Firecalc Crystal Ball Experiment

[Rianne]

I experimented with Firecalc under the "Your Portfolio" tab.

Instead of putting "Total Market" or "Mixed Portfolio" I used the "Portfolio of consistent growth of 3% and inflation rate 7%. My success rate was 100%. My spending was $100K/year-Constant Spending Power and starting Portfolio of $1.5M

These are hypothetical numbers and I included pension and SS. I was surprised. At only 3% growth for 30 years and inflation at 7% for 30 years, 100% success. How can this be?

Edit! I just put in 1% growth and 7% inflation, still 100% success.

 

[REWahoo]

A nice pension and SS can make a huge difference in portfolio survivability.

 

[CardsFan]

Well, you made me look. I just tried your scenario with our SS of $55,000/year. Can't make it past 20 years.

I then put in our actual portfolio value, and lasted 30, but just barely.

Is your pension inflation adjusted? If not, note the default has the inflation adjusted turned on.

Otherwise, you must have a REALLY good pension (We have none)

 

[Rianne]

A nice pension and SS can make a huge difference in portfolio survivability.

Well, 2% growth isn't looking so bad. Maybe for our beneficiaries.

 

[Rianne]

Well, you made me look. I just tried your scenario with our SS of $55,000/year. Can't make it past 20 years.

I then put in our actual portfolio value, and lasted 30, but just barely.

Is your pension inflation adjusted? If not, note the default has the inflation adjusted turned on.

Otherwise, you must have a REALLY good pension (We have none)

Good catch. I unmarked the inflation-adjusted pension ($31,500yr) and got a -$293,000. Unchecking the inflation adjustment and putting in 6% consistent growth and 7% inflation is 100%

0 growth and 0 inflation left me with $830K at the lower end.

 

[Out-to-Lunch]

How can this be?

Note that you (artificially) eliminated the sequence of returns risk (SORR) that is the bane of withdrawing from volatile portfolios.

 

[Dtail]

Note that you (artificially) eliminated the sequence of returns risk (SORR) that is the bane of withdrawing from volatile portfolios.

Big point and one of the main concepts of the reasoning of using a 4% WR instead of a median withdrawal rate of 6.5%.

 

[HI Bill]

+1. If we knew the SORR, and inflation, FIRE would be easy at a much earlier date (along with knowing your expiration date)!

 

[COcheesehead]

As others have said, straight line returns do not exist in the real world. SORR is the boogie man under the bed.

 

[youbet]

A nice pension and SS can make a huge difference in portfolio survivability.

Not frequently awarded and then only to the most deserving, this statement wins the youbet "Understatement of the Day" award.

Congratulations REWahoo, nicely done.