I think I'm at FI but how can I be sure?

C

cantdrv55

Confused about dryer sheets
Joined
Jul 5, 2021
Messages
7
Hi all, new member here. I'm 57 and my wife is 55. We have two kids but only one (13 y/o boy) is still at home. I have to make sure our money lasts for 40 years because the women in my wife's family are vampires. Her mom is 87, still drives and exercises. She probably has another 15 years in her. My wife will surely outlive me. Also, our little boy has Down Syndrome so he'll be living with us until we die.

Anyway, I tried the FIRECalc and it says there are no scenarios out of 111 where my assets would fail me. What do you think of FIRECalc? I know garbage in, garbage out. Assuming my expenses are right on as are my total portfolio, can I trust it?

Lastly, where can I find out how much Medicare will cost us? The official website seems to be locking up.

Thanks!
 
cantdrv55 said:
Anyway, I tried the FIRECalc and it says there are no scenarios out of 111 where my assets would fail me. What do you think of FIRECalc? I know garbage in, garbage out. Assuming my expenses are right on as are my total portfolio, can I trust it?
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FIRECalc does not predict the future, it tells us how our portfolios would have fared in the past. So, if you trust that between now and the time you expire the market will perform no worse than it has since 1871, then yes, you can trust FIRECalc.
 
Short answer is, you can't "know," but you can make educated predictions. FIRECalc is a tool to help you do just that (usually using historical data). Like any predictive tool, in addition to the caveat that the past doesn't predict the future, it is subject to errors/biases in assumptions and inputs as you alluded to.



There are other calculators out there in addition to FIRECalc and you can also use Monte Carlo simulators (FIRECalc has that as an option as well). I would say that FIRECalc is probably trustworthy as it has been "peer" reviewed by this community for a long time!


Another consideration will be how you will access your funds and/or optimize tax strategies. Not all funds are as liquid as others (tIRA, Roth, 401k, etc all have different rules and penalties if you do not play by them).



For me to be confident and to plan, I built a spreadsheet going out to age 100 (now 47) with expected inflows and expenses and projecting balances and withdrawals by each account. For my planning I have built in a market drop at my FIRE date of 30% and assumed only 5.5% returns after that (likely/hopefully will prove too conservative but I'd rather "Blow that Dough" when I'm in my mid-50's and realize I'm going to die rich than trying to figure out how to make ends meet!) I also play around in FIRECalc using shorter time periods on specific accounts (for instance, what is the probability that my after tax accounts will last until I can withdraw from my tax advantaged accounts or until my annuity will begin payments?)



FIRECalc is a great tool but you need to look at your specific situation and assumptions in detail as well. 100% FIRECalc results are a great start and you are probably good to go.... but you'll never be 100% sure of your results until you die or are broke.



One other thought, most people's expenses are not completely locked in stone (or grow in perfect sync with inflation) and have room for adjustment so even if you are off, you will likely adjust your spending depending on how your portfolio is doing.



FLSunFIRE
 
I rely on FireCalc, a <3% WR, and comfort with my budgeted expenses (planned and reasonable surprises) to feel confident.

I suspect the budget takes the most management for folks.
 
I used FireCalc and Fidelity's tool, built my own spreadsheet to show income and outgo projections. Some say 4% of your pile draw rate, Fidelity says you should have 25 times your expenses. No tool or method is foolproof. I also built in a couple income sources that don't get counted in my planning and I also went for 3% draw initially.

I guess that is to say use several different methods to plan, plan for underestimating expenses and then put a bit away for in case your assumptions are wrong. But then after all that remember your entire life you have adjusted to changes. Retirement is no different in that you will be pleasantly surprised and well other surprised. You will adjust to these surprises like you always have.
Best wishes for your retirement.
 
OP, I trust FireCalc results as a good indicator if my $ will last. FireCalc will give you some of the worst scenarios in the past such as entering a deep market down period just when you retire etc. (whether the future would be worst than the worst past, no one knows). One thing to look out for is how diversify is your portfolio? Do you own the whole equity market or just a few hot stocks. In your situation, I will want to have some asset allocated to equity (VTI etc.) to ensure the $ will last to take care of your DS even after you have passed. Welcome to the forum.
 
