100% success and how complicated can it be?

[Camas Lilly]

If I can get 100% success in Firecalc using several different scenarios, how many others do you think I need? I can get there on another site, Marketwatch I think, but then there are others that just are way off, I am not real clear if I am entering the correct information and doesn't display details about how it is calculating the results or how much draw it is taking. The worst is the site from my financial planner, which shows a whopping 25% success rate, but I do realize he wants to manage our money, so I don't take his tools too seriously.

I have tracked our expenses for a few years, have always run a tight monthly budget and set aside money for those annual and unexpected expenses. I have figured multiple ways of paying for health care (61/DH67) and have three different budgets. One we would get by on, the next-ideally, the third-everything we would ever need and more. I can comfortably hit budget no 2 and I am fine with that. There's wiggle room either way.

My question is if I know how much our income is, how much our expenses will be, and what % I want to draw, does it really matter if I don't need to draw any more than 3.5%? Isn't that the number you need to stay at or under and you will "never" run out of money?

We will have two SS incomes and a pension. We would maybe want to draw up to 5% the first couple of years as we will be moving halfway across the US and then back to 3-3.5% from then on.

Although I would like to use another site that is easy to use, I was wondering if I am making this too hard for myself? There's not really any other variables but income, expenses and draw $/% to hit budget is there?

 

[Dtail]

At the default numbers, Firecalc provides 100% success rate at ~3.58%WR, so if your withdrawal rate is at 3.5% or under it should naturally work to 100% if your stock allocation is also in ~40-80% band.
I-Orp is another popular calculator used by folks on this site. A little more input than Firecalc, but not too much.
The retirement calculator from Fidelity is also somewhat popular, as with this calculator one can input their individual expenses if they wish.
I have used MarketWatch too and it appears to be a little more conservative than Firecalc.

 

[CDRE]

Are you including all taxes in the expense block? Some other calculators apply a tax rate to your expenses.

 

[rpguy4]

Another retirement calculator you may try is the Flexible Retirement Planner -

https://www.flexibleretirementplanner.com/wp/
I've used FRP enough that I gave a small donation.
It's free to download.

 

[mystang52]

"The worst is the site from my financial planner, which shows a whopping 25% success rate, but I do realize he wants to manage our money, so I don't take his tools too seriously."

I am NOT starting another Financial Planner debate, but if you can't trust your FP on this one relatively simple calculation, can you trust him/her for anything else?

 

[Camas Lilly]

Are you including all taxes in the expense block? Some other calculators apply a tax rate to your expenses.

I am working in gross amounts, income and expenses.

 

[Camas Lilly]

Another retirement calculator you may try is the Flexible Retirement Planner -

https://www.flexibleretirementplanner.com/wp/
I've used FRP enough that I gave a small donation.
It's free to download.

LOL. I just downloaded that one but for the life of me, I can't figure out how to launch it. If I launch the app, I get a screen with "About", "Quit" and "Uninstall". I am on a Mac, but I downloaded the Mac version as it said.

 

[Camas Lilly]

"The worst is the site from my financial planner, which shows a whopping 25% success rate, but I do realize he wants to manage our money, so I don't take his tools too seriously."

I am NOT starting another Financial Planner debate, but if you can't trust your FP on this one relatively simple calculation, can you trust him/her for anything else?

He's not a regular advisor. I have consulted him prior to my husband retiring and again recently before me retiring. I have found some inconsistencies, but for the most part, the numbers seem to be there, just results seem way off.

 

[Camas Lilly]

So it seems the most popular sites are:

Firecalc - very easy
Marketwatch
i-Orp
Fidelity

I've tried:
i-Orp - Looked too complicated, but will revisit
Portfolio Visualizer - OK
Personal Capital - somewhere in the middle need to revisit
New Retirement - seemed complicated, lots of errors and not real sure I was entering correct info.
Flexible Retirement planner.com (which I can't seem to work yet)

 

[Camas Lilly]

LOL. I just downloaded that one but for the life of me, I can't figure out how to launch it. If I launch the app, I get a screen with "About", "Quit" and "Uninstall". I am on a Mac, but I downloaded the Mac version as it said.

Looks like I may have gotten PDF Mac Master instead, whatever that is. Out of time for today, so I'll go back and try again.

