Has Firecalc ever been wrong for you? Do you trust it 90%?

[Andre1969]

I would have thought that 2000 would have been a bad time to retire, and one of the cycles that might be destined for failure. But, I just put the numbers into FireCalc, and for a 3% withdrawal rate the ending balance as of 2013 is about 8% higher than the start of 2000...despite two serious recessions in that timeframe.

Going to a 4% withdrawal rate, the ending balance is a bit lower, but not much...down about 3.3%.

 

[razztazz]

I would have thought that 2000 would have been a bad time to retire, and one of the cycles that might be destined for failure. But, I just put the numbers into FireCalc, and for a 3% withdrawal rate the ending balance as of 2013 is about 8% higher than the start of 2000...despite two serious recessions in that timeframe.

Going to a 4% withdrawal rate, the ending balance is a bit lower, but not much...down about 3.3%.

What asset allocation did you use?

If this is true (I'm going to do my ow run on it later) how can raddr's gloomistic numbers be right and so gloomistic? I know he used a 75/25% AA. Maybe that's the key?

 

[Andre1969]

Oops...I goofed. I re-ran the numbers, and unfortunately, it's a bit more gloom/doom than I thought. Just keeping it simple, if you started off with $1M at the beginning of 2000, a 3% SWR would leave you at $735,735 at the end of 2013. A 4% would leave you with $504,039!

I found where my original goof was. I accidentally put in a starting balance of $2M, rather than $1M! So in my original post, what I thought was a 3 and 4% SWR were actually 1.5 and 2.0%, respectively!

As for the asset allocation, I just used whatever FireCalc defaults to. I kept it simple and didn't mess with that part.

 

[Major Tom]

I wish I had the guts to use the maximum WR that Firecalc "allows" while still maintaining a 100% success rate. I could be living quite a glitzy life-style (relatively speaking). However, I live on significantly less. I don't even take future SS into account. If I considered SS, and went for a 95%, man - things would be stylin' here!

My theory is that if the SHTF (which, for me, it might), the longer I can live on less in the early stages of retirement, the more I'll be able to splurge when older. Alternatively, I could get so used to my frugal lifestyle that, by the age of 80, I could end up living in an even tinier place, eating cold beans out of a can, and imagining myself to be the luckiest guy in the world.

If this happens, the local cat rescue agencies are going to love the windfall when I cross the rainbow bridge to meet up with all my beloved animals

 

[GTFan]

I'm just curious to those of you who think this time it isn't different, what do you think of the global decline in interest rates since the 1980's? Just an anomaly or stocks will be higher to make up for lower interest rates or something else?

I see articles on interest rates trending lower and people like Bogle (and Shiller, Grantham and Arnott) predicting lower stock returns, and they seem to make pretty logical conclusions:

John Bogle says you won't make much money from stocks - MarketWatch

What factors of Bogle's prediction do you think specifically are overly pessimistic? If you don't believe that Firecalc will be 100% accurate for future results do you discount your results further, like multiply the Firecalc results by another 50% or 80% or some other number to represent the probability that the future may not be like the past?

The way I look at this is as long as a 60/40 can return at minimum 0% real I'm all good since the money we have will last for the projected 35 years with zero real return, not even counting SS when it starts.

More importantly there's this quote from the Bogle prediction you linked:
Bogle predicts that a balanced portfolio (roughly half in stocks and half in bonds) should return around 3.5% for the next decade. Adjusted for inflation or in “real” terms, Bogle thinks a balanced portfolio will return 1.5%, barely increasing purchasing power.

But even with the worst predictions from the current doom-and-gloom crowd there are few saying a 60/40 will be less than zero, so any other risk-averse strategy such as liability matching is only going to do worse if you can take the (very small risk) that the minimum zero assumption is correct.

And assuming you can live with zero with your stash of course.

 

[cyber888]

Whether you use Firecalc as a prediction/forecasting tool or not, it's still a way to see how past data can give you a possible future scenario. The future is uncharted waters and retirement is a leap of faith into the unkown. The future may not be like the past, or the past could repeat itself.