When I read through the assumptions on FIRE it said it did not take taxes into consideration. I guess the spending rate should also include your estimated taxes to be accurate? Everything else about the default option w 75% equity 25% fixed income and .18 expense ratio fits my portfolio almost to a tee.
I have used the "ultimate retirement calculator" which you can google online which is a straight line calculation. What I like about it is that you can choose inflation rate, tax rate, return rate and what estate you would like to leave. It basically says I can spend $220k at a 13.5% tax rate with a 7% return and 2.5% inflation with $5.5mm at age 45 to leave roughly $15mm at age 87, which is the future values of $5.5mm at 2.5% inflation at age 87.
What I like about FIRE is that it is more a monte carlo simulation in real world market environments. When I plug in these spending numbers I come out with a 90% success rate, but maybe I should add taxes to my $220k spending?
I think I will feel more confident if I know my fire assumptions are accurate, and if I can come up with a 90% success rate. I will also feel confident about buying a second home since my investment portfolio is slightly larger than $5.5mm.
Right now I am only spending dividends and interest, but it seems like the numbers can work spending some principal. I'm only 44 so it's scary for me to think of touching principal. The good thing is we have a lot of expenses we could cut if we had to, 22k for vacations, 18k for country club etc. Any thoughts on FIRE, tax rates and what is a good success rate would be appreciated. Thanks.
I have used the "ultimate retirement calculator" which you can google online which is a straight line calculation. What I like about it is that you can choose inflation rate, tax rate, return rate and what estate you would like to leave. It basically says I can spend $220k at a 13.5% tax rate with a 7% return and 2.5% inflation with $5.5mm at age 45 to leave roughly $15mm at age 87, which is the future values of $5.5mm at 2.5% inflation at age 87.
What I like about FIRE is that it is more a monte carlo simulation in real world market environments. When I plug in these spending numbers I come out with a 90% success rate, but maybe I should add taxes to my $220k spending?
I think I will feel more confident if I know my fire assumptions are accurate, and if I can come up with a 90% success rate. I will also feel confident about buying a second home since my investment portfolio is slightly larger than $5.5mm.
Right now I am only spending dividends and interest, but it seems like the numbers can work spending some principal. I'm only 44 so it's scary for me to think of touching principal. The good thing is we have a lot of expenses we could cut if we had to, 22k for vacations, 18k for country club etc. Any thoughts on FIRE, tax rates and what is a good success rate would be appreciated. Thanks.
Last edited: