FIREcalc rewrite - suggestions?

Dory36,
- First--I'm new to the board and FireCALC--both are great.

- Potential improvements to FireCALC: I plan to take a fixed percentage of the ending portfolio balance from the fund each year (i.e. withdrawals will vary depending on portfolio results, not depending on inflation, etc. No chance to go broke, but available withdrawals will fluctuate each year and it's possible the balance will decline over the years if the % is too aggresive). I think this approach is fairly common. FireCALC is super now, but would fit my needs slightly better if I could input the % I plan to take of the ending balance (and the number of years/asset allocation) and then see some expression of how the portfolio can be expected to do relative to inflation (slowly decline? grow in true value?)and also how wild the fluctuations in annual available withdrawals are likely to be relative to an inflation-adjusted constant.

Thanks!

Mark W
 
Dory36,
- First--I'm new to the board and FireCALC--both are great.

- Potential improvements to FireCALC: I plan to take a fixed percentage of the ending portfolio balance from the fund each year (i.e. withdrawals will vary depending on portfolio results, not depending on inflation, etc. No chance to go broke, but available withdrawals will fluctuate each year and it's possible the balance will decline over the years if the % is too aggresive). I think this approach is fairly common. FireCALC is super now, but would fit my needs slightly better if I could input the % I plan to take of the ending balance (and the number of years/asset allocation) and then see some expression of how the portfolio can be expected to do relative to inflation (slowly decline? grow in true value?)and also how wild the fluctuations in annual available withdrawals are likely to be relative to an inflation-adjusted constant.

Thanks!

Mark W
 
Dory36,
- First--I'm new to the board and FireCALC--both are great.

- Potential improvements to FireCALC: I plan to take a fixed percentage of the ending portfolio balance from the fund each year (i.e. withdrawals will vary depending on portfolio results, not depending on inflation, etc. No chance to go broke, but available withdrawals will fluctuate each year and it's possible the balance will decline over the years if the % is too aggresive). I think this approach is fairly common. FireCALC is super now, but would fit my needs slightly better if I could input the % I plan to take of the ending balance (and the number of years/asset allocation) and then see some expression of how the portfolio can be expected to do relative to inflation (slowly decline? grow in true value?)and also how wild the fluctuations in annual available withdrawals are likely to be relative to an inflation-adjusted constant.

Thanks!

Mark W
 
Mark,

You can simulate withdrawal of a fixed % of the
ending balance each year by increasing the
expense ratio box to the desired amount and setting
the amount withdrawn box to zero.

Cheers,

Charlie
 
Charlie is correct - JWR1945 posted a great discussion on this at http://64.37.106.236/cgi-bin/yabb/YaBB.pl?board=saferate_board;action=display;num=1079049785

One approach would be to use the calculator in its normal mode to get to a nominal withdrawal rate (i.e., 3%, 5%, whatever) and then rerun it with zero withdrawals and the withdrawal rate (plus whatever expenses you have) in the expense column.

I will probably add a field soon for "percentage of portfolio withdrawal" or something like that - but it will simply get added to the expenses to do the calculations.

Unfortunately, at this point I am not sure you will get much really useful info out of the calculator when you do this, so I will need to also figure out how to usefully report withdrawals in inflation adjusted dollars. (Average? Average plus high and low? Average plus standard deviation?)

Dory36
 
Dory36
Unfortunately, at this point I am not sure you will get much really useful info out of the calculator when you do this, so I will need to also figure out how to usefully report withdrawals in inflation adjusted dollars. (Average? Average plus high and low? Average plus standard deviation?)
Click to expand...
I recommend using a threshold. Most people have a minimum (real) dollar amount in mind, an amount that they must have. A person might enter such a threshold as a (real) dollar amount or as a percentage of the first withdrawal.

Have fun.

John R.
 
I hope no one minds if I revive this dormant thread - I am also new to FIREcalc and this board. The calculator page banner doesn't show a revision yet so I thought there might still be time for a suggestion?

I was interested to find that my 100% SWR is drastically higher if I take SS at 66 vs. 62. I assume that is because my time horizon goes a few years beyond the "simple" break-even point for benefits, and I am near the maximum benefit.

I know it would be a lot of work, but it would be great if the calculator could make the determination of the best time to start taking benefits (hopefully separately for two benefits). In other words, to maximize the 100% SWR over the worst-case timespan. Not the least of the complications is that the second benefit may be either primary or spousal, with different pre-full-retirement-age reduction rates.

I'm not sure if this is a practical suggestion but it seems to me that it falls within the purpose of the tool for identifyng and planning for the worst-case scenario. In any case, thanks for providing a super planning tool!

Best regards,
CC
 
Dory36,

I just ran the following senario in FIREcalc:

Withdrawals: 40529
Starting Portfolio: 610000
Lifespan: 30
Your SS: 14000 starting in year 7
Spouse's SS: 7000 starting in year 8
Sell Your House: 100000 in year 16
Stocks: 30
Remainder invested: 5 yr Treasury
expenseE Ratio: 0.18
Inflation: CPI
First year withdrawal: checked
Results - Success Rate: 100%

Ran the same info except adjusted withdrawal by non-inflation adjusted pension income which should equate to the same withdrawal amount as above:
Withdrawals: 72000
Withdrawal Change 1: of -31471 starting in year 0
Results - Success Rate: 50.8%

Why:confused:?

