Big differences between FIRECALC and New Retirement

[dknighd]

It is kind of funny (to me) how a discussion of "do I have enough", or "which tool to trust", turned into $2k dinners. It brings YMMV to a completely new level for me!

 

[LateToFIRE]

It is kind of funny (to me) how a discussion of "do I have enough", or "which tool to trust", turned into $2k dinners. It brings YMMV to a completely new level for me!

To each their own. I get the "why". Though I've never spent anything close of my own $$$ for a dinner for two (my own limit has been ~$500), for some it is all about the special and unique experience, and the memories that creates, as much as the food itself.

P.S. When I hit my retirement button, I could see doing something like this (before I go into austerity shock). Better get on the waiting list now!

 

[Koolau]

It is kind of funny (to me) how a discussion of "do I have enough", or "which tool to trust", turned into $2k dinners. It brings YMMV to a completely new level for me!

Yeah, you'll get used to it after a while.

 

[COcheesehead]

We dropped $400 on a wine paired chef’s selection dinner at the Little Nell in Aspen. It was fun, highly enjoyable and likely represents the upper end of what we would spend on dinner. I can’t think of what I would add to make it more valuable for us.

 

[dknighd]

Never under estimate, or over estimate, the power of the magic wand. AKA money in the bank. And how you spend it. Used with discretion it is a powerful thing.

 

[dknighd]

Just for fun. And education. Assume your loved one will live to 110. And you will die tomorrow. Then reverse the calculation. Very few people will live to 110. And very few people will die tomorrow. But they are both possible.

 

[tmm99]

Has anybody tried Right Capital Premium and New Retirement Premium both? How do they compare in your opinion?

 

[2HOTinPHX]

We upgraded to the paid version of NewRetirement today. 2 week trial period. We played around with it for a few hours tonight. I really like the layout and work flow. For our basic needs it works pretty well. Lots of categories for you add income and expense items and plenty of customization options.
With no debt and low expenses of about 4k per month looks like our 930k investments plus SS has us at 99% success rate even under pessimistic scenario out to age 90, currently 60 and 56. We still end up with a lot left on the table. Still lots to learn. The tax area had us paying nothing till RMDs kick in so not sure if that's right?
Played with the Roth conversion area a little but need more time in it....
It seems to follow the spreadsheet we started but add so much more with charts and stuff.
Further research is needed but so far we like it.

 

[Safe Harbour]

Ok so back to Calculators

I'm surprised no one mentioned the free calculator at Early Retirement Now. I have tried all the calculators listed plus a couple others that were excellent including Income Strategy which was recently bought out by T. Row Price so it only available through them. This was an excellent tool as it allowed you to look at withdrawal strategies (which actually make a big difference) for those in the withdrawal vs the accumulation phase as well as dealing exceedingly well with Taxes and ROTH conversions.

But Early Retirement Now is especially useful because it uses CAPE values to give you (IMHO) a better indication of the proper withdrawal rate for your horizon given current CAPE values. For long term retirees (>40 years) the 4% rule is probably over optimistic. For those shorter term (<30 years) it is probably pessimistic. This calculators is google sheets based and free. You should give it a spin.

 

[G-Man]

It looks like the Fidelity Retirement Planner tool has been updated to reflect the new RMD ages. Also, for me, it looks like the tool is calculating a lower score for me as well. Down like 4 or 5 points. No big deal.

 

[Echard]

I’ve tried and analyzed just about every calculator out there. They all produced different results, which led me down the path of understanding why. Ultimately, what I realized is that there are two big assumptions that must be made that are heavily responsible for the results of any calculator: expected return on stocks and inflation rate.

That led me down a path of capturing capital market assumptions from all of the major brokerages for the returns on different asset class categories for the next 10-20 years (few project 30).

From there I developed a range of stock return assumptions and inflation assumptions along with asset allocation models and bond returns to run optimistic thru pessimistic assumptions.

The bottom line is that there is a great deal of uncertainty about the future returns of stocks and inflation, because of macro factors like government overspending, aging populations, the slowing of internationalization, etc. You can bankrupt a portfolio of $8M under certain scenarios of stock returns, SoRR, spending, and inflation. Conversely, many scenarios result in massive success.