 

[Camas Lilly]

The things that I think are throwing me off is trying to input these things:

1) He is retired, already collecting SS and Pension
2) I am not yet retired but will retire in 2020 or 2021, will collect SS, have job and income until then, 10% additional deposits in 401k
3) Want to draw RMD 2020 or 2021

So then I just started simplifying and entering the figures assuming we both are retiring in 2020 or 2121 without any other additonal input other than incomes - SS, SS and Pension with projected expenses. Then the calculator runs the balance on projected income, expenses and how much it thinks I need to draw, but I want to enter that amount specifically so I can see what that number is.

 

[Jerry1]

Give us your numbers. What are your expenses, your pension, your SS and your nest egg. With that, we can at least see if you’re in the ball park. There is a big difference between FireCalc (100%) and an advisor (25%). With that base information we should be able to tell which one makes sense.

Personally, I think you should try the Fidelity program. I’m not sure if it’s available to non-Fidelity members though. If you have any money with Fidelity, I’m sure you can use it and even get help from them if needed. I found it very helpful and pretty straight forward.

 

[Spock]

Some times it takes a big crowbar to get comparable numbers out of the various calculators.

One windage factor is always spending in retirment if you currently LBYM. The calculators will assume something like needing 70% of your current income even though you might be currently living on 40%. On those I downshifted my income until the spending number matched my retirement budget.
Another is age as a lot of calculators have minimum retirement ages or can't handle somebody already unemployed.

Other primary variables: inflation (optimistic). Investment mix. Projected returns on that investment mix (optimistic). I started off with 5 calculators giving wildly different results. I eventually had 10 or so that gave numbers in the same ball park.

The most useful is I made my own spreadsheet with the FV and PMT functions to project balances and how long those balances will last using my numbers for inflation/returns/etc.
On another tab I can do some worst case (conservative) projections.
Yet another tab is a brute force 1 row per year calc that takes a starting balance (end of prior year), interest, income, SS, taxes, budgeted spending, and projected spending changes (drop a car, drop motorcycles, switch to medicare, etc). Input numbers and then scroll down to where the savings balance goes negative.
Over the years the spreadsheet has turned into my primary planning tool with tabs for Budget, RMDs, tax planning (ACA subsidy driving IRA withdrawals), etc.

 

[Camas Lilly]

Give us your numbers. What are your expenses, your pension, your SS and your nest egg. With that, we can at least see if you’re in the ball park. There is a big difference between FireCalc (100%) and an advisor (25%). With that base information we should be able to tell which one makes sense.

Personally, I think you should try the Fidelity program. I’m not sure if it’s available to non-Fidelity members though. If you have any money with Fidelity, I’m sure you can use it and even get help from them if needed. I found it very helpful and pretty straight forward.

Thanks Jerry. I will post some info this evening or tomorrow morning. Appreciate the help from all of you.

 

[OldShooter]

I am almost certainly the outlier here. I view these web sites mostly as interesting toys. None have any ability to forecast the future, nor do we. So there are no "guarantees" and there is no "never."

Spending and investment income are hard to forecast. Forecasting your date of death is even harder. The real world is that withdrawal rates will vary from year to year and investment returns will vary even more. So IMO these calculators are close to the dreaded "garbage in, gospel out" scenario.

Now let the flames begin.

 

[Dtail]

I am almost certainly the outlier here. I view these web sites mostly as interesting toys. None have any ability to forecast the future, nor do we. So there are no "guarantees" and there is no "never."

Spending and investment income are hard to forecast. Forecasting your date of death is even harder. The real world is that withdrawal rates will vary from year to year and investment returns will vary even more. So IMO these calculators are close to the dreaded "garbage in, gospel out" scenario.

Now let the flames begin.

I respect your posts in general, so am a fan.
Have to ask though that for starters in order to make a decision whether one is ready to retire from a financial perspective, do you not believe that one should have something in the order of 25x expenses in investments?

This concept as you know this based on the 4%WR concept, which is the basis of many calculators out there.

For folks who depend heavily on investments for their spending, the calculators provide some comfort that one is in a decent mode, otherwise we
could go back to Peter Lynch's 7%WR concept.

