100% success and how complicated can it be?

[Dtail]

Not odd at all. The programmer can decide which to do. Anything like a Monte Carlo is going to use a random number generator in the program. But these are actually "pseudo-random" - you feed it a seed, and it generates a 'random' number from that seed. If you give it the same seed every time, you get the same 'random' number. But there is essentially zero correlation between the seed and the resulting 'random' number.

So the programmer uses a fixed seed if they want a 'random' sequence that is the same each time each time the program is run. Or they use the date/time or some other ever-changing number as the seed, if they want a different test sequence each time. Just depends what you are looking for.

-ERD50

Being a non engineer, this is interesting. I felt there was some concept of this nature being used, but couldn't express it as such.

So if given this is the nature of the Fidelity model, would it then capture the "tails" of a typical Monte Carlo type testing and thus provide a more conservative result vs. an historical sequential analysis?

 

[ShokWaveRider]

I find Firecalc somewhat confusing. Here is a scenario I put in (it is somewhat hypothetical) Here are the results. The parts highlighted are what confuses me.

FIRECalc Results (Consistent growth)
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.

FIRECalc looked at the 91 possible 30 year periods in the available data, starting with a portfolio of $4,400,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 91 cycles. The lowest and highest portfolio balance at the end of your retirement was $1,749,946 to $4,400,000, with an average at the end of $1,749,946. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

Since you elected the "crystal ball" option for every year, every year will have succeeded or failed, so it is 0% or 100%. FIRECalc found that 0 cycles failed -- the portfolio was depleted before the end of the 30 years -- for a success rate of 100%

But it says there will be $1,749,946 left after 30 years?

 

[Dtail]

I find Firecalc somewhat confusing. Here is a scenario I put in (it is somewhat hypothetical) Here are the results. The parts highlighted are what confuses me.

FIRECalc Results (Consistent growth)
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.

FIRECalc looked at the 91 possible 30 year periods in the available data, starting with a portfolio of $4,400,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 91 cycles. The lowest and highest portfolio balance at the end of your retirement was $1,749,946 to $4,400,000, with an average at the end of $1,749,946. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

Since you elected the "crystal ball" option for every year, every year will have succeeded or failed, so it is 0% or 100%. FIRECalc found that 0 cycles failed -- the portfolio was depleted before the end of the 30 years -- for a success rate of 100%

But it says there will be $1,749,946 left after 30 years?

They are translating that 0 cycles failed, meaning related to the portfolio being depleted by the end of 30 years had 100% success.
Just a little convoluted way of stating it.
It also means that the least amount of monies you will have left in this 30 year scenario based on historical sequencing is 1.7m.

 

[SecretlyFI]

OP, is your DH pension 100% survivor? Make sure you’re planning for the possibilities of one outliving the other, for things like pension and SS.

 

[ShokWaveRider]

They are translating that 0 cycles failed, meaning related to the portfolio being depleted by the end of 30 years had 100% success.
Just a little convoluted way of stating it.
It also means that the least amount of monies you will have left in this 30 year scenario based on historical sequencing is 1.7m.

Thanks, not bad considering I used a 3.5% rate of return with a 2% personal inflation rate (Although I calculated our inflation rate to be more like 1%)

 

[pb4uski]

I find Firecalc somewhat confusing. Here is a scenario I put in (it is somewhat hypothetical) Here are the results. The parts highlighted are what confuses me.

FIRECalc Results (Consistent growth)
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.

FIRECalc looked at the 91 possible 30 year periods in the available data, starting with a portfolio of $4,400,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 91 cycles. The lowest and highest portfolio balance at the end of your retirement was $1,749,946 to $4,400,000, with an average at the end of $1,749,946. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

Since you elected the "crystal ball" option for every year, every year will have succeeded or failed, so it is 0% or 100%. FIRECalc found that 0 cycles failed -- the portfolio was depleted before the end of the 30 years -- for a success rate of 100%

But it says there will be $1,749,946 left after 30 years?

If success is 100% then 0 of the 91 cycles failed.... since failure is a portfolio value less than zero sometime during the 30 year time horizon, then it makes sense that the average ending value woud be greater than zero.

What doesn't make sense in what you wrote/copied from FIRECalc is that the range would be $1,749,946 to $4,400,000 and the average would be $1,749,946. Are you sure you copied it right? The average should be somewhere between the high and the low and it is highly unlikely that the high value would be the same as the beginning value.

