FireCalc - What is your % now?

As 2008 comes to a close many of us have seen and discussed how much our respective protfolios declined. This has certainly been unsettling for many in ER. Having made the transition from full time wage slave to semi-ER in April 2008 the large decline in the markets has been an attention getter!!!

Thankfully I have a LBYM lifestyle and there was a lot of cushion for me to try an ER. FireCalc gave me a 100% probability of success based on my parameters this spring. I take some assurance that even with a portfolio taking a 23% drop due to the market decline I am still at 99.1% as of yesterday. this uses the same withdrawal amount and years of expected retirement. I am thankful to see that.

I realize that my Firecalc prediction in April is what it was going into my ER but it is good to see a high probability of success if were starting ER today after the fall.

So with that said, if you run Firecalc today with your current balance what do you get for a % and does it give you confidence or create more anxiety?

I was at a 3% withdrawal rate, now I'm at 4%.

And I think combined with with careful tax loss selling this year and the capital losses realized by mutual funds going forward, the taxes on that 4% will be lower than usual for the next couple of years which gives me a little extra.

I used to feel really comfortable with what my portfolio could support. Now I just feel "safe", but that's better than the alternative!

Also, my "cash cushion" bucket is really helping me weather these horrible market conditions, because I don't have to withdraw from my retirement fund until 2011.

Audrey

Still 100%.

I'm still at 100% and while I was feeling queazy when the market was tanking I'm still okay at 4% which has a lot of padding in it . I could do 3% but why should I ?

At the beginning of the year I was at 2.75%. Now I'm at 3.75%. Most of my fluff is gone as are my (for now) 'big ticket' spending plans. The good news is that so far interest and dividends exceed my living expense needs.

Since I am will not retire for another 11 months, I used Firecalc to determine how much I could spend with 100% probability of success, given my own situation, asset allocation, pension, and so on.

It tells me I could spend about 3.4% of what I have now. I was planning to begin ER by spending less than that anyway, at least until I get my feet wet.

i now have about as much faith in retirement calculators as i do in churches.

lazygood4nothinbum said:

i now have about as much faith in retirement calculators as i do in churches.

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Leaving church out if it, how have retirement calculators disapointed you?

What promises did they ignore?

Ha

seeing a thing as it is and not as you have imagined it to be does not disappoint but enlightens.

i'm not sure i understand your question "what promises did they ignore." perhaps if i only used the church as a social gathering place, and not for prayer.

i have not been a student of economics for long, only for these past two years of early retirement so i realize that i don't know much. this has been quite the two year education. from what little i can see, i wonder if a paradigm is changing.

it seems nothing more than a crap shoot to take long term averages and apply them to short term lives. it all sort of depends when you hop on the ride. never mind that those averages only include, as only they could, the past and so do not take into account potential future conditions such as, say, the looming $50 trillion dollar deficit the u.s.a. will likely face in my lifetime. i can not even wrap my brain around such numbers. perhaps if the calculators added a hyperinflation button to push. can you say 2% swr? i simply don't know how anyone puts faith in that.

shotgunner said:

So with that said, if you run Firecalc today with your current balance what do you get for a % and does it give you confidence or create more anxiety?

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100%, same as before. Our spending has dropped a bit over the last six years, though, so that helps maintain a margin of safety.

I retired in June 2002, so our ER started at a minimum portfolio with a slim margin of safety. The next five years nearly doubled the portfolio, and now we have a rental home with a bit of cashflow. So I keep ramping up our spending projection until FIRECalc drops to a 95% success ratio, and then spouse & I discuss what we'd have to do to force our spending up to that level. Heck, we're spending more time discussing refinancing our mortgage(s) than on figuring out ways to spend more money. But we've boosted our charitable donations, which makes us feel better.

When the Dow's over 14,000 it's impossible to figure out how you & spouse would feel during a recession. The spontaneous exclamations of "Woo-hoo!" really derail the discussion. But in times like these it's a lot easier to have the "How do you feel about..." talks and then decide what you'll do for the next 30-40 years. In our case, instead of automatically reinvesting dividends we'll be more likely to let them pile up and then use them to value-average rebalance every year or two. But if we feel like taking money off the table, it'll be a lot easier to do. This tactic will knock a percent or two off of our future portfolio performance, but we've already shown (through not one but two market freefalls) that we have "enough".

Down to 82.2% with just the portfolio....but it looks like
social security will save me IF it's still there in 2017 !

...and I probably should add that in order to assure
my success, I need to die by the time that I am 84 ......

Still @ 100%, which surprises me in a way. But after rethinking my situation I realize that my DB plans as well as SS are really lowering my needs (income-expenses) in fact I could increase my expenses by 50% w/o causing a ripple in my Plan.

Since expenses are the easiest thing for me to control, I'm not sure how I could actually increase my expenses.