I think of FI in a sliding scale: Getting less than 100% success rate in FIREcalc at your projected spend level is "Not really FI". Just making 100% at your spend level is "Kind of FI" and 100% at various spend rates exceeding your projected level are more and more convincingly FI.

In reference to the OP's question, I do use FIREcalc (and Fidelity RIP) but require 100% projected success at a spend rate 50% higher than my projected level. I call that "reasonably sure I'm FI". That was my minimum criterion for retirement, but I'm more conservative than many.
 
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I mainly use Firecalc with its historical sequencing in conjunction with Fidelity and its Monte Carlo simulation.
100% success in each is good enough for me, even though my spending is not linear.
I do conceptually "retire again" each year for updated numbers.
 
I would just add to the wise comments already posted that you need to make sure your expenses includes the taxes you will be needing to pay. These can sometimes be overlooked when planning.
 
Excellent responses from everyone. I’m glad I found this site. Thanks!
 
Spudd said:
I would just add to the wise comments already posted that you need to make sure your expenses includes the taxes you will be needing to pay. These can sometimes be overlooked when planning.
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Not only taxes, but large infrequent expenses such as roof replacement, furnace/AC replacement, periodic car purchases, whole house painting/residing, major remodel, etc. Some people don't plan on those infrequent but inevitable costs. In my case, those expenses have average about 20% above our more predictable day/week/month/year in and out expenses. FWIW
 
Good point Midpack. Buy my toys now while still employed…
 
FLSUnFIRE said:
There are other calculators out there in addition to FIRECalc and you can also use Monte Carlo simulators (FIRECalc has that as an option as well). I would say that FIRECalc is probably trustworthy as it has been "peer" reviewed by this community for a long time!
FLSunFIRE
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Curious where Firecalc has the option to use Monte Carlo? I have not seen that?
 
bltkmt said:
Curious where Firecalc has the option to use Monte Carlo? I have not seen that?
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REWahoo said:
It is the last button on the Your Portfolio tab, "A portfolio with random performance".
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I played around with this function on Firecalc. Not sure how robust it is vs. the historical sequencing program.
 
Dtail said:
I played around with this function on Firecalc. Not sure how robust it is vs. the historical sequencing program.
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I wonder what you mean by "robust" in this context.
 
As others mentioned - make sure your spending numbers on the first page are all inclusive: taxes, healthcare, occasional new car.... It is *gross* spending, not net.

Also - if you are a worst case scenario type person... You should model one or the other of you dying earlier than plan - and having the SS change. When one spouse dies, the surviving spouse gets the larger of the two SS payments. So less is coming in. My BFF's dad just died and her mom is panicked at the lower income. They had no idea, and no plan. I'll admit I never thought to model the 'what if' if me or my husband died early until I read about here on ER.org.
 
In our case, if my husband goes before me, we will end up with having more in our kitty because he is the big spender and I am el cheapo. Losing one part of the SS won't be felt. Our $25K a year travel budget will shrink to a couple of thousand dollars when I travel to see my son, or maybe $5-10K for that year if my son and I go on a cruise. I will almost certainly ditch the $15K a year country club golf dues and go with a $3K a year social and sports membership and golf at public courses. Then there is the expensive wine, I don't drink alcohol and that will be another expense that will disappear. If I go before him, I think he won't miss my SS either since it means that there is one less mouth to feed. My term annuities will continue to pay even after I pass.
 
Lots to think about when it comes to spending in the future. What I put into the calculator was our current spend plus a fudge factor (guess) to convert the dollars to gross. Did I do it right?
 
youbet said:
I wonder what you mean by "robust" in this context.
Click to expand...

From various posts I have read about Firecalc, the Monte Carlo simulator appears to be an add on feature and it might not have the comprehensive programming behind it such as the historical sequencing feature.

Could just be my interpretation of various past posts.
 
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