I realized you just have to hope for the best for the next 30 years, and keep spending comfortably under the 4% rule if you can, until some of the SoRR is in the rear view mirror. As inflation and stock returns start to play out, you have a much better handle on the strength of your plan.

 

[marko]

Unpredictable stock gains and inflation have always been the wild card.

One other thing to consider is longevity. By that, I mean that my original plan had to cover 40 years. Now, at age 71, it only needs to cover about 20 years.

My portfolio is not only much larger (2X), but that coupled to a shorter time span, changes the spending profile.

 

[dknighd]

I’ve tried and analyzed just about every calculator out there. They all produced different results, which led me down the path of understanding why. Ultimately, what I realized is that there are two big assumptions that must be made that are heavily responsible for the results of any calculator: expected return on stocks and inflation rate.

That led me down a path of capturing capital market assumptions from all of the major brokerages for the returns on different asset class categories for the next 10-20 years (few project 30).

From there I developed a range of stock return assumptions and inflation assumptions along with asset allocation models and bond returns to run optimistic thru pessimistic assumptions.

The bottom line is that there is a great deal of uncertainty about the future returns of stocks and inflation, because of macro factors like government overspending, aging populations, the slowing of internationalization, etc. You can bankrupt a portfolio of $8M under certain scenarios of stock returns, SoRR, spending, and inflation. Conversely, many scenarios result in massive success.

I realized you just have to hope for the best for the next 30 years, and keep spending comfortably under the 4% rule if you can, until some of the SoRR is in the rear view mirror. As inflation and stock returns start to play out, you have a much better handle on the strength of your plan.

The third unknown is how long you will live, I hate estimating that!
SORR will never go away.

 

[flyingaway]

Unpredictable stock gains and inflation have always been the wild card.

One other thing to consider is longevity. By that, I mean that my original plan had to cover 40 years. Now, at age 71, it only needs to cover about 20 years.

My portfolio is not only much larger (2X), but that coupled to a shorter time span, changes the spending profile.

I'm very much interested in this kind of situations, i.e., you find later you have a lot more money than you expected (2X in your case) and you have less time, how do you modify your spending plan?

 

[Koolau]

Unpredictable stock gains and inflation have always been the wild card.

One other thing to consider is longevity. By that, I mean that my original plan had to cover 40 years. Now, at age 71, it only needs to cover about 20 years.

My portfolio is not only much larger (2X), but that coupled to a shorter time span, changes the spending profile.

I thought about that when I started using FIRECalc. At 58 when I retired, 30 years seemed maybe just a bit optimistic, but not overly so. SO I cheated and each year for a while, refigured FIRECalc as if I'd just retired. Eventually, putting in 30 years seemed ridiculous.

Now, I just say "I'm gonna live to 99" and that means (now) that I would input in 23 years survival. The longer you live, the better things look if your stash hasn't been eroded (mine has grown.)

Fun to play with though YMMV.

 

[2HOTinPHX]

I'm very much interested in this kind of situations, i.e., you find later you have a lot more money than you expected (2X in your case) and you have less time, how do you modify your spending plan?

Unfortunately you also have to try to factor in long term health care needs. One more factor in the great unknowns of retirement.
With all these unknowns it feels like jumping off a cliff sometimes....
It's a tough balance to find between you've had enough of work and when you have enough to not work. [emoji3061]

 

[LateToFIRE]

Unfortunately you also have to try to factor in long term health care needs. One more factor in the great unknowns of retirement.
With all these unknowns it feels like jumping off a cliff sometimes....
It's a tough balance to find between you've had enough of work and when you have enough to not work. [emoji3061]

Having observed up close, and in some cases managed, the LTC situations of close family elders who had resources ranging from +$1M to zero NW, what I have come away with is that much of the worry is hyped and overblown. Don't get me wrong - it's hellish to manage, but it invariably all works out in the end.

