FIRECalc Success Rate & RE

[tb001]

After running our numbers on a couple of sites, we're starting to get into % success rates that are looking pretty good. That said, FireCalc has definitely been the most optimistic.

I'm curious what % success rate people feel comfortable with, and what age you plan to, especially given the current market conditions. A 95% success rate in FIRECalc feels pretty good, but is it *really* 95% after an extended bull market, given SORR...

I know the answers to this Q will vary tremendously depending on risk tolerance, age, buffer, etc... but am curious to hear the responses.

FWIW, in FIRECalc, we're at 88% with most aggressive assumptions (no downsizing, live to mid-90s, high spend level with fair amount of extras), 95% assuming we cut our [padded] budget by about 5% and live to 90, and 100% if we add in a downsizing to that last scenario.

I'm having trouble pulling the trigger, I think mainly because I know how stressed I will be in a downturn. After watching our investments grow and adding money year after year, the thought of pulling money out is pretty stressful, especially given where the markets are right now.

I find myself wanting to hit that 100% success rate for our most aggressive assumptions, but filled with dread at the thought that the market may take a turn for the worse in the interim and leave us stuck w*rking through a recovery, just to get back to where we are now.

 

[Bir48die]

You didn’t include any information in regards to age, portfolio or budget. From an emotional standpoint I stressed jumping off three years ago awaiting the downturn. Still waiting. Enjoying life in the meantime

 

[SumDay]

I'm curious what % success rate people feel comfortable with, and what age you plan to, especially given the current market conditions. A 95% success rate in FIRECalc feels pretty good, but is it *really* 95% after an extended bull market, given SORR...

My middle name is 'Nervous Nelly' so nothing below 100% satisfied me. We pulled the trigger last fall at 61 and 64, and then had a pretty rough ride in the market during the last few months of 2018. I will admit it was pretty scary, as I was preparing to make our first withdrawals in January 2019. Luckily, we bounced out of that slump, I made our withdrawals and we aren't eating cat food.

A Bucket Strategy helps me sleep at night. Something about having that cash bucket sitting there (I know, not performing well...) is very comforting. I agree that moving from saving to spending is a huge shift. But getting to that spending phase is why we saved all those years, right? I just knew it was time, and obviously the 100% @FireCalc helped.

YMMV. Good luck!

 

[tb001]

You didn’t include any information in regards to age, portfolio or budget. From an emotional standpoint I stressed jumping off three years ago awaiting the downturn. Still waiting. Enjoying life in the meantime

So when you jumped, what was your success rate?

Didn't include the additional info because I'm not sure how relevant it is, though I suppose my answers would change if we were in our 60s or budgeting a frugal retirement.

We're in our late 40s/mid 50s, with young kids. Our expenses are high, but we want to maintain our current lifestyle, at least until the kids are launched. Without the ability to do that at a 'reasonable' success level we wouldn't be RE. I just have no idea what reasonable is!

[and I know past 80-90%, these things are a lot of hand waiving, but the risk averse/Type A person in me likes the idea of being at 100%!]

 

[Midpack]

I'm curious what % success rate people feel comfortable with, and what age you plan to, especially given the current market conditions. A 95% success rate in FIRECalc feels pretty good, but is it *really* 95% after an extended bull market, given SORR...

FIRECALC results have almost nothing to do with what the market has done recently, and neither does the success rate. It uses ALL market and inflation history including actual sequence of returns from 1871 to present including every bull market, every bear market, the Depression, the Great Recession, World Wars, etc. Using the 30 year example, unless the last 30 years are better or worse than ANY other 30 year period from 1871 to present, the SWR and success rate will be essentially unchanged from one year to the next.

I know the answers to this Q will vary tremendously depending on risk tolerance, age, buffer, etc... but am curious to hear the responses.

You're right, it varies based on all sorts of factors. I’ve seen people who are OK withdrawing as much as 5% and others a few who’re targeting 1.5-2.0%. That would be a success rate of 72.9% (5% WR) to in effect 200% (2% WR). There are definitely people here who plan to withdraw less than the $ amount that the 100% success rate threshold $ amount.

While risk tolerance, age, buffer (?) are indeed big factors, how much secure income one has versus relying on portfolio may be an even bigger factor.

I don’t know if there’s been a success rate poll, but I suspect there’s been several WR polls. One will give you the other.

