Depends on your inputs and particulars (age, time to retirement, time to SS/pensions, AA, etc.). So, if you have less than ~15 years to SS/pension (which is the case, at your current ages of ~61 and 68), you can easily spend >3.5% until SS/pension kicks in. Because Firecalc assumes that you're withdrawing a lower percentage of your invested assets after the 'fixed income' kicks in, the SORR goes down significantly. Look at the first line that goes below zero $ on the graph. How many years after retirement is that? Then add in SS/pension. The success rate should then go to 100%, if you're adequately prepared.My question is if I know how much our income is, how much our expenses will be, and what % I want to draw, does it really matter if I don't need to draw any more than 3.5%? Isn't that the number you need to stay at or under and you will "never" run out of money?
We will have two SS incomes and a pension. We would maybe want to draw up to 5% the first couple of years as we will be moving halfway across the US and then back to 3-3.5% from then on.
Well, the good news is that there will never be enough data to show which of us is right.... I don't equate Firecalc 100% as a guarantee of safety, but I do view 100% as safer than 95% or 80%.
While you are technically 100% correct, the point of the tools is to have something that will help you make a decision, rather than gut instinct. No one can know your expiration date, market returns, inflation, etc., over the next 30 to 50 years.Well, the good news is that there will never be enough data to show which of us is right.
Consider this, though: A set of parameters which, given to FireCalc on 1/1/2007 produced a 100% number but just barely. Now rerun those parameters three years later. I'd expect, and I think you would too, that the result would be quite a bit below 100% due to the Great Recession now being in the history dataset.
Which number is correct? Both of them, because "correct" can only mean that the FireCalc rules and algorithms were properly applied to the parameters and the history dataset.
Which number is the better prediction? No one knows.
Agree. That's why I mentioned that this was the effective WR% when using Firecalc's default AA which is 75% stocks.
Like I said, 100% success rate is not an iron clad guarantee.Well, the good news is that there will never be enough data to show which of us is right.
Consider this, though: A set of parameters which, given to FireCalc on 1/1/2007 produced a 100% number but just barely. Now rerun those parameters three years later. I'd expect, and I think you would too, that the result would be quite a bit below 100% due to the Great Recession now being in the history dataset.
Which number is correct? Both of them, because "correct" can only mean that the FireCalc rules and algorithms were properly applied to the parameters and the history dataset.
Which number is the better prediction? No one knows.
Well, the good news is that there will never be enough data to show which of us is right.
Consider this, though: A set of parameters which, given to FireCalc on 1/1/2007 produced a 100% number but just barely. Now rerun those parameters three years later. I'd expect, and I think you would too, that the result would be quite a bit below 100% due to the Great Recession now being in the history dataset.
Which number is correct? Both of them, because "correct" can only mean that the FireCalc rules and algorithms were properly applied to the parameters and the history dataset.
Which number is the better prediction? No one knows.
Outliving my wife, or my health are my worst nightmare. I can always spend less.but outliving my money is a worst nightmare situation for me.
Oooh ... I think you will not find that even the calculator makers say that. From the Firecalc home page:... The point of the calculators is to give you the best prediction available ...
As H. L. Mencken said many years ago: “For every complex problem, there is a solution that is simple, neat and wrong.” And Einstein: “Everything should be made as simple as possible, but not simpler.”... OldShooter, what alternatives to the models would you suggest?
I don't know what your story is, but I don't think your methods are very realistic for most of us.Yes, I think you are making this too hard for yourself.
*Give us your numbers.* What are your expenses, your pension, your SS and your nest egg. With that, we can at least see if you’re in the ball park.* There is a big difference between FireCalc (100%) and an advisor (25%).* With that base information we should be able to tell which one makes sense. *
**
Personally, I think you should try the Fidelity program.* I’m not sure if it’s available to non-Fidelity members though.* If you have any money with Fidelity, I’m sure you can use it and even get help from them if needed.* I found it very helpful and pretty straight forward.
Does the Pension have a COLA?
Consider this, though: A set of parameters which, given to FireCalc on 1/1/2007 produced a 100% number but just barely. Now rerun those parameters three years later. I'd expect, and I think you would too, that the result would be quite a bit below 100% due to the Great Recession now being in the history dataset.
yes.
I'm not the person you were addressing above, but I would not expect that, and I think you're mistaken if you expect it.
A "100% number but just barely" means that it succeeded in all cases but nearly failed in the worst case historical scenario. Generally speaking, the two scenarios that come up as worst case in history is the Great Depression of the late 1920s/early 1930s, and the stagflation of the late 1960s/early 1970s.(*) To the best of my knowledge the Great Recession is not even close, particularly since the stock market has done very well since then.
Since the Great Recession does not present a new historical worst case, it would follow then that the "100% number but just barely" would continue to be a "100% number but just barely" and not "quite a bit below 100%" that you expect.
(*) The specific worst case will depend on the particular input data chosen. In my case Stagflation represents the worst case.
Agree with the above.
Minor point - many folks state that inflation is our greatest worry as retirees, but is it a major worry if one's personal inflation rate is much lower?
In this case, wouldn't one receive the advantages of higher rates on the Fixed side, but not the negative inflation concerns?
You state that the expenses are padded, but choice #2 is more realistic.
Does that mean realistic but padded or just realistic?
Have you included potential lumpy expenses like a new roof/new cars, etc in the budget?
You’re not at 25%, but you’re not at 100% either. With budget #3, you’re probably close to 100%, but with budget #1, you’re not in a good place. Probably something like 75%. So, hard to tell what happened with your financial planner model but my guess is a very conservative market assumption (no growth) and using budget #1.
You said the pensions are COLA’d. Do your expenses include taxes? According to your first post, your budgets do include healthcare. Assuming the healthcare is a large number, modeling how that changes as you go onto Medicare will help a lot.