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Old 05-19-2019, 08:00 PM   #41
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Still working and Lord willing, will be the Class of 2024 if near 100% with one DD still in college. Once she is graduated and if it is past 2024, 85% is good for DW & me.

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Old 05-19-2019, 08:13 PM   #42
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To the OP, I would use a couple more retirement calculators. The one I like besides FIRE Calc is the one from Fidelity. The main point is that by using more than one calculator, you’ll see and understand differences between them that matter.

If you’re just now coming to think about early retirement, I’d start doing a lot of work around what retirement would mean. Of course there is lifestyle, but just focusing on finances, there is taxes, social security, health insurance, inflation which is closely aligned with spending and your need to really understand your budget. It took me a couple years (no full time of course) to get comfortable with my numbers.

For what it’s worth, if I knew I entered everything correctly and completely into FIRE Calc and was not at 100%, there’s no way I’d consider retiring. In fact, I forget if FIRE Calc shows a success rate over 100%, but you can impute a higher than 100% outcome by using conservative assumptions.
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Old 05-19-2019, 08:33 PM   #43
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To the OP, I would use a couple more retirement calculators. The one I like besides FIRE Calc is the one from Fidelity. The main point is that by using more than one calculator, you’ll see and understand differences between them that matter.

If you’re just now coming to think about early retirement, I’d start doing a lot of work around what retirement would mean. Of course there is lifestyle, but just focusing on finances, there is taxes, social security, health insurance, inflation which is closely aligned with spending and your need to really understand your budget. It took me a couple years (no full time of course) to get comfortable with my numbers.

For what it’s worth, if I knew I entered everything correctly and completely into FIRE Calc and was not at 100%, there’s no way I’d consider retiring. In fact, I forget if FIRE Calc shows a success rate over 100%, but you can impute a higher than 100% outcome by using conservative assumptions.
Firecalc only shows success rates up to 100%, but one can effectively input a higher success rate by calculating maximum spending.
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Old 05-19-2019, 08:46 PM   #44
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After entering all the pertinent info, you can tell FIRECalc to look for the highest spending level that results in 100% success rate (the stash depleted at the end of the retirement period, which is usually 30 years).

Suppose FIRECalc says you could spend $100K/year, but you choose to be conservative and spend only $80K.

Some posters then say that their success rate is 100/80 = 125% which is not correct in the probabilistic sense, but we know what they mean.
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Old 05-20-2019, 08:07 AM   #45
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At 43, I’d definitely want 100% (plus a cushion or two). At 63, 95% for plan A and I sleep just fine.
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Old 05-20-2019, 08:54 AM   #46
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Yep, there's at least one popular online guru who notes that "success" over 80% is meaningless...there are simply too many uncontrollable variables in our lives.

I think this is it:


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The hard part, of course, is how to interpret this kind of output. Realize that these probabilities are merely an imperfect estimate of the investment risk you are taking. In other words, they assume the continuity of financial and political institutions over the period studied. Consider the implications of the above 97% success rate at a withdrawal of $2,500 per month ($30,000 per year). For this to be a useful estimate of your true chance of not running out of money, the "success rate" of your ambient political, economic, and military environment must be at least 97% over this 40-year period. Do you think that this is likely? Only if you are an historical illiterate (which, I’m afraid, subsumes many finance academics).
...


