Is it time to jump in?

[roaming2]

My husband and I created a Fidelity retirement plan years ago and we have make changes and updates to it each year as costs, medical insurance, and our lifestyle has changed. We have been living within this plan for the last three years, other than expenses, like home remodels that we are completing before retirement, that will not be needed again for many years. No one in our family has ever gone to this extent to plan before pulling the trigger for retirement. We want to retire early and have over 1,400,000 in investments and are debt free. Our plan has us living to the longest longevity age possible 94 and 97. We want to retire as soon as we reach the financial goal of being able to. We are 54 and 59. The current plan shows that we will be delete our cash when we are in our mid 90's. We have made no increases in our plan for any inheritances that we many get or the final life insurance proceeds if one of us dies before the other. So I know you have to be able to sleep at night when you pull the trigger to retire, but do we need a 100 score and to show no depleted cash to do so. Looking for info from others that have gone before us.

 

[ncbill]

Other sources of income?

Expenses?

You should be able to spend nearly $60,000/year from your assets, not counting SS or pensions.

 

[Jerry1]

If I’m retiring early and voluntarily, then yes, I want 100% or more. If I have to retire, then I’d feel comfortable with 90%. Of course if you have to retire, it doesn’t really matter but I’d feel more comfortable the closer to 90% I am in the modeling.

Remember, if you run out of money, at 90 years old, you’re not going back to work. Better to work a couple more years while you can if you need to in order to do your best to avoid that.

 

[OldShooter]

All these programs can say is: "If the next 30 years are like the past 30 years, then here is your number." Said another way, it is a guess and it has a large margin of error. So when you see 100%, 90%, and 80% all those numbers are saying "Probably you will be OK." Similarly, when you see 10%, 20%, and 30% all the numbers are saying is "Probably you will not be OK." There is no practical difference between a reported 90% and a reported 100%. Probably there is no practical difference between 80% and 100%.

Almost certainly the biggest uncertainty we face is inflation, which has been very benign for the past 30 years at IIRC an average of about 2.5%. But if you look back another 10 years to get a 40 year average suddenly you are looking at something like 4%. So, like the guy in the movies says: "Are you feeling lucky?"

IMO you are looking for certainty where none is possible. If you are seeing 90% and 100% from the magic box, then "Probably you will be OK."

 

[NW-Bound]

... when you see 10%, 20%, and 30% all the numbers are saying is "Probably you will not be OK." ...

I think it means "it is highly likely you will not be OK (unless you die early)".

 

[imoldernu]

DH life expectancy is 83. When figuring the odds, you have to start somewhere. We decided to take a chance at age 53, and planned our finances based on a life expectancy of 85. We're 82 now, and well ahead of the plan, and now our life expectancy is 89. A different time frame, and with a lot less $$$ than you'd believe.

That said... my own thinking is to rely on an actual planned budget that you create, rather than only using a retirement calculator. It's a reality check. Must think ahead to determine if the travel budget of $10K will still be valid when you're 70 (and like that). Without numbers... even if they're just guesses, there will always be uncertainty. Thinking 25 years ahead puts a touch of reality on future plans.

I used a twenty year large green spreadsheet budget to look ahead, and spent many, many hours reasoning out the numbers. FWIW, now, 30 years later, we're exactly on plan. We didn't really follow the budget, but used it to check where we stood at least once a year.

Best of luck.. Retirement is Great!

 

[Fedup]

I say not enough information to help you make a decision to jump or not.

 

[roaming2]

We want to retire early voluntarily


Annual expenses are around 65,000 not including medical insurance. or taxes


We included a 4% inflation factor and a 18% tax rate and a 4% rate of return on our investments


Our score was a 97 out of 100% that our plan had enough money to last until the end of age 97


Other sources of income - SS will cover about 22K per year, I think - need to confirm this amount


The retirement budget that this plan is based on was one that we created and is based on our actual expenses of maintaining the lifestyle that we want and have been living within these means for 3 years. It also includes replacements of vehicles as the ones we have wear out. I am very detailed about our finances and try to account for everything.

 

[Jerry1]

What did you do for healthcare? That and inflation seem to be the black holes that we just can’t predict. Also, good retirement calculators will inflate different expanses at a different rate. Again, health insurance is likely to go up more than average inflation.

 

[Lukeee]

I haven’t gone yet but like imoldernu, I have a detailed spreadsheet that (In my case) Brings me till SS with expected annual balance/run rates. I’m giving myself the flexibility of decreasing my budget if need be Incase of an unplanned catastrophic expense.

