Firecalc Question?

[Lump2]

If you put all your info into Firecalc, And you got no failures for any cycles. Should be OK to pull the plug pretty confidently right?

 

[REWahoo]

Should be OK to pull the plug pretty confidently right?

Yes, as long as the next 30 or so years aren't worse than any similar period over the past 130+ years. That's the catch...

 

[Gumby]

Also, don't forget the asteroid.

 

[ERD50]

Also, don't forget the old "Garbage-In, Garbage-out" saying. Were your assumptions good? Were your entries made correctly? Life expectancy (the default 30 years may be shorter than many ER's will experience)? Taxes? Health Care?

And so on...

-ERD50

 

[Lump2]

Thanks for the responses, My financial planner had said there was no problem. And he told me I could draw even more than we need. Hopefully my numbers are not garbage. Biggest struggle for me is I don't have traditional pension. Just 403B and Roth IRA's.
I think if I had a traditional pension instead of trying to draw the right% of assets would be easier.

 

[Midpack]

Thanks for the responses, My financial planner had said there was no problem. And he told me I could draw even more than we need. Hopefully my numbers are not garbage. Biggest struggle for me is I don't have traditional pension. Just 403B and Roth IRA's.
I think if I had a traditional pension instead of trying to draw the right% of assets would be easier.

I am in the same 'no pensions' boat as you are. But you can buy a pension if you really want to, immediate annuities are much like traditional pensions. Some well known retirement income academics (who don't have any incentive to sell you an annuity, Pfau, Otar & Kitces come to mind) recommend some level of annuitization - usually annuitizing enough to cover floor income needs. I am NOT recommending for or against annuities by any means, but it has appeal for some retirees.

 

[ERD50]

Thanks for the responses, My financial planner had said there was no problem. And he told me I could draw even more than we need. Hopefully my numbers are not garbage. Biggest struggle for me is I don't have traditional pension. Just 403B and Roth IRA's.
I think if I had a traditional pension instead of trying to draw the right% of assets would be easier.

Ohhh, you didn't mention 'Financial Planner' before...

I'll re-iterate my "Garbage-In, Garbage-Out" statement - if this is an 'assets under management' fee based planner, rather than a one-time charge to review your assumptions, then make sure you are adding in the appropriate management fees (often ~ 1%), and the typically higher expense ratios for the funds he/she may be putting you in (again, often around another added 1% compared to low cost index funds).

FireCalc has an entry field for fund expenses, it defaults to a low 0.18%, reflecting low cost index funds. You need to make that reflect your real numbers (or better, make your real numbers match that).

Those two numbers could DOUBLE the portfolio you need to retire confidently. More details would help, the funds you are in, fees, etc. If you are not comfortable with actual amounts, put it all in percentages.


-ERD50

 

[Lump2]

yes I pay the planner a % of my assets by the quarter. And I added that figure into my expenses so it should not matter what he charges me.
I worked at a University so all the funds I am in are either Fidelity, Or CREF TIAA
I am 57 and DW is 59 we have no mortgage My monthly expenses are 5000$
My assets are about 1.55 M
DW will get about 1500$ at 62 from SS and pension per month
I will get about 1700 from SS at 62

 

[REWahoo]

...I added that figure into my expenses so it should not matter what he charges me.

Interesting concept. Is that like buying stuff on sale and adding up how much you saved?

 

[2B]

yes I pay the planner a % of my assets by the quarter. And I added that figure into my expenses so it should not matter what he charges me.
I worked at a University so all the funds I am in are either Fidelity, Or CREF TIAA
I am 57 and DW is 59 we have no mortgage My monthly expenses are 5000$
My assets are about 1.55 M
DW will get about 1500$ at 62 from SS and pension per month
I will get about 1700 from SS at 62

Congratulations on turning this into a FireCalc question into another financial planner post. You'll quickly find out that there are few (if anyone) here that recommends a planner that takes a percentage of assets. You could do a search and find dozens of financial planner threads. Many will support a fee only planner but even there careful research has to be done to avoid spending $5,000 for a simplified, cookie cutter plan. Basically, it's hard to defend the "value proposition" a planner provides when you have to pay them from a percentage of your assets.

 

[Lump2]

Sorry Didn't Mean to get off track, I do appreciate the help of all the people that have responded though, Just wondering if anyone sees anything about my numbers that would be incorrect. I did change the fees charged in Firecalc to 1% and it did change it a little bit. But still had 100% success.

 

[marko]

If you put all your info into Firecalc, And you got no failures for any cycles. Should be OK to pull the plug pretty confidently right?

The greatest thing I got out of FireCalc was that it led me to this site several years ago. What a fortunate day for me!

I stumbled onto FireCalc looking for additional inputs (I'd never pull the plug on just one calculator no matter how reputable!) and in poking around came to this site sort of through the back door.