So, think about what a 97% 40-year success rate means: the absence of all of the above for approximately the next 1,200 years. (A 97% success rate means a 3% failure rate; those 40 years divided by 0.03 is 1,200 years.) Ignore for a minute the uncertainties of the less-developed world and think only about the winners: Germany—in this century alone, three episodes of military and/or economic disaster, the first two associated with mass starvation. Japan—wartime devastation even worse than Germany’s. England—near brushes with disaster in 1812-1814 and in both world wars. And even the United States—repeated banking failures, civil war, and the near-bankruptcy of the Treasury in the 19th century. The near collapse of the capitalist economy in the 1930s. And oh yes, I almost forgot—the entire globe barely missed mass incineration in October 1962.
History’s best-case scenario was the Roman Empire, which survived more or less intact for about seven centuries (if you ignore the odd sackings of the capital after 200 A.D.).
A wildly optimistic historian might give us another few centuries of economic, political, and military continuity. Back-of-the-envelope, that’s about an 80% survival rate over the next 40 years. Thus, any estimate of long-term financial success greater than about 80% is meaningless.
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Old 05-20-2019, 09:48 AM   #47
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Didn’t find any retirement forums until after we retired. I retired by choice and my husband didn’t. We have always lived on a budget.
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Old 05-20-2019, 10:07 AM   #48
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Might be true, but psychologically if one's retirement started at 80% success rate and starts heading very south, one might always wonder "maybe I should have worked it to 95/100%"?
Just a thought....
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Old 05-20-2019, 10:27 AM   #49
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I left MegaCorp 6+ years ago with a well below 100% success number.
Due to some misinformation and a great market run it is now at 100%. Of course that means little as it's based on the past, not the future where it will matter.
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Old 05-20-2019, 10:48 AM   #50
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Might be true, but psychologically if one's retirement started at 80% success rate and starts heading very south, one might always wonder "maybe I should have worked it to 95/100%"?
Just a thought....



I think you have to look at that differently. If you have a 95% success rate in your plan you actually have 95%*80% or 76%. If you retired with an 80% success rate you actually only have a 64% chance of success.



I think where it becomes important is when people kid themselves and keep staying one more year at the job (or eat ramen for lunch, etc.) to get from 95% to 100%.



I get it, some people want certainty, but there is no such thing in this world.
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Old 05-20-2019, 11:04 AM   #51
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... now at 100%. Of course that means little as it's based on the past, not the future where it will matter.
Exactly! No retirement calculator can honestly claim to predict anything.
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Old 05-20-2019, 11:30 AM   #52
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Originally Posted by Turbo29 View Post
I think you have to look at that differently. If you have a 95% success rate in your plan you actually have 95%*80% or 76%. If you retired with an 80% success rate you actually only have a 64% chance of success.



I think where it becomes important is when people kid themselves and keep staying one more year at the job (or eat ramen for lunch, etc.) to get from 95% to 100%.



I get it, some people want certainty, but there is no such thing in this world.
Bolded by me - agree with this statement, umm 100%.
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Old 05-20-2019, 12:05 PM   #53
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Bolded by me - agree with this statement, umm 100%.
Indeed! And no way am I going follow a withdrawal method like the default in Firecalc and others, which assumes a fixed withdrawal, adjusted for inflation each year. I see these tools more as a ballpark guesstimate to see if you've stashed enough away to start retirement - once that commences, flexibility is the name of the game. This can be done in an ad-hoc manner or by one of many other retirement methods out there which aren't SWR.
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Old 05-24-2019, 04:42 PM   #54
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The biggest determinant is what you spend in reality. Most people just pluck a number out of thin air like 100K, but if your spend down is 110K it makes a difference longevity and success, so I would track a budget for a while using Mint or something and create a spread sheet of actual spending for 2-3 years. In my case I budgeted 10k/mo live on about 8500/mo and use the accumulating 1500 as cushion money for a new A/C or something.
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Old 05-24-2019, 06:58 PM   #55
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Let me add to that my 3%/5% rule of thumb: If you have a withdrawal rate around 5% or more, you probably need to be willing to take on more risk of portfolio failure including ability to cut back on spending and return to work if necessary. If you have a withdrawal rate around 3% or less, you are almost certainly going to die with a good deal of money. Actually, Firecalc and other sources peg the 'failsafe' withdrawal rate somewhere around 3.5% - the rate the survives any set of historical returns/inflation etc.
This is helpful, but is there an easy way to adapt this when I want to start at close to 5% but then reduce that due to government pensions (Canadian OAS and CPP)?

