I am new to FireCalc and just don't get it at all. Help me!
1. On the homepage, if you're not retired yet, do you enter anything on the "Spending" column on the FireCalc's homepage? Should it simply be 0 and current nest egg? For instance, if our current net worth is 100,000, and we spend nothing from this 100,000, do you simply enter 0 for Spending, 100,000 for Portfolio and 55 for Years (as the nest egg has to last our son until his projected life expectancy of around 85)?
2. On the "Spending Models" tab", I used CPI as the inflation assumption, rather than a flat 3%.
3. On the Other Income / Spending tab, I input 0 for SS. I don't feel comfortable relying on it, and want to calculate how long our nest egg will last without SS / SSDI for our son after us.
4. The most confusion I have is on the Not Retired Yet tab. Since H plans to work for another 20 years, and we plan NO withdrawals until then, I put in his retirement as 2041 and the amount of money we plan to contribute each year until then.
When FireCalc spit it's results out, it said:
"Because you indicated a future retirement date (2041), the withdrawals won't start until that year. Your contributions will continue until then. The tested period is 20 years of preretirement plus 35 years of retirement, or 55 years."
Why would FireCalc consider pre-retirement period when we're contributing to our nest egg, and not withdrawing, in the calculations? This really really confuses me. Also, how can I tell the calculator to show me if our nest egg will last our son an additional 55 years in retirement AFTER we're gone? He will only in his late-20s / early 30s when H retires. Given the longevity on Dad's side of the family, our son's "retirement" will be a further 55 odd years after we've exited the Planet, for his projected life expectancy of 85.
What am I missing here?
5. When I pick anything other than "Percentage of Remaining Portfolio" on the "Spending Model" tab, I get a low probability of success if I choose "Constant Spending Power". That worries me because will a constant percentage of our portfolio have the same purchasing power across my son's lifespan? For instance, will 4% of our nest egg in 2041 have the same purchasing power as 4% of the portfolio in 2065 (for instance)?
6. On the Portfolio tab, I am choosing a portfolio with random performance, with a mean total portfolio return of 7% and variability (standard deviation) of 10%. However, here, the default and only assumption of an inflation rate is a flat 3%. There is no option to pick CPI as the inflation rate which contradicts the assumption of CPI on inflation on the "Spending Models" tab". I am just really confused.
Help!
1. On the homepage, if you're not retired yet, do you enter anything on the "Spending" column on the FireCalc's homepage? Should it simply be 0 and current nest egg? For instance, if our current net worth is 100,000, and we spend nothing from this 100,000, do you simply enter 0 for Spending, 100,000 for Portfolio and 55 for Years (as the nest egg has to last our son until his projected life expectancy of around 85)?
2. On the "Spending Models" tab", I used CPI as the inflation assumption, rather than a flat 3%.
3. On the Other Income / Spending tab, I input 0 for SS. I don't feel comfortable relying on it, and want to calculate how long our nest egg will last without SS / SSDI for our son after us.
4. The most confusion I have is on the Not Retired Yet tab. Since H plans to work for another 20 years, and we plan NO withdrawals until then, I put in his retirement as 2041 and the amount of money we plan to contribute each year until then.
When FireCalc spit it's results out, it said:
"Because you indicated a future retirement date (2041), the withdrawals won't start until that year. Your contributions will continue until then. The tested period is 20 years of preretirement plus 35 years of retirement, or 55 years."
Why would FireCalc consider pre-retirement period when we're contributing to our nest egg, and not withdrawing, in the calculations? This really really confuses me. Also, how can I tell the calculator to show me if our nest egg will last our son an additional 55 years in retirement AFTER we're gone? He will only in his late-20s / early 30s when H retires. Given the longevity on Dad's side of the family, our son's "retirement" will be a further 55 odd years after we've exited the Planet, for his projected life expectancy of 85.
What am I missing here?
5. When I pick anything other than "Percentage of Remaining Portfolio" on the "Spending Model" tab, I get a low probability of success if I choose "Constant Spending Power". That worries me because will a constant percentage of our portfolio have the same purchasing power across my son's lifespan? For instance, will 4% of our nest egg in 2041 have the same purchasing power as 4% of the portfolio in 2065 (for instance)?
6. On the Portfolio tab, I am choosing a portfolio with random performance, with a mean total portfolio return of 7% and variability (standard deviation) of 10%. However, here, the default and only assumption of an inflation rate is a flat 3%. There is no option to pick CPI as the inflation rate which contradicts the assumption of CPI on inflation on the "Spending Models" tab". I am just really confused.
Help!
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