 

[2B]

Sorry Didn't Mean to get off track, I do appreciate the help of all the people that have responded though, Just wondering if anyone sees anything about my numbers that would be incorrect. I did change the fees charged in Firecalc to 1% and it did change it a little bit. But still had 100% success.

You didn't say how much of the $1.55 MM was with the FA. The 4% rule becomes the 3% rule when a 1% FA is involved. With that, FireCalc will give you 95+% when you take out $46,500 or less per year. The FA gets $15,500/yr with no risk. What a deal but you don't need the extra money.

I don't recall if you said how many years you put into your plan. I've found that if you go over 30 the program cuts out some bad performing years from the cycles so your success rate will go up using a 40 year plan rather than a 30 year plan.

FireCalc doesn't come with a guarantee but nothing does. I-ORP is popular as is ESPlanner. It's always fun (for us nerdy types) to cross check programs against each other but nothing can accurately predict the future. You need to remain flexible.

 

[ERD50]

yes I pay the planner a % of my assets by the quarter. And I added that figure into my expenses so it should not matter what he charges me.

I worked at a University so all the funds I am in are either Fidelity, Or CREF TIAA ...

... Just wondering if anyone sees anything about my numbers that would be incorrect. I did change the fees charged in Firecalc to 1% and it did change it a little bit. But still had 100% success.

Yes, a few more Q's.

Changing the 'fees' to 1% might not be enough. That is total expenses, and includes the management fees, plus the expense ratio of the funds you are in. You need both.

And 'in Fidelity or CREF' does not tell us how the funds are invested, only 'where' they are invested. A breakdown of equity versus fixed, and those pesky expenses are really needed to know where you stand.


-ERD50

 

[Lump2]

ERD hope this is what your looking for.
Current Allocations
US equity 47%
Intl. equity 19%
Real Estate 10%
Fixed Income 11%
Bonds 13%
Ave Net Expense ratio of funds .505%
FA fees are .040% of funds managed which is about 1.0 M

 

[ERD50]

ERD hope this is what your looking for.
Current Allocations
US equity 47%
Intl. equity 19%
Real Estate 10%
Fixed Income 11%
Bonds 13%
Ave Net Expense ratio of funds .505%
FA fees are .040% of funds managed which is about 1.0 M

OK, the equity/fixed is in a reasonable range IMO (and by reasonable, I mean anything from 40/60 to 95/5 - I'm not picky ), and while there are lower Expense ratios available, those aren't outrageous.

But are you sure about the .040% management fee of the $1M? That's $400/year. I would think even someone charging an hourly fee for an annual review would cost more than that. 1% seems typical, some .5% and maybe a few .25% that I've heard of, but never 0.04%.

-ERD50

 

[Lump2]

You are right FA fees are 0.40 I pay him about 4000$ for yr.

 

[flyingaway]

With social security coming, you are good to go with $1.55M. There is no need for an financial advisor, just get a target fund if you do not want to do anything yourself. Otherwise just maintain the existing funds.

 

[Al18]

I would put your FA to work and start moving some of your money from a traditional 401K to a Roth IRA, to save on future taxes. The period between your early retirement and when your start SS is the perfect time to convert this money at a lower tax rate than when you were working.

 

[ERD50]

You are right FA fees are 0.40 I pay him about 4000$ for yr.

OK, but you have a reasonable (IMO) asset allocation, so at this point, why give even $4000 to an FA? What does it gain you? While those expense ratios of those funds aren't crazy high, you could achieve an equivalent AA with a much lower expense (easily another 0.2% delta), and save the 0.4% as well. I'd rather have the ~ 0.6% of $1M to spend as I please, than give it to someone who does not appear to be adding any value.

$6,000 a year is nothing to sneeze at. I'd buy some nice stuff for myself or loved ones, or just add it to the portfolio as a buffer against any bad times in the future.

-ERD50

 

[Lump2]

When you say get a target fund, Your saying put all the assets in a certain fund and just leave them alone. Any target fund that you would suggest?

 

[2B]

When you say get a target fund, Your saying put all the assets in a certain fund and just leave them alone. Any target fund that you would suggest?

I didn't bring up the target date fund but I'll comment anyway. I would only recommend a target date fund for someone that is absolutely against taking any role in being their own FA. I personally think it's as good as using a percent of assets FA for most people and saves a lot of money.

I suggest you read Andrew Hallam's Millionaire Teacher as a really good introduction to index investing. It's pretty simple and easy to read. It's what you'll get encouraged to do by the vast majority of people here. If you have a complicated financial life (but it doesn't sound like you do), even I would recommend a fee only planner. Even then, I'd suggest you consolidate your money at Vanguard and get a decent review of your financial situation by a CFP for free or very low cost.