 

[tb001]

My middle name is 'Nervous Nelly' so nothing below 100% satisfied me. We pulled the trigger last fall at 61 and 64, and then had a pretty rough ride in the market during the last few months of 2018. I will admit it was pretty scary, as I was preparing to make our first withdrawals in January 2019. Luckily, we bounced out of that slump, I made our withdrawals and we aren't eating cat food.

A Bucket Strategy helps me sleep at night. Something about having that cash bucket sitting there (I know, not performing well...) is very comforting. We all have to do what makes us comfortable.

YMMV. Good luck!

Ha! You understand! I've looked into the bucket strategy, but then if you model keeping a % of portfolio in cash, that 100% is even farther away!!

 

[tb001]

FIRECALC results have almost nothing to do with what the market has done recently, and neither does the success rate. It uses all market and inflation history including actual sequence of returns from 1871 to present including bull markets, bear markets, the Depression, the Great Recesison, World Wars, etc.

You're right, it varies based on all sorts of factors. I’ve seen people who are OK withdrawing as much as 5% and others a few who’re targeting 1.5-2.0%. That would be a success rate of 72.9% (5% WR) to in effect 200% (2% WR). While risk tolerance, age, buffer (?) are indeed factors, how much secure income one has versus relying on portfolio may be a bigger factor.

Midpack, you've hit on my concerns r.e. FIRECalc... It's been a bit reassuring to see that, using that *other* calculator, our failures have all been in the stagflation years of the 60s. Somehow that seems less stressful than a market drop.

We are reliant on our portfolio for >80% of our spend, at least in the early years, so you're right, that's a big contributor to my feeling of uncertainty. In part, the answer is appropriate asset allocation and we've looked into various glide path models.

But really, I'm curious to hear how others think about balancing success rate with risk and current market conditions.

 

[dtbach]

Are you the type of people who would be OK with living below your standards now? How much of a hit in lifestyle would there be to get to 100% right now?
My DW and I like a nice standard of living and so we worked about 5 years longer to achieve that (getting bigger pensions, more of a stash, etc). We are now reaping the rewards and don't really expect to lower our spending patterns for a long period of time.
We both had jobs that weren't "Hell" so maybe that could make a difference for you.

 

[Midpack]

Midpack, you've hit on my concerns r.e. FIRECalc... It's been a bit reassuring to see that, using that *other* calculator, our failures have all been in the stagflation years of the 60s. Somehow that seems less stressful than a market drop.

We are reliant on our portfolio for >80% of our spend, at least in the early years, so you're right, that's a big contributor to my feeling of uncertainty. In part, the answer is appropriate asset allocation and we've looked into various glide path models.

But really, I'm curious to hear how others think about balancing success rate with risk and current market conditions.

I understand. If 80% of your income is secure it’s not hard to accept a much lower success rate than someone who’s relying on a personal porfolio for 80% of income, the difference is significant. IME folks here usually answer without divulging their reliance on secure vs personal portfolio, so make sure you ask and factor that in. And you’d have to know many other factors to draw worthwhile conclusions.

The general answer to your last sentence is where 4% was once considered the SWR, many are now saying 3% is the new SWR based on risk/current long term market outlook. IOW many have gone from accepting a 95% success rate to planning on just over 100%.

 

[GravitySucks]

My first run was a bit above 80% so thought I was fine, but I am widowed with adult children. With young children I'd probably want 110%.

 

[COcheesehead]

I use 100%, no real reason other than I can. FireCalc tells me that at that level I can take out about 4.5% for 35 years. My budget though is really closer to a 3% withdrawal rate so I figure that is a pretty good buffer for those odd years with one off expenses.
I am in countdown mode. Nothing will stop us from pulling the plug next year.

 

[MichaelB]

We rely on portfolio for >95% of our budget. FIRECalc gave me an 84% success rate. A bit low. I had already quit my job a couple of years earlier, was enjoying life and did not want to return to work, so I sucked it up.



I ran FIRECalc 2 Years ago and it projected 100%. It's now down to 95%, but only because I have significantly upped the budget for travel.

 

[Carpediem]

We rely on portfolio for >95% of our budget. FIRECalc gave me an 84% success rate. A bit low. I had already quit my job a couple of years earlier, was enjoying life and did not want to return to work, so I sucked it up.

I ran FIRECalc 2 Years ago and it projected 100%. It's now down to 95%, but only because I have significantly upped the budget for travel.

MichaelB, If you don't mind me asking, what do you do for HC? ACA? Medicare?

