So you get 100% in Firecalc .. but are you comfy with your lowest minimum balance ?

[audreyh1]

Quote:

Originally Posted by Dtail Bolded by me - but wonder how many folks on this site are withdrawing 4.35% each year. Probably very few.

Not clear how many people are using %remaining portfolio method either.

If you draw 4.35% of portfolio each year you have to know that worst case historical scenario sees a drop in real income over 60% over a decade and a half, so it’s not for the faint of heart. But it might not happen.

[kgtest]

Quote:

Originally Posted by OldShooter If I were ever to write a planner (I won't) it would probably have three or four outputs like: "Doesn't look too good,"Kind of marginal,"A reasonable bet," and "Looks pretty good." No way would I punch out three digit % numbers. (Old joke: "How do you know that economists have a sense of humor?" "They use decimals.")

My planner is a little different...

Really bad
Bad
Good
Really good


Most decisions we make could have any of the above