pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
+1 sounded way too corporate for my liking.
Sort of like jumping out of an airplane with a parachute that no one has ever tried before. The concept is there, and the chute should open, but it may be a hard landing. Or get tangled in wires. Or a nice soft landing.
Or it may not open at all in a very small percentage of cases.
when you say 37,800 a year income, do you mean spending/withdrawal, or income, like a pension, extra income?
Yes, I know firecalc is only a model. But I just wanted to know if those who retired 10 or more years ago, it's still a successful model for you.
Unfortunately, the answer to this question may be subject to survivor bias. I've been reading this site since 2006. I recall several people who ERd based on projections that included historical success on FireCalc, but no longer post. Some of them may have "failed" at ER.
But I just wanted to know if those who retired 10 or more years ago, it's still a successful model for you.
Once again, FIRECalc doesn't predict anything, it only tells us how a specific set of inputs (portfolio size, asset allocation, annual withdrawal amount, etc.) would have fared historically.
Look closely at the phrase "then it is likely to withstand whatever might happen between now and the day you no longer have any need for your retirement funds." Still say they're not promoting it as a predictor??How it works - the philosophy:
FIRECalc makes a single fundamental assumption:
If your retirement strategy would have withstood the worst ravages of inflation, the Great Depression, and every other financial calamity the US has seen since 1871, then it is likely to withstand whatever might happen between now and the day you no longer have any need for your retirement funds.
That isn't much less than average expenditures for age 65+ households ($39,173, 2011 figures):
http://www.bls.gov/cex/2011/Standard/sage.pdf
FIRECALC gives you the success rate using the inputs/assumptions the user provides based on more than 100 years of actual past history - it does not predict anything. It's entirely up to the user to decide whether past history is of any use as a predictor for the future...
For an example assume you lived in germany in 1912 and ran the german equivalent of fire calc back then (if it had existed), you would have been spectacularly wrong it had been 100 years since a really destructive war had been fought in Germany. The Pre WW1 german firecalc would not have modeled WW1 or the great inflation after it. Or assume that Yellowstone had a catastrophic eruption in 10 years etc. Firecalc being historically based does not have a long enough time baseline to include the financial effects of these disasters.
Sure, trust it... After all, the stock market will always go up 6%-8%. Just ask the Japanese investors.
nonsense. Firecalc promotes the use of the tool as a predictor of future success all over the site. See my previous post. Why else would the majority of people use it?
nonsense. Firecalc promotes the use of the tool as a predictor of future success all over the site. See my previous post. Why else would the majority of people use it?
Because the past is the only quantifiable metric we have, and we don't have a better guide. But it is the past. Not sure how they promote the tool as a predictor, the website plainly states otherwise...nonsense. Firecalc promotes the use of the tool as a predictor of future success all over the site. See my previous post. Why else would the majority of people use it?
How can I be sure these results will work in the future?
FIRECalc's standard model uses the overall US stock market performance. Most 401k and similar retirement plans offer investment choices ("index funds") that are closely tied to the overall market performance, and the others generally tell you how they compare.
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.
But as one early retiree pointed out, there isn't much anyone can do to prepare for a comet hitting us!
How can FIRECalc predict future returns from past performance?
It can't. And it doesn't try. In fact, it tries to predict what will not happen. This might sound confusing, but it's really simple.
Consider an analogy: Suppose you are building a house in Honolulu. How do you decide how much heating and air conditioning capacity you will need?
We know that the lowest it has ever been there was 52°, on a day in February 1902 and again on another day in January 1969, and the hottest it has ever been was 95°, in 1994. Buying a system suitable for an Anchorage-style winter and a Phoenix-style summer would be a major waste of money that could be better used elsewhere.
FIRECalc works the same way, using stock market history and your portfolio and spending plan instead of weather history and furnace capacity. No one could predict the temperature for any specific given future date during the decades that house will be used, and no one can predict the future returns of your investments. But by knowing the historical worst cases, you'll have the information to judge if your savings are sufficient to handle the winter.
+1.
You will now get the rebuttal from the risk averse crowd that future interest rates will be lower, global economies are different, liability matching strategy and cutting expenses are the only ways for portfolio survival.
I will stick with my balanced portfolio and spend in retirement without worrying about drastically cutting expenses until the market drops by 50%.
Yes, I'll reiterate what I said. I would like to see how someone who used it a decade ago compares the result to where they are now.
Unfortunately, the answer to this question may be subject to survivor bias. I've been reading this site since 2006. I recall several people who ERd based on projections that included historical success on FireCalc, but no longer post. Some of them may have "failed" at ER.
You can bet your retirement on historical returns if you you choose. I am not trying to change anyone's mind who wishes to use the 4% rule / mutual fund / Firecalc approach. I am just letting the risk adverse among us know what I wish I would have heard about myself years ago - there are other methodologies with less risk for funding retirement that are not well advertised because they are not as profitable for the large investment companies.
...Originally Posted by daylatedollarshort View Post
You can bet your retirement on historical returns if you you choose. I am not trying to change anyone's mind who wishes to use the 4% rule / mutual fund / Firecalc approach. I am just letting the risk adverse among us know what I wish I would have heard about myself years ago - there are other methodologies with less risk for funding retirement that are not well advertised because they are not as profitable for the large investment companies.
[/B]We both have very different approaches. I don't try to influence people to adopt my approach but you seem to constantly preach yours. I'm more of an optimist and don't believe in the gloom and doom of the US and global economies.
The other thing you forgot is that "this time, it's different"you forgot.... the sky is falling down too.
We both have very different approaches. I don't try to influence people to adopt my approach but you seem to constantly preach yours. I'm more of an optimist and don't believe in the gloom and doom of the US and global economies.
I vote for thisAlternatively, we could continue have civil pro and con discussions of the different approaches