Financial calculator time horizons

[FREE866]

I'm 53 next week. Retired at 50.



When I put my numbers in the various calculators I do it a couple of different ways. I put in time horizon of 17 years ( thats when I turn 70 and plan to take SS and my need from portfolio will be drastically lower) and then I'll run another test for 42 years ( living to 95 and the calculator allows me to enter ss income for last 25 years)



Both results look good , but was just wondering if there is any negative I might be missing in breaking it down in these two ways.


Thanks.

 

[Dtail]

The historical SORR for 42 years is different than one for 17 years plus 25 years.
The calculators take into effect already the various income/expenses available throughout the entire retirement cycle.

 

[FREE866]

The historical SORR for 42 years is different than one for 17 years plus 25 years.
The calculators take into effect already the various income/expenses available throughout the entire retirement cycle.

Gotcha


so do you think the 17 year test is more likely to lets say disappoint or would that be the 42 year one?

 

[Dtail]

Gotcha


so do you think the 17 year test is more likely to lets say disappoint or would that be the 42 year one?

Interesting question. Not 100% sure.
On one hand, a 17 year period for example, the period from 1966 through 1983 was a very poor period in that the bull market didn't start until 1982 and even so this was one of the worst years to retire even when measured over 30 years.

OTOH, a 42 year period allows more time for recovery, but also because it is an extended time for an early retirement, many studies show that one needs to lower their SWR% all things being equal vs. a standard 30 year retirement.

 

[FREE866]

Interesting question. Not 100% sure.
On one hand, a 17 year period for example, the period from 1966 through 1983 was a very poor period in that the bull market didn't start until 1982 and even so this was one of the worst years to retire even when measured over 30 years.

OTOH, a 42 year period allows more time for recovery, but also because it is an extended time for an early retirement, many studies show that one needs to lower their SWR% all things being equal vs. a standard 30 year retirement.

Yeah, I feel the standard 30 year one doesn't apply because as of now my expected SS income at 70 will generate ~60% of the current income I need now.

 

[Dtail]

Yeah, I feel the standard 30 year one doesn't apply because as of now my expected SS income at 70 will generate ~60% of the current income I need now.

Well the SS income of my DGF and myself who is planning currently to take it at 70 y.o. (DGF already collects) also represents ~60% of expected total needs.
Our total retirement period is at 36 years, so not super different overall.

I just use the entire 36 year retirement period as one input in Firecalc and other calculators.

 

[Gumby]

You do know that FIRECalc will take into account social security starting at some future date?

 

[FREE866]

You do know that FIRECalc will take into account social security starting at some future date?

Yes, I do that one for when I'm doing a 42 year time horizon. However, I'm always curious what will be my avg balance and success ratio if I just to it until 70 with current spending.

 

[Gumby]

Well, one difference that I can see is that there are more 17 year periods in the FIRECalc data set than there are 42 year periods, so I suppose we can be more confident in the success rate generated for the shorter period than for the longer period.

 

[FREE866]

Well, one difference that I can see is that there are more 17 year periods in the FIRECalc data set than there are 42 year periods, so I suppose we can be more confident in the success rate generated for the shorter period than for the longer period.

ahhh...interesting ....unfortunately one of the "hobbies" I've picked up over the last couple of years is just running way too many financial calculator scenarios!

 

[FREE866]

even without adding any social security at all the ending balance for the 42 year test is substantially higher

 

[GenXguy]

I basically do what the OP does for my retirement horizon and adding SS benefits at age 65 to determine my WR for early FIRE and then for when SS kicks in to get 3.4% and 2.1% WRs respectively to provide sufficient money for required expenses, taxes, and discretionary spending.

I consider that SS benefits could be cut 25% from the promised benefits, but my discretionary budget is high enough that I could shift some funds out of that to make up the difference from the reduced SS benefits and still have plenty for discretionary.

 

[Dtail]

I basically do what the OP does for my retirement horizon and adding SS benefits at age 65 to determine my WR for early FIRE and then for when SS kicks in to get 3.4% and 2.1% WRs respectively to provide sufficient money for required expenses, taxes, and discretionary spending.

I consider that SS benefits could be cut 25% from the promised benefits, but my discretionary budget is high enough that I could shift some funds out of that to make up the difference from the reduced SS benefits and still have plenty for discretionary.

Okay. You are effectively creating a WR% from Firecalc translating your spending.
I supplement the Firecalc inputs with a yearly WR% spreadsheet on the side.