Yes, there is no guarantee of the past predicting the future, but what else do we have to go on?

 

[Ready2Go]

This one was referenced in a book I'm reading. Played with it a little and it seems pretty slick.

https://financialmentor.com/calculator/best-retirement-calculator/

 

[OldShooter]

Thanks for the flowers. Standard Terms: All opinions guaranteed worth price paid.

... Yes, there is no guarantee of the past predicting the future, but what else do we have to go on?

Well, now that's the problem, isn't it? We are doomed to live most of our lives using inductive reasoning; hoping that the past will help us predict the future. And often it does.

The sun will come up tomorrow morning. Pretty reliable but even then the astronomers tell us that will only last until our sun goes nova.

How about this one: “But in all my experience, I have never been in any accident … of any sort worth speaking about. I have seen but one vessel in distress in all my years at sea. I never saw a wreck and never have been wrecked nor was I ever in any predicament that threatened to end in disaster of any sort.”

You probably guessed it -- the captain of the HMS Titanic, E. J. Smith.

So, yes, 25x, 4%, 60/40, retirement "calculators," etc. are nice touchstones. I touch them too. But they are not guarantees. IMO people use these numbers and these calculators looking for certainty, at least subconsciously. That's really my point. I don't think there is any predictive difference between 80% and 100%, for example. The future just isn't that precise.

My view is that we put our financial life jackets on, climb in the boat and shoot the rapids. I think it is more about how we handle the boat during the trip than it is about the life jackets. How much to spend and when? Where to live and how? Asset allocation and why? Measure with a micrometer and then watch fate cut with an axe. ...

 

[dirtbiker]

At the default numbers, Firecalc provides 100% success rate at ~3.58%WR, so if your withdrawal rate is at 3.5% or under it should naturally work to 100% if your stock allocation is also in ~40-80% band.
I-Orp is another popular calculator used by folks on this site. A little more input than Firecalc, but not too much.
The retirement calculator from Fidelity is also somewhat popular, as with this calculator one can input their individual expenses if they wish.
I have used MarketWatch too and it appears to be a little more conservative than Firecalc.

This would depend on AA though. WR at 100% Firecalc success rate would look far different between 100% cash and 100% equities, for example.

 

[Dtail]

Thanks for the flowers. Standard Terms: All opinions guaranteed worth price paid.

Well, now that's the problem, isn't it? We are doomed to live most of our lives using inductive reasoning; hoping that the past will help us predict the future. And often it does.

The sun will come up tomorrow morning. Pretty reliable but even then the astronomers tell us that will only last until our sun goes nova.

How about this one: “But in all my experience, I have never been in any accident … of any sort worth speaking about. I have seen but one vessel in distress in all my years at sea. I never saw a wreck and never have been wrecked nor was I ever in any predicament that threatened to end in disaster of any sort.”

You probably guessed it -- the captain of the HMS Titanic, E. J. Smith.

So, yes, 25x, 4%, 60/40, retirement "calculators," etc. are nice touchstones. I touch them too. But they are not guarantees. IMO people use these numbers and these calculators looking for certainty, at least subconsciously. That's really my point. I don't think there is any predictive difference between 80% and 100%, for example. The future just isn't that precise.

My view is that we put our financial life jackets on, climb in the boat and shoot the rapids. I think it is more about how we handle the boat during the trip than it is about the life jackets. How much to spend and when? Where to live and how? Asset allocation and why? Measure with a micrometer and then watch fate cut with an axe. ...

Well let's continue a bit.
If you were totally dependent on your investments for income and Firecalc came back with a success rate of 25%, would you FIRE?

Yes it is all about the adjustments along the way, but there are also certain numbers parameters along the way which assist in making those decisions.

IIRC, @Mathjak mentioned that the only theoretical failures for a 30 year retirement were when an inflation adjusted return average of 2% wasn't achieved in the first 15 years. 1966, etc.
So when does one know when to adjust along the way without some historical guidance assistance?

 

[Dtail]

This would depend on AA though. WR at 100% Firecalc success rate would look far different between 100% cash and 100% equities, for example.

Agree. That's why I mentioned that this was the effective WR% when using Firecalc's default AA which is 75% stocks.