Jan 1, 1993. aka before FireCalc I think. So I run it once in a while to feel warm and fuzzy and then go to my current rule of thumb:

Somewhere between the SEC yield of my portfolio (usually 3% or higher) and 5% variable depending on my mood for the coming year - el cheapo or expansionist. Gloom and doom wise probably more toward cheap in 2009.

I did cheat post Katrina and took 6% in 2006. Theoretical purity is not one of my strongpoints.

I also play with ORP and then then do what I do - takeout wise.

heh heh heh -

mickeyd said:

Still @ 100%, which surprises me in a way. But after rethinking my situation I realize that my DB plans as well as SS are really lowering my needs (income-expenses) in fact I could increase my expenses by 50% w/o causing a ripple in my Plan.

Since expenses are the easiest thing for me to control, I'm not sure how I could actually increase my expenses.

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I'm not sure, but there is this rumor going around... apparently you can't take it with you... You may have to check with Unclemick on that.

I was at 100% early in August -- I'm down to 82% now. But I'm still planning to retire in April. I've got enough cash to last several years, and enough padding in my retirement budget to comfortably cut back a bit on spending.

Coach

FIREdreamer said:

I'm not sure, but there is this rumor going around... apparently you can't take it with you... You may have to check with Unclemick on that.

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The $100 bills, tightly wrapped around the shafts of the flaming arrows, are what make them burn so brightly.

Wish I knew which were FIRECALC and which were SIRECALC...

I ran firecalc when I retired 2 years ago and it said 100%. Are we supposed to re-run the #'s now or just go based on what it said at retirement? I was just going to go to the 95% rule next year on spending.

Don't think I want to know what it would say with today's #'s.(heh)

FIREdreamer said:

I'm not sure, but there is this rumor going around... apparently you can't take it with you... You may have to check with Unclemick on that.

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Has unclemick seen this picture as an example? Look at the LCD TV!

By the way, it was sent to me as an E-mail attachment from a friend about "taking it with you". No explanation, so I don't know where the picture came from. Thought I just pass it on.

HEH HEH HEH ...

Gee, I am turning into a younger unclemick...

73ss454 said:

I ran firecalc when I retired 2 years ago and it said 100%. Are we supposed to re-run the #'s now...

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Yes. And just to be safe, cut whatever it says by 50%.

REWahoo said:

Yes. And just to be safe, cut whatever it says by 50%.

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Yeah, DW will be thrilled.

NW-Bound said:

Has unclemick seen this picture as an example? Look at the LCD TV!

By the way, it was sent to me as an E-mail attachement about "taking it with you". No explanation, so I don't know where it came from. Thought I just pass it on.

HEH HEH HEH ...

Gee, I am turning into a younger unclemick...

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Maybe that's what they mean by "crab mentality"? If I can't enjoy it anymore, neither can you!

I want to be cremated, so should they just pile up all my furniture, put me on top and strike a match? What about the stuff that cannot be reduced to ashes (gold, silver, etc...), should it be buried with my remains? I ain't leaving nothin' behind...

The ancient Egyptians sure did believe you could take it with you, but hey, I am not betting against the oracle of KC... He seems to know his stuff.

I'm at about a 24% withdrawal rate, but I'm not retired yet, and not withdrawing at the moment...

2Cor521

If I retired today, using a life expectancy of 90, and my "comfortable but not luxurious" expense projections, I would be at a 3.7% WR, and 97.9% success expectation. If on the other hand I use a life expectancy of 85, the expectation of success drops to 94.9%. I didn't try adding in SS because I never use it for my FIRE planning. If it is there when I'm 62+, it will be play money. If not, I will not have expected it anyway. This does include a windfall that I have earned and will be received and invested in Q1 next year. The above is what I keep posted in my head just in case I wake up one morning, decide I can't take anymore, and spit the dummy.

I have a slightly more luxurious spending plan, and two lower spending plans, each very do-able, although the lowest would require us to sell our dream home, and move to a less costly location...which would boost the portfolio and give us more to spend (it is really just a worst case scenario contingency plan that is still very liveable). The first level lower spending plan gets us 3.25% WR and 100% success on current port. The lower one, after selling the McMansion and buying something in the 3000' range, would put us at about 2.3% considering the cost of living in the location we are considering for the contingency plan. The more slightly luxurious plan is sitting right on 4% at the moment, but that includes the ongoing expenses associated with a couple of toys I would like to buy, and would need to save for before FIRE (don't have the toys yet).

I'm shooting for FIRE in 2-3 years with an SWR of about 3.2-3.4%, on my slightly more luxurious spending plan. I guess I could pull the plug when DD graduates in June, but there are those couple of toys I'd like to have as I enter the world of ER...and the economic uncertainty kind of makes me want to hang onto the income from w*rk just a bit longer.

R

Rambler said:

If I retired today, using a life expectancy of 90, and my "comfortable but not luxurious" expense projections, I would be at a 3.7% WR, and 97.9% success expectation. If on the other hand I use a life expectancy of 85, the expectation of success drops to 94.9%.

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How does your success rate drop if you die earlier? I would have expected the opposite....

2Cor521