Has Firecalc ever been wrong for you? Do you trust it 90%?

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cyber888

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So I run Firecalc with $680,000 nest egg, $37,800/year income ($3,150/month income), 37 years of retirement, Social Security income at 62 - $1,370 for me & $1,100 for wife (present value). It came out to 100% I initially started with $720,000 and kept lowering it, until I hit $680,000. Firecalc still says 100%

I know most of you here have a $1mil or more. Well, I don't have kids or nor do I plan to leave money for any relatives - it's just me and wife and live in a low cost southern state. I will surely try to continue to hit that $1 mil mark, but Firecalc says I have enough? Should I trust it 90% or 80% ..
 
I don't know of ANY retirement calculator that is going to give you 100% accuracy. It's just not how it works. All of them will give you a 'windage' but if you're looking for a "can I/can't I retire?" I'd suggest a lot more homework.

Having said that, I found that if I enter SS information with me taking SS at a date before today, I get a very odd result.
 
when you say 37,800 a year income, do you mean spending/withdrawal, or income, like a pension, extra income?
 
marko said:
I don't know of ANY retirement calculator that is going to give you 100% accuracy. It's just not how it works. All of them will give you a 'windage' but if you're looking for a "can I/can't I retire?" I'd suggest a lot more homework.
....
Click to expand...

+1

I see calculators as akin to a sawed-off shotgun, not a sniper rifle. Also, note the inherent limits: history teaches us that depriving ourselves to boost our 40-year success probability much beyond 80% is a fool’s errand, since all you are doing is increasing the probability of failure for political, economic, and military reasons relative to the failure of banal financial planning. The Retirement Calculator from Hell, Part III (e.g., systemic bank failures, plague, world wars, invasion of the Huns....)
 
For an example assume you lived in germany in 1912 and ran the german equivalent of fire calc back then (if it had existed), you would have been spectacularly wrong it had been 100 years since a really destructive war had been fought in Germany. The Pre WW1 german firecalc would not have modeled WW1 or the great inflation after it. Or assume that Yellowstone had a catastrophic eruption in 10 years etc. Firecalc being historically based does not have a long enough time baseline to include the financial effects of these disasters.
 
I have always been interested in hearing from someone who ran firecalc a decade or more ago (or the earliest it was around) documented their findings, then checked in a decade later and reported how closely it had predicted where they'd be at this stage.
 
FIRECalc is nothing more than a model. All models are wrong; some models are useful.
 
hesperus said:
I have always been interested in hearing from someone who ran firecalc a decade or more ago (or the earliest it was around) documented their findings, then checked in a decade later and reported how closely it had predicted where they'd be at this stage.
Click to expand...

Once again, FIRECalc doesn't predict anything, it only tells us how a specific set of inputs (portfolio size, asset allocation, annual withdrawal amount, etc.) would have fared historically.
 
cyber888 said:
So I run Firecalc with $680,000 nest egg, $37,800/year income ($3,150/month income), 37 years of retirement, Social Security income at 62 - $1,370 for me & $1,100 for wife (present value). It came out to 100% I initially started with $720,000 and kept lowering it, until I hit $680,000. Firecalc still says 100%

I know most of you here have a $1mil or more. Well, I don't have kids or nor do I plan to leave money for any relatives - it's just me and wife and live in a low cost southern state. I will surely try to continue to hit that $1 mil mark, but Firecalc says I have enough? Should I trust it 90% or 80% ..
Click to expand...
I'm not sure how FIRECALC could be "wrong" or what "trust" has to do with it?

FIRECALC gives you the success rate using the inputs/assumptions the user provides based on more than 100 years of actual past history - it does not predict anything. It's entirely up to the user to decide whether past history is of any use as a predictor for the future...
 
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I think what he means by wrong is that he put the same information into Firecalc and it doesn't return consistent results (correct me if I'm wrong). I've seen that too. But I've never been sure if it is just me re - inputting the data wrong. Sometimes, I think that is it, sometimes, I think Firecalc might occasionally mis-fire -- returning different results with the same input. The only way to be sure would be if Firecalc repeated, on the results page, the data that was input. Right now it only returns part of the inputted data, and the rest is not stated.

I agree Firecalc is a useful tool, but it also seems to be that the 4% withdrawal rate has been around before Firecalc, (correct me again if I am wrong, I'm new). So if you assume the 4% withdrawal rate, it's mostly a question of can you get a handle on your spending to accurately calculate if 4% will be enough? And honestly, who can know what costs will be 30 years from now?

OTOH, I've been in my house 30 years, and I know what I spent then and what I spend now. Will that help me predict what I need to spend in the future? Maybe. Maybe not.