Example: Plan is for 30 year withdrawal phase from age 58 to 88:
How safe am I if I start high (4.9% WDR for 7 years), but then at age 65 drop that to 4.3% (for 5 years), then finally drop again to 2.8% at age 70 for the final 18 years?
I guess Firecalc does the math for you, but was wondering if there was an easy rule of thumb as per catman2020 that handles this kind of phased withdrawal rate reduction from high too low?
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Old 05-24-2019, 07:05 PM   #56
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This is helpful, but is there an easy way to adapt this when I want to start at close to 5% but then reduce that due to government pensions (Canadian OAS and CPP)?

Example: Plan is for 30 year withdrawal phase from age 58 to 88:
How safe am I if I start high (4.9% WDR for 7 years), but then at age 65 drop that to 4.3% (for 5 years), then finally drop again to 2.8% at age 70 for the final 18 years?
I guess Firecalc does the math for you, but was wondering if there was an easy rule of thumb as per catman2020 that handles this kind of phased withdrawal rate reduction from high too low?
  • Input your 4.9% withdrawal rate (in $) on the first screen.
  • In the second tab, input government pensions and their corresponding starting years under the SS section. If you're single, you could enter your first pension under "Your Social Security", and the second under "Spouses Social Security".

    If your intent is to offset your withdrawal rate by the pension amounts, you're done, and FIRECALC includes the assumed lowered withdrawal rate, which increases your success %. If, however, you're actually going to change (lower) your annual spending rate, under "Pension Income (or off chart spending reduction)", enter the $ amount you are reducing your spending by as a negative dollar amount in the lower portion of the screen . Note: Don't do this if you're not actually going to be lowering your annual spending and are counting on SS or pensions to maintain the original spend amount, or you'll be counting it twice.
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Old 05-24-2019, 07:11 PM   #57
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  • Input your 4.9% withdrawal rate (in $) on the first screen.
  • In the second tab, add SS and the start year. Under "Pension Income (or off chart spending reduction)", enter your new reduced spending level as a negative dollar amount in the lower portion of the screen for the drop to 4.3% and 2.8%. Note: Don't do this if you're counting on SS or pensions to maintain the original spend amount, or you'll be counting it twice.
I have tried that...just wondering if there was any trick to do a quick and dirty assessment based on the percentages, along catman2020's simple rule of thumb. For example, could I convert my phased WDR reduction to a single equivalent WDR?
E.G. Do a weighted average (4.44% in the above example).
I guess really it is probably best to just plug the numbers into Firecalc like you suggest!
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Old 05-24-2019, 07:18 PM   #58
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I have tried that...just wondering if there was any trick to do a quick and dirty assessment based on the percentages, along catman2020's simple rule of thumb. For example, could I convert my phased WDR reduction to a single equivalent WDR?
E.G. Do a weighted average (4.44% in the above example).
I guess really it is probably best to just plug the numbers into Firecalc like you suggest!
It's best to plug in the numbers as suggested. That way, FIRECALC includes the SORR associated with the differing durations, and includes the stability of your pension income as something that does not add SORR to your situation. Using a weighted average won't give you a realistic determination, as it wouldn't model the three indpendent withdrawal rates and their durations.

With higher withdrawal rates, the SORR generally hits at 12 to 17 years (for around 5% withdrawal rates), meaning that if you take out 6% for 17 years, you're much more likely to run out of $ beginning in this time period due to the SORs. Hope this made sense.
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Old 05-25-2019, 08:17 AM   #59
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I am shooting for 95% but I don't count all my assets in firecalce either. Figure they are my oh s**t fund. . . Plus my life expectancy number is likely too high as no one in my family has made it there.
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Old 05-25-2019, 09:30 AM   #60
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I am shooting for 95% but I don't count all my assets in firecalce either. Figure they are my oh s**t fund. . . Plus my life expectancy number is likely too high as no one in my family has made it there.
That's the old back and forth of including all funds or not. I and some others do not include emergency type funds as part of our investment assets.
Most do however and feel it is just mental accounting of sorts.
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