It boils down to this: If you've got assets then, yes you may have to exhaust those remaining assets on LTC. But, if you don't have the assets, well then, actually the state is pretty good about providing for you - caveat being as long as you've got really strong, smart advocates who know how to navigate the system for you and who have the time/energy/proximity to make sure you're being treated right.

The other harsh reality is that once you need intensive LTC, your time remaining is likely very short, less than 2 years. Which kinda means that insurers tend to come out ahead on those LTC policies planners like to push because they dribble those benefits out very carefully (i.e. slowly) to run down the clock (been there, seen it ).

Now, of course, most folks don't want to blow the assets they spent a lifetime accumulating, and most want to pass some along to kids, charities, etc. But, IMO that is a different problem.

LTC Hack: Keep your younger family members close, do your estate planning, healthcare decision stuff, and asset sheltering early.

 

[Koolau]

Unfortunately you also have to try to factor in long term health care needs. One more factor in the great unknowns of retirement.
With all these unknowns it feels like jumping off a cliff sometimes....
It's a tough balance to find between you've had enough of work and when you have enough to not work. [emoji3061]

Yeah, I think LTC (no matter how you look at it: LTCi, CCRC, etc.) is a great unknown. Some folks handle it with the options mentioned. Others go naked and hope for the best. With enough investments, you can probably make it w*rk as well. If I had $10mil, I'd self insure and live at home with full time nursing care (if the need arose.) Since I don't have that big a stash, I've bought LTCi - and hope I never use it! What a way to make your FIRE journey w*rk for you! YMMV

 

[Echard]

This is going to sound morbid, but I believe in 20-30 years a lot of people will be looking for ways to go ahead and end their life rather than go into expensive long term care.

 

[Koolau]

This is going to sound morbid, but I believe in 20-30 years a lot of people will be looking for ways to go ahead and end their life rather than go into expensive long term care.

Why would that be? Most people want to live longer.

 

[SecondCor521]

Why would that be? Most people want to live longer.

Not who you asked, but:

To escape current pain or illness
To avoid expected future pain or illness
Everything accomplished / nothing to look forward to / boredom
Loss of spouse, especially for those married for 50 / 60 / 70 years
Beliefs about being reunited with loved ones who have already passed away
In general, any situation which results in significant depression

You're not ready to go. I'm not ready to go. But I know several people at my Dad's CCRC who are ready to go.

 

[Koolau]

Not who you asked, but:

To escape current pain or illness
To avoid expected future pain or illness
Everything accomplished / nothing to look forward to / boredom
Loss of spouse, especially for those married for 50 / 60 / 70 years
Beliefs about being reunited with loved ones who have already passed away
In general, any situation which results in significant depression

You're not ready to go. I'm not ready to go. But I know several people at my Dad's CCRC who are ready to go.

I see your point but that's what councilors and psychologists are for. Depressed people need help not a hot shot.

I know that some folks in horrible pain of end-stage diseases may well want to check out early. I sympathize with such folks. But otherwise "healthy" (age-appropriate illnesses, no doubt) should not be checking out without serious counseling IMHO.

 

[marko]

This is going to sound morbid, but I believe in 20-30 years a lot of people will be looking for ways to go ahead and end their life rather than go into expensive long term care.

In 20-30 years? It goes on today.

 

[COcheesehead]

This is going to sound morbid, but I believe in 20-30 years a lot of people will be looking for ways to go ahead and end their life rather than go into expensive long term care.

Having been with relatives moving into LTC, you likely won’t have the wits about you to even contemplate that decision.

 

[SecondCor521]

I see your point but that's what councilors and psychologists are for. Depressed people need help not a hot shot.

I know that some folks in horrible pain of end-stage diseases may well want to check out early. I sympathize with such folks. But otherwise "healthy" (age-appropriate illnesses, no doubt) should not be checking out without serious counseling IMHO.

I was not and am not arguing for euthanasia; that's a separate discussion. And I agree with you that healthy folks in most cases can get better. OTOH, there are progressive and incurable fatal conditions that are not painful. All I'm saying is I can see why people so afflicted would prefer the Lord take them sooner rather than later (to use the terminology of one of my acquaintances).