Thanks,
Snowbird
 
Dory36,

I just ran the following senario in FIREcalc:

Withdrawals: 40529
Starting Portfolio: 610000
Lifespan: 30
Your SS: 14000 starting in year 7
Spouse's SS: 7000 starting in year 8
Sell Your House: 100000 in year 16
Stocks: 30
Remainder invested: 5 yr Treasury
expenseE Ratio: 0.18
Inflation: CPI
First year withdrawal: checked
Results - Success Rate: 100%

Ran the same info except adjusted withdrawal by non-inflation adjusted pension income which should equate to the same withdrawal amount as above:
Withdrawals: 72000
Withdrawal Change 1:  of -31471 starting in year 0
Results - Success Rate: 50.8%

Why:confused:?

Thanks,
Snowbird
Click to expand...

I just tried with your numbers at 72000. It's 100%.
 
amt,

If you use inflation-adjusted $$$ I agree it's 100%. Since my pension is not adjusted, it comes out 50.8%.

Snowbird
 
What would you like to see added or changed?

Dory36
Click to expand...

Dory,
This thread may be long since dead, but I did not see this anywhere on the existing posts, If it isn't too obvious, I would really like to see FireCalc add more data series -- perhaps from DFA -- on more exotic asset classes that I incorporate into my portfolio. Specifically:

Large US Value
Small US Value
International Value
International Small
Emerging Markets
GNMA
High Yield
Foreign Bonds- Intermediate Term
REITs
Commodities
Oil and Gas
Market Neutral Hedge Index
Venture Capital/Private Equity.

The last two are probably unrealistic, but the others would be great and should not be too hard to find, though naturally the series are shorter.

These asset classes, in a Modern Portfolio analysis, dramatically lower volatility and preserve or even enhance yield over the S&P, which is highly prized, and could allow FireCalc to delive better news to prospective ERs.

Dreaming further, I would love to have an option in FireCalc that says: 1) show me that I can go the number of years withoug going broke and 2) show me that I can go the number of years while preserving the real value of the portfolio. (or 90% of the real value or somesuch). Since none of us knows the hour of our death, really long run planning would seem to me (to be safe) to require the latter approach.

Thanks for all you've done for us,

ESRBob
 
Hmmm -- any idea where we can get reliable data on any of those classes? Prof Schiller kindly supplied the total market and commercial paper from around the Civil War era, but I haven't seen sources of any other data.
 
DFA has pretty almost all of this in their annual data book, though the international asset classes go back only 20 years or so, which might mean they could never work in Firecalc. The value stocks series, small and large, go back to 1926, annual data. REITS data goes back a long way, too. I have copied it into a spreadsheet by hand, in the form of annual total returns, if that helps. When the time comes, let me know.

Dory, its great the way it is, but if you're offering to play Santa Claus, those are some of the ways I'd love to see it grow...

ESRBob
 
Dory,

Along the lines of ESRBob's idea how about a "Coffee House portfolio" option? Even with partial data this might be useful. The model could assume rebalancing as per Coffee House guidelines.

http://www.coffeehouseinvestor.com/

is the page for this investment style.

Thanks for all the effort you have put into FIREcalc.
I used
 
REITS data goes back a long way, too.  I have copied it into a spreadsheet by hand, in the form of annual total returns, if that helps.  When the time comes, let me know.
Click to expand...

Doesn't REIT data only go back to approximately 1970? And there were some large changes in the rules in the 1980's that makes the old investments not really comparable with the current ones? That's only 4 or 5 overlapping 30 year periods.
 
...as long as you're mulling over adding a Life Expentancy feature, please consider an option for Joint Life Expectancy for those of us who are married:

http://www.retireearlyhomepage.com/joint2003.xls

Cb
Click to expand...

If dory is unable to program the joint table and combine it with SWR, you can approximate it using the single life table.

For example, say both you and your spouse are 50 years old, individually you each have a 33.7 year life span. The joint/last survivor figure is 39.9 -- a six year difference.

If you just subtract 6 years from your age (50-6=44) and use the single life table for a 44-year-old, the result is pretty close to being correct. (i.e. age 44 = 39.3 lifespan)

intercst
 
I agree with the suggestion re the SalaryGuru analysis.

I think it would also be a good idea to add a discussion of the SWR findings put forward by William Bernstein in his book "The Four Pillars of Investing" and by JWR1945 at the SWR Research Group board. We have learned a lot about what the data says in recent years and it is no longer appropriate to lead people to think that there is only one way to look at the numbers. I think that it might do a lot to alleviate some of the friction that we have seen in SWR discussions if we made it clear up front that the REHP study approach is only one possible approach and that a good number of reputable stock analysts have a very different take on the question of what withdrawal rate is safe.
 
That would be "what the data say"

arrete
Click to expand...


picky, picky, picky, arrette but in the same spirit...since the host has bought a house and scutteled the ship shouldn't he be required to change his moniker from dory36 to oh I dunno ...Ranch50, Colonial66, CapeCod42, or maybe SaltBox35?


BUM :-*
 
since the host has bought a house and scutteled the ship shouldn't he be required to change his moniker from dory36
Click to expand...

I like it the way it is, partially because so many people think he's female. :D

Besides, I get very confused when people change their names.

arrete - you're stuck with mine
 
I could have SWORN I just saw a honking goose riding a folding biyak with a color laser printer strapped to it...must have been a hallucination.
 
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