 

[GravitySucks]

OP, is your DH pension 100% survivor? Make sure you’re planning for the possibilities of one outliving the other, for things like pension and SS.

Taxes also take a big jump when you lose your spouse.

OP,
For a 100% success, redefine what success is.
I have mile marker goals laid out every 5 years. One is to make it to 70 to start SS, with the house, a newer car, and 1/2 my portfolio intact. Firecalc says about 85% chance of this, but 100% chance I'll have 1/3 of the portfolio preserved. (And a 50% chance the portfolio will be larger than now.) Meeting this goal is success, not meeting it doesn't hurt to bad.
At overall success time I'm not going to care how much money I have, overall failure and I guess I'll have some good stories and memories of riches squandered.

 

[ShokWaveRider]

If success is 100% then 0 of the 91 cycles failed.... since failure is a portfolio value less than zero sometime during the 30 year time horizon, then it makes sense that the average ending value woud be greater than zero.

What doesn't make sense in what you wrote/copied from FIRECalc is that the range would be $1,749,946 to $4,400,000 and the average would be $1,749,946. Are you sure you copied it right? The average should be somewhere between the high and the low and it is highly unlikely that the high value would be the same as the beginning value.

Yes that is exactly how it came out of FireCalc, unless cut an paste is choosy...

 

[daylatedollarshort]

Our formula is pretty simple. By spending less than SS, pensions and TIPS interest, our net worth should be at least the same when we die as it is today in inflation adjusted dollars. If we wanted to spend down principal, and we keep at least a zero real interest rate, then we can have a safe withdrawal rate of 3.33% (100 / 30 years remaining retirement years = 3.33%). With some real return, we can safely withdraw a bit more. TIPS 20 years are at inflation + .31%. When one of us passes, the other will still keep the portfolio, pensions and higher SS and the current home which will likely be downsized so the numbers still work for one.

When we retired, 30 year TIPS were at inflation plus 2% and that seemed good enough for us. Yields are lower now but our expenses ended up lower than we budgeted, plus we have a ladder that captured some of the higher yields, so we should still be okay.

 

[pb4uski]

Not odd at all. The programmer can decide which to do. Anything like a Monte Carlo is going to use a random number generator in the program. But these are actually "pseudo-random" - you feed it a seed, and it generates a 'random' number from that seed. If you give it the same seed every time, you get the same 'random' number. But there is essentially zero correlation between the seed and the resulting 'random' number.

So the programmer uses a fixed seed if they want a 'random' sequence that is the same each time each time the program is run. Or they use the date/time or some other ever-changing number as the seed, if they want a different test sequence each time. Just depends what you are looking for.

-ERD50

But if you get the same "random" number then it isn't really random and it follows that it isn't really Monte Carlo.... it is "pseudo-Monte Carlo".

 

[Camas Lilly]

OP, is your DH pension 100% survivor? Make sure you’re planning for the possibilities of one outliving the other, for things like pension and SS.

Yes it is 100%. Thanks for asking. I welcome any double checking as that really is the purpose for checking and re-checking, isn't it?

Also the survivor expenses should decrease along with the decrease of income. Right now we have 2 homes, 7 vehicles, several trailers, tractors, implements, etc. Trying to get to at least 4 vehicles by move time ( 2 are already there). The second home is a single wide mobile home in the place we are moving to, but not large enough, not so much for all our belongings, but the pets would need more space to co-exist or have to be divided between two places. Cramming them into 900 sq. ft. from 5,000+ sq. ft. would not be pretty. There is also potential for rental income (or guest house) there too that I am not figuring.

 

[N02L84ER]

If success is 100% then 0 of the 91 cycles failed.... since failure is a portfolio value less than zero sometime during the 30 year time horizon, then it makes sense that the average ending value woud be greater than zero.

What doesn't make sense in what you wrote/copied from FIRECalc is that the range would be $1,749,946 to $4,400,000 and the average would be $1,749,946. Are you sure you copied it right? The average should be somewhere between the high and the low and it is highly unlikely that the high value would be the same as the beginning value.

It sounds like he put in a fixed rate of return, 3.5%, a fixed inflation, 2%, and a withdrawal rate > 3.5%. The High value is his starting value. The Low value is the final year.