We're in a very similar boat to what you described and I'm an extreme Nervous Nelly to pull the trigger given ACA and healthcare costs. We're 5 years away from Medicare.

 

[Live And Learn]

My portfolio provides 100% of my income for the first 15 years of ER so I went with 100% success in FIRECalc and 90% certainty of my portfolio lasting to age 95 in Fidelity RIP. In both cases I also included full cost ACA premiums and both of us hitting our OOP maximum in HC costs in the budget, and only included 67% of projected SSI. Why ? Because I knew that once I left the w*rkforce there is NO WAY I'd want to ever return ... and I was right ... just the thought of going back to w*rk gives me a sad sad feeling.

 

[Dtail]

I am retired for 20 months and in a couple of years will depend on our portfolio for 75% of spending for ~8 yrs, then at 70 y.o. will depend on the portfolio for ~40%.

Nevertheless, I am one who believes heavily in the calculators and am 100% in Firecalc/Fidelity and using 4 other calculators.
I still review the results monthly, but am also into numbers in general.
Even though the 100% number is important to me, OTOH I don't pad any numbers or take haircuts on SS and other things, so the numbers are more realistic (to me) and thus might cut expenses sooner than others.

As @Midpack effectively stated, it is very important to note that just because one retires possibly near the end of a bull market, that doesn't mean that the numbers are not just as valid as retiring at the end of a bear market.

 

[Rianne]

I pad the spending, big time. Keep pushing it higher to stay within 100%. If left with $100K at the end, so be it. Interesting, the VG Nestegg, using Monte Carlo simulation, which is similar to firecalc, does not want to give you 100%. Unless your SWR is super low. It's like they don't want you to feel confident.

 

[freedomatlast]

Finally reached 100% success rate for more than twice our average spending over the last three years which included weddings, new cars, major home improvements etc. So I'm finally at the point where I'm comfortable that we're good to go. Now if I can just shed the OMY syndrome and pull the plug..........

 

[DogGone]

I’m hours away from pulling the trigger after a month of fierce study. I am 52 so really want to be confident.

After using many other models... I’d say the FireCalc result is consistent with my other models when using a balanced portfolio, not the default high stock exposure.

With some effort and the 14 day trial period, I love NewRetirement ‘s model. The PlannerPlus option let’s you see all the details of the assumptions in spending/income by year and most importantly let’s you time phase changes, see details to ensure inflation is hitting your inputs as expected, etc.

The big downside is you have to input an optimistic and pessimistic range for rates of return, inflation, etc... no Monte Carlo, though apparently planned.

You can also save multiple scenarios, like “lose 25% in crash” and easily toggle between them.

I found Vanguard Best Egg and Fidelity way to optimistic.

 

[MichaelB]

MichaelB, If you don't mind me asking, what do you do for HC? ACA? Medicare?

We're in a very similar boat to what you described and I'm an extreme Nervous Nelly to pull the trigger given ACA and healthcare costs. We're 5 years away from Medicare.

A long answer, probably more than you want to read

When I first quit I didn’t have access to Cobra. We lived in NY, which had a guaranteed issue requirement, so we had a crappy policy that covered the basics. When we moved to Florida I got coverage using short term policies for a year, then through a good friend who put me on her payroll - no salary, but it gave me access to her small group policy. Once the ACA was passed I finally had access to comprehensive health insurance. I recently became eligible for Medicare, and have a G supplemental policy.

 

[COcheesehead]

I’m hours away from pulling the trigger after a month of fierce study. I am 52 so really want to be confident.

After using many other models... I’d say the FireCalc result is consistent with my other models when using a balanced portfolio, not the default high stock exposure.

With some effort and the 14 day trial period, I love NewRetirement ‘s model. The PlannerPlus option let’s you see all the details of the assumptions in spending/income by year and most importantly let’s you time phase changes, see details to ensure inflation is hitting your inputs as expected, etc.

The big downside is you have to input an optimistic and pessimistic range for rates of return, inflation, etc... no Monte Carlo, though apparently planned.

You can also save multiple scenarios, like “lose 25% in crash” and easily toggle between them.

I found Vanguard Best Egg and Fidelity way to optimistic.

If you like "what ifs" there is an app called Retire Plan. It lets you buy a car every 7 years, or less, get an inheritance, have a market correction, remodel the house, etc...endless fun of watching your nest egg shrink.

 

[Dtail]

I’m hours away from pulling the trigger after a month of fierce study. I am 52 so really want to be confident.

