchart increase in spending in the year the pension commences?

I get a very different (more favorable result) doing this than leaving the cash in my portfolio and classifying it as short term bonds and beginning withdrawals from said portfolio immediately upon retirement.

 

[pb4uski]

What I would suggest is that you reduce your portfolio by the cash and use the Not Retired tab and enter a year 4 years later than when you will really retire.... I think what that will do is let what you enter as the portfolio amount grow for 4 years before withdrawals commence.

 

[phil70]

Thanks, pb4uski. That was my thinking as well. After thinking about, it seems logical but I was surprised at how much better my plan looked in Firecalc using that bucket method. I try to take all these calculators with a grain of salt, but appreciate your confirmation.

Interestingly, a Monte Carlo calculator I also use (Flexible Retirement Planner) resulted in no net improvement using the bucket method, but Monte Carlo is an entirely different approach.