FireCalc limitation?

[RunningBum]

This I guess that the flaw is pretty big... IOW, the calculation should take into account all possible timeframes between 1 and 50 is you choose 50 years..

IOW, if there is any 40 year period that would fail in a 50 year period, that is a fail... if there is any 10 year period that would fail in a 50 year period, that is a fail....

Once you reach 0, there is no way to make it back....

Not necessarily. If you are missing years beyond 40, it is a fail. But if you are missing the first years, it may succeed. The first 10 (or less) years could've been successful enough to raise the portfolio enough to survive the next 40.

 

[Katsmeow]

This I guess that the flaw is pretty big... IOW, the calculation should take into account all possible timeframes between 1 and 50 is you choose 50 years..

IOW, if there is any 40 year period that would fail in a 50 year period, that is a fail... if there is any 10 year period that would fail in a 50 year period, that is a fail....

Once you reach 0, there is no way to make it back....

I think it depends on where that 40 year period is. That is, imagine that in a 50 year period that if you started with $1 million in year 1 and in year 11 that $1 million would be $2 million and in year 50 that would fall to say $500,000 and this would be a success.

However, if you used a 40 year period then in year 1 (which is the same year as year 11 in a 50 year period) you start with $1 million and by year 40 you have failed.

That would be a failure in a 40 year plan but wouldn't be in a 50 year plan because in the 50 year plan your $1 million first grew for 10 years and so even though you started with $1 million in each plan in the 50 year plan that $1 million had grown in the first 10 years so the plan succeeds.

 

[Texas Proud]

I think it depends on where that 40 year period is. That is, imagine that in a 50 year period that if you started with $1 million in year 1 and in year 11 that $1 million would be $2 million and in year 50 that would fall to say $500,000 and this would be a success.

However, if you used a 40 year period then in year 1 (which is the same year as year 11 in a 50 year period) you start with $1 million and by year 40 you have failed.

That would be a failure in a 40 year plan but wouldn't be in a 50 year plan because in the 50 year plan your $1 million first grew for 10 years and so even though you started with $1 million in each plan in the 50 year plan that $1 million had grown in the first 10 years so the plan succeeds.

But using your example.... the failure is the one starting in year 11.... it failed in 40 years.... maybe there is not a full 50 years to check, but it still failed...

With the explanation that was given... it is doing a yearly step... so it is doing the calc right except for the ending 50 years... so if you go back 49 years and that would be a fail... it seems that it is not reported as a fail because you do not have 50 years.... next year it will report as a fail since you now will have the full 50.... but you might have a fail for 49, 48, 47... and that could make a difference...


Now, it should not matter that we are talking about 50.... it still should do the same for 40, 30 etc... it just that these have fewer possibilities that do not have the full amount of years...

 

[Jack_Pine]

This is why no calculator should ever return 100% confidence level. There is no such thing.

 

[REWahoo]

This is why no calculator should ever return 100% confidence level. There is no such thing.

FIRECalc doesn't return a confidence level - it 'predicts' the past, not the future:

If you tell FIRECalc how much you have, and how much you'll be taking out each year, FIRECalc will show you how such a combination would have fared for the duration of your retirement, in every year for which we have market data.

The level of confidence an individual derives from seeing a "100% success rate" from FIRECalc is in the mind of the beholder - and how much one believes future economic conditions will be no worse than those included in the data...

If the next few decades are even worse for the stock market than the worst that has ever been seen, including the Great Depression, then all bets are off.