After using many other models... I’d say the FireCalc result is consistent with my other models when using a balanced portfolio, not the default high stock exposure.

With some effort and the 14 day trial period, I love NewRetirement ‘s model. The PlannerPlus option let’s you see all the details of the assumptions in spending/income by year and most importantly let’s you time phase changes, see details to ensure inflation is hitting your inputs as expected, etc.

The big downside is you have to input an optimistic and pessimistic range for rates of return, inflation, etc... no Monte Carlo, though apparently planned.

You can also save multiple scenarios, like “lose 25% in crash” and easily toggle between them.

I found Vanguard Best Egg and Fidelity way to optimistic.

Fidelity used to be in general the most conservative, but they changed their medical inflation down to 4.9% which is still higher than the generic inflation used by other calculators.
However, they seemed to have changed something else which isn't apparent to me, but my numbers apples to apples have gone higher in the last 3 months relative to the other calculators (not due specifically to market gains).

 

[HI Bill]

Ha! You understand! I've looked into the bucket strategy, but then if you model keeping a % of portfolio in cash, that 100% is even farther away!!

A little. But if you keep 90% in equities, rathern than, say, VG's recommended max of 65%, not so much different. I have 90/5/5, and the firecalc results are similar to having 80/20.

 

[HI Bill]

I found Vanguard Nest Egg...way to optimistic.

This one's based on Monte Carlo, so I think it gives similar results to other calculators, but doesn't factor in SS, Pension, or other income outside of your "savings balance today". I really like the MarketWatch calculator. You can add SS, pension, extra spending, etc., and it models draw-down based on your activity level, inflation, and future changes in spending. But it over-allocates housing costs, and this is largely not adjustable.

https://www.marketwatch.com/calculator/retirement/retirement-planning-calculator

 

[COcheesehead]

Fidelity used to be in general the most conservative, but they changed their medical inflation down to 4.9% which is still higher than the generic inflation used by other calculators.
However, they seemed to have changed something else which isn't apparent to me, but my numbers apples to apples have gone higher in the last 3 months relative to the other calculators (not due specifically to market gains).

Interesting. I noticed mine went up a bit, but chalked it up to increasing assets.

 

[SecondCor521]

I'm curious what % success rate people feel comfortable with, and what age you plan to, especially given the current market conditions. A 95% success rate in FIRECalc feels pretty good, but is it *really* 95% after an extended bull market, given SORR...

I know the answers to this Q will vary tremendously depending on risk tolerance, age, buffer, etc... but am curious to hear the responses.

FWIW, in FIRECalc, we're at 88% with most aggressive assumptions (no downsizing, live to mid-90s, high spend level with fair amount of extras), 95% assuming we cut our [padded] budget by about 5% and live to 90, and 100% if we add in a downsizing to that last scenario.

I'm having trouble pulling the trigger, I think mainly because I know how stressed I will be in a downturn. After watching our investments grow and adding money year after year, the thought of pulling money out is pretty stressful, especially given where the markets are right now.

I find myself wanting to hit that 100% success rate for our most aggressive assumptions, but filled with dread at the thought that the market may take a turn for the worse in the interim and leave us stuck w*rking through a recovery, just to get back to where we are now.

I'm 49, single, FIREd 3 years, and have three kids 24, 19, 17. I'm quite logic-oriented and comfortable with risk. AA of 93/7. I would feel comfortable with a spend rate that would have been 95% historically safe for 40 years. I spend far less than that and need to work on spending more.

Note that FIREcalc already includes SORR, because it iterates the planning period over each start date. So when it comes up with 4% (or whatever), that's 4% assuming you started at the worst SORR we've seen so far.

At the end of the day, you rolls your dice and you takes your chances. I think looking at in terms of regret is helpful: Which would you regret more - working another X years to get to 100% and then realize you didn't need it, or retire early and risk having to cut back or go back to work?

I pad the spending, big time. Keep pushing it higher to stay within 100%. If left with $100K at the end, so be it. Interesting, the VG Nestegg, using Monte Carlo simulation, which is similar to firecalc, does not want to give you 100%. Unless your SWR is super low. It's like they don't want you to feel confident.

FIREcalc is a historical-based calculator. VG is a Monte Carlo simulator. They are similar in that they both provide data about retirement readiness, but how they do so is quite different. IME, Monte Carlo simulators tend to be a percent or two more conservative than historical calculators.