I am at 100% on the calculator but as mentioned above, it’s based on history. The slight unknown is the future returns, inflation and unexpected expenses

 

[Dtail]

Are you filling in the detailed expense budget in the Fidelity calculator? The healthcare expenses are inflated at 5.5% vs. 2.5% for other expenses. Did you include the SS numbers?
I retired with the Fidelity calculator at 105, but some on this site had much higher numbers.
The Fidelity calculator is one of the most conservative out there.
Have you tried Firecalc?

 

[pb4uski]

We want to retire early voluntarily


Annual expenses are around 65,000 not including medical insurance. or taxes


We included a 4% inflation factor and a 18% tax rate and a 4% rate of return on our investments....

Your 0% real rate of return assumption (4% return less 4% inflation) is very conservative, depending on what your overall asset allocation is... historically, a 60/40 portfolio has generated a ~5% real return... I haircut it to 3.3% for my retirement planning and even that may be too conservative.

18% for tax is probably too high as well... best practice is to do a pro forma tax return as if you are retired to fine-tune what your taxes will be in retirement. For example, in 2018 if you had just $80k of tIRA withdrawals for a married couple your federal tax would be just $6,339... 7.9%... plus state tax if applicable might put you up to 10% or so.

 

[roaming2]

For healthcare, i have a quote of the retiree healthcare cost of 24K per year that will take us to medicare age. Than I used the first year numbers for our situation of $70,000 withdrawal income to get medicare costs of 6K per year. Dropped this number lower after the death of one of us.

 

[roaming2]

Thanks for the information, I filled in the detailed Fidelity calculator for the budget including the SS Numbers from our last SSA notice.I will try firecalc. Had not heard of it.

 

[roaming2]

We have a balance asset allocation and over the last 7 years have a rate of return between 5.31 and 13.78%

 

[Dtail]

Thanks for the information, I filled in the detailed Fidelity calculator for the budget including the SS Numbers from our last SSA notice.I will try firecalc. Had not heard of it.

Firecalc is connected to this site and there are many folks here who can assist with questions.
Additionally, it provides results based on historical sequences in the markets and can be used in conjunction with the Monte Carlo based Fidelity calculator.

 

[Gumby]

Thanks for the information, I filled in the detailed Fidelity calculator for the budget including the SS Numbers from our last SSA notice.I will try firecalc. Had not heard of it.

The FIRECalc link is at the bottom of every page.

 

[roaming2]

Thanks for all the help, I am new to this website, but don't want to jump off the deep end without my safety gear. When I ran the numbers here our score was 100. I have a lot to learn about retiring

 

[HI Bill]

When I ran the numbers here our score was 100.

Congrats! Assuming all your inputs were correct, it sounds like you're in great shape!

 

[Fedup]

I didn’t know how to run FIRECALC, one of the inputs for AA was 75 equities, I never changed it. I didn’t know. So do double check. My equities AA is about 25-45%.

 

[TwoByFour]

I have more faith in FireCalc than Fidelity. Reason why is Fido uses a technique called Monte Carlo which uses a statistical model of returns. The statistical model must include a proper treatment of sequence-of-returns which as most investors know, is a huge factor in the success or failure of a retirement. So Fido models the distribution of returns and auto-correlation in order to approximate SOR. FireCalc uses actual data which has the proper SOR effects built into it. The downside of FireCalc is that historic returns are just a guess about the future and are probably wrong. The big question of course is how wrong - a little, or a lot? This is where a healthy margin of error is good to include in your planning.

 

[Dtail]

I have more faith in FireCalc than Fidelity. Reason why is Fido uses a technique called Monte Carlo which uses a statistical model of returns. The statistical model must include a proper treatment of sequence-of-returns which as most investors know, is a huge factor in the success or failure of a retirement. So Fido models the distribution of returns and auto-correlation in order to approximate SOR. FireCalc uses actual data which has the proper SOR effects built into it. The downside of FireCalc is that historic returns are just a guess about the future and are probably wrong. The big question of course is how wrong - a little, or a lot? This is where a healthy margin of error is good to include in your planning.

I think using both gives a broader range of results due to the different methodologies. Fidelity being more conservative in results since it starts with a haircut to the portfolio can give some confidence too for the more conservatives folks here.
I personally use a bunch of retirement calculators, since I did not build in much fluff in the total numbers, although do have a decent amount of discretionary expenses and somewhat lower WR%.