How much is enough?

[daylatedollarshort]

Quote:

Originally Posted by rodi The 10% failure rate can be modified by cutting back on spending if there are bad years in the market... Trinity study and other spending models tend to be rigid, and not follow real world reactions to down markets. I think it was Unclemick who said it pays to be agile and flexible in retirement to adjust to the circumstances... If you rigidly maintain the inflation increased withdrawal rate after a series of down years... you risk being part of that 10% failure. Firecalc doesn't claim to predict the future... but it backtests the plan. Most folks here put in a margin of safety... either discounting an income stream (SS for example), over estimating spending, or setting aside some money outside of firecalc... No one can predict the future market returns... not even firecalc... but firecalc considers the worst of the actual past performances.

I see your point, but to me that would be changing the variables (withdrawal rate) to avoid a 10% or possibly higher failure rate. It doesn't change the failure rate probability given a fixed withdrawal rate.

[Perryinva]

Yes but unfortunately (?!) more of us are living longer.

Your risk profile is basically whatI would call flexibility of discretionary funds. While I could, if I had to, base my FIRE on actual expenses, I choose to leave a lot of conservative discretionary as part of the equation. If all goes just average, I should be wonderIng after a few years of retirement why I am spending so much less than planned, but still doing everything I wanted. I had always assumed I would work until 65, so leaving at 61.3 is RE for me. At 61.3 Firecalc gives me 100% success using all three withdrawal profiles. . Of course the resolution of Firecalc is only a year so I use my year I turn 61.

I would rather work longer in my cushy job and increase my pension and savings so that I have enough that being flexible and cutting back is unnecessary in retirement if my portfolio underperforms, than retire earlier and worry about the market and money.

[Koolau]

Quote:

Originally Posted by Perryinva <SNIP> I would rather work longer in my cushy job and increase my pension and savings so that I have enough that being flexible and cutting back is unnecessary in retirement if my portfolio underperforms, than retire earlier and worry about the market and money.

This was my thinking and what made me stay until 58 even though I was FI at 51 Also, kids were still leaving the nest so our FIRE dream (aka the move to Paradise) was on hold. When the j*b changed from "cushy" to drudgery, I left in less than a week. The extra time on the j*b gave us much greater security (shorter time to live and more money.) I don't necessarily recommend this approach, but it has some advantages - such as, in our case, the ability to invest much more conservatively. Naturally, YMMV.

[NW-Bound]

Regarding taking SS into consideration, I wonder if anybody misses a nifty feature in FIRECalc that takes delayed SS or pension info to adjust WR upwards.

Let's say you have $1M. If you have no other income, then you can draw $35K with COLA, and the chance of going broke in 30 years is small. If you now have SS coming online in 10 years, say $35K, then FIRECalc will tell you that you can withdraw even more, such as $55K while still not having SS.

When you finally get that $35K SS, then you cut back your withdrawal to $20K, and that matches your now smaller stash (because you have been doing 5.5% WR). The net effect is that you maintain a higher standard of living of $55K, at the expense of drawing down your stash while waiting for SS.

I am just making up the above numbers as an example. Conceptually, people know how it works, but FIRECalc gives you a better estimate of how much one can spend by drawing down his stash prior to SS. And if you don't spend that much, perhaps you can stuff your Roth with the extra money and avoid higher taxes on the RMD later.

[GravitySucks]

Quote:

Originally Posted by Perryinva Yes but unfortunately (?!) more of us are living longer. Your risk profile is basically whatI would call flexibility of discretionary funds. While I could, if I had to, base my FIRE on actual expenses, I choose to leave a lot of conservative discretionary as part of the equation. If all goes just average, I should be wonderIng after a few years of retirement why I am spending so much less than planned, but still doing everything I wanted. I had always assumed I would work until 65, so leaving at 61.3 is RE for me. At 61.3 Firecalc gives me 100% success using all three withdrawal profiles. . Of course the resolution of Firecalc is only a year so I use my year I turn 61. I would rather work longer in my cushy job and increase my pension and savings so that I have enough that being flexible and cutting back is unnecessary in retirement if my portfolio underperforms, than retire earlier and worry about the market and money.

That's all true, what your missing is that I felt 80% was a reasonable risk and if the odds weren't in my favor a part time job or a cut in travel would have been in my future. The risk was still what it was, the response was, and remains, flexible.
So I'm still sticking to the personal risk aversion is part of the equation.

[dallas27]

Enough is defined by the following equation...

Additional expected wealth gained from labor = or < expected remaining time on earth X current value placed on your own time

[dallas27]

Quote:

Originally Posted by dallas27 Enough is defined by the following equation... Additional expected wealth gained from labor = or < expected remaining time on earth X current value placed on your own time

And the problem with the equation is many screw up valuation of the right side of the equation.

But... Check out this story, this guy gets exactly how much additional labor would liekly cost him far beyond his additional wealth.... Extreme example but still instructive.

Ravens OL John Urschel Retires After CTE Study, Continues Pursuit of MIT Ph.D. | Bleacher Report

[IrishMoss]

If someone has a career they love, and they enjoy their job and working every day, then there's no reason to "retire." It's a gift to love what you do so much that you want to keep doing it. And if you make good money doing what you love, that's more icing on the cake.

FI is a number.

RE is a decision.

But one does not have to retire early or not even in their 60's, or 70's if there's no limit imposed on them. Some doctors practice into their 80's because they enjoy it. Some attorneys too. Big difference between enjoying what you do and would even do it for free just to keep doing it versus being a cog in an organizational wheel who does not enjoy the work and never wanted to be doing the thing they are now doing, or are simply burned out and hating going to work.

[Perryinva]

^^^^ yup!

The $5k extra yearly income for delayed filing SS (which in my case is the max amount, so your number may vary) that I used in a previous response came from Firecalc, by trying various start dates for SS, and fiddling with income numbers to achieve the same success rates.