 

[COcheesehead]

This one was referenced in a book I'm reading. Played with it a little and it seems pretty slick.

https://financialmentor.com/calculator/best-retirement-calculator/

In my opinion its worthless. Its all based on what you input. There is no back testing, no Monte Carlo. Garbage in, garbage out.

 

[RunningBum]

I am almost certainly the outlier here. I view these web sites mostly as interesting toys. None have any ability to forecast the future, nor do we. So there are no "guarantees" and there is no "never."

Spending and investment income are hard to forecast. Forecasting your date of death is even harder. The real world is that withdrawal rates will vary from year to year and investment returns will vary even more. So IMO these calculators are close to the dreaded "garbage in, gospel out" scenario.

Now let the flames begin.

I don't treat those like the bible either. I agree that if you are putting in "best guesses" for future expenses and then relying on a tool that uses historical data, there is plenty of room for error. And sometimes those guesses aren't even "best" if people don't properly estimate irregular expenses.

I don't recall exactly what I did before retirement. I know I ran Firecalc at some point, but I don't think I ran it very often. I did constantly look at and update my projected retirement budget until I was satisfied that it was as solid as I could predict. I set 25x my budget as an investment net worth minimum goal, but wanted 30-33x as a safer goal as long as I didn't mind working. IIRC I retired right around 30x.

So, yes, 25x, 4%, 60/40, retirement "calculators," etc. are nice touchstones. I touch them too. But they are not guarantees. IMO people use these numbers and these calculators looking for certainty, at least subconsciously. That's really my point. I don't think there is any predictive difference between 80% and 100%, for example. The future just isn't that precise.

This part I don't really agree with. Maybe I'm just interpreting this wrong, but it sounds to me that many people treat 95% or even 80% the same as 100%. But as long as you spend and invest the same way, 100% is always going to be safer than anything less than 100%. In most cases it's just a matter of having a little buffer, but there is some possible case that you can handle with more money that you can't with less.

I don't equate Firecalc 100% as a guarantee of safety, but I do view 100% as safer than 95% or 80%.

 

[OldShooter]

Well let's continue a bit.
If you were totally dependent on your investments for income and Firecalc came back with a success rate of 25%, would you FIRE? ...

Well, someone's black box would not be my main tool for decision making. Probably I would not use any of the calculators as a primary tool. I fiddled with FireCalc for a few minutes shortly after discovering this forum 2-3 years ago but have not been back.
-

Yes it is all about the adjustments along the way, but there are also certain numbers parameters along the way which assist in making those decisions.

Sure. All we have is history, but it is an imperfect tool for predictions. To the extent the future is random, as IMO it is for individual stocks and for economic forecasts, history is no tool at all.

IIRC, @Mathjak mentioned that the only theoretical failures for a 30 year retirement were when an inflation adjusted return average of 2% wasn't achieved in the first 15 years. 1966, etc.
So when does one know when to adjust along the way without some historical guidance assistance?

Again, that's all we have but IMO inductive predictions are less accurate than people want them to be. That's really my point.

 

[FI_RElater]

....but it rhymes

as with all calculators, you have to dig into the details of their assumptions. (for example, I just tried the one given above....it doesn't accept one already being retired...and doesn't use MC anyway, so it's just a linear calc... better to do your own spreadsheet in Excel so you know your inputs)

When I used those calculators.... I'd either give myself a higher cushion (usually 25% above for income needs) or, if available, limit the WR to 3.5% (which is more consistent with other developed countries calculated SWR, per w@rk by Estrada). Obviously one tricky part is the "how long will you need it " ... and I typically used 90-95, since very few make it there and the errors around MC are at least of the same magnitude.... {That, and my specific conditions...immediate parents never made it past 62 but prior made it to about mid-80's if lucky, and prior career had history of reduced longevity (personally saw some pass at 45, 50, and 65).
So if you give a larger cushion and it still gives 100%, then use explore tab to find what FC gives as max. (The error bars are significant so only large shifts are likely to be meaningful, say 10% or more)

The bigger question is what happens after the first dies and it's affect on the surviving spouse. If you cut it too close, one risks the condition of the surviving spouse just missing: usually due to the combo of reduced income (since the lower SS is gone, and possibly only getting half of the pension if they had one at all) and a higher tax rate (single versus MFJ).