Early Retirement, as opposed to working until you drop in the traces, is something of a leap of faith. Perhaps it is better to think about it as an early sabbatical, a chance to re-evaluate and decide what you want to do with the rest of your life. It might mean working again, or creating something, or just living, perhaps more frugally than some would like, but on your own time.
 
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sansha said:
when you say 37,800 a year income, do you mean spending/withdrawal, or income, like a pension, extra income?
Click to expand...

We have not heard back from the OP.

Let's look at his numbers.

cyber888 said:
So I run Firecalc with $680,000 nest egg, $37,800/year income ($3,150/month income), 37 years of retirement, Social Security income at 62 - $1,370 for me & $1,100 for wife (present value). It came out to 100% I initially started with $720,000 and kept lowering it, until I hit $680,000. Firecalc still says 100%...
Click to expand...

Let's assume that he wants to spend $37.8K/year. His SS is $16.44K/year and his wife's is $13.2K/year. Let's further assume that SS starts for them soon, like next year.

Then, it means that he only needs to draw $37.8K - $16.44K - $13.2K = $8.16K from his stash.

Even if his stash barely keeps up with inflation, meaning a real return of 0, over his 37-year retirement he only draws $302K out of $680K.

There, it's 100%. You do not even need FIRECalc to tell you that.
 
Sure, trust it... After all, the stock market will always go up 6%-8%. Just ask the Japanese investors.

Look at a risk mitigation plan. Worst case, you become a greeter at Walmart or learn to up-sell to a larger portion for a combo meal. If you are already doing a job like that, not big deal.

If you have a decent job now, why not stretch it a year or two so you can be 100% sure.

$37,800 is really not that much money. A year or two of stagflation and you may well wish you worked longer. You may be too young to remember stagflation.
 
You say your income is 37,800 per year? Do you mean expenses? With expenses that low, social security will cover 80%, so I trust firecalc saying you are good to go with a 680k portfolio. But I would re-think your retirement expenses. Did you consider expenses like new cars, new roof, new heating system, new teeth, new hip, etc.?
 
MikeWillRetire said:
You say your income is 37,800 per year? Do you mean expenses? With expenses that low, social security will cover 80%, so I trust firecalc saying you are good to go with a 680k portfolio. But I would re-think your retirement expenses. Did you consider expenses like new cars, new roof, new heating system, new teeth, new hip, etc.?
Click to expand...

That isn't much less than average expenditures for age 65+ households ($39,173, 2011 figures):

http://www.bls.gov/cex/2011/Standard/sage.pdf
 
Thanks for posting the link with the average expenditures. Very interesting and helpful.
 
sansha said:
Early Retirement, as opposed to working until you drop in the traces, is something of a leap of faith. Perhaps it is better to think about it as an early sabbatical, a chance to re-evaluate and decide what you want to do with the rest of your life. It might mean working again, or creating something, or just living, perhaps more frugally than some would like, but on your own time.
Click to expand...

I think it requires a leap of faith for those counting on growth from their portfolios to fund it. Otherwise maybe not so much for retirees who have simply saved up X years worth of expenses and get at least a zero real return, less whatever is realistically going to be funded by SS, pensions, rental or other retirement income.

You are welcome on the CES link. We used that quite a bit to help us reign in some of our expenses that were needlessly high.
 
pb4uski said:
According to Vanguard, a 60/40 portfolio has gained in 68 out of 89 years (over 3/4 of the time)... hardly a leap of faith... more akin to playing the averages.

https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations
Click to expand...

+1.

You will now get the rebuttal from the risk averse crowd that future interest rates will be lower, global economies are different, liability matching strategy and cutting expenses are the only ways for portfolio survival.

I will stick with my balanced portfolio and spend in retirement without worrying about drastically cutting expenses until the market drops by 50%.
 
Corporateburnout said:
...You will now get the rebuttal from the risk averse crowd that future interest rates will be lower, global economies are different, liability matching strategy and cutting expenses are the only ways for portfolio survival. ....
Click to expand...

you forgot.... the sky is falling down too.
 
sansha said:
Early Retirement, as opposed to working until you drop in the traces, is something of a leap of faith.
Click to expand...


Sort of like jumping out of an airplane with a parachute that no one has ever tried before. The concept is there, and the chute should open, but it may be a hard landing. Or get tangled in wires. Or a nice soft landing.

Or it may not open at all in a very small percentage of cases.

You have to pick your happy path plan with plenty of redundancies, have a risk mitigation plan, and a disaster recover plan. FireCalc will help you see what would have happened, not what will happen.

It will not predict your future expenses growth, or unforeseen situations where you might get into trouble.
 
Senator said:
You have to pick your happy path plan with plenty of redundancies, have a risk mitigation plan, and a disaster recovery plan.
Click to expand...

This made me cringe because it brought back memories from my working days in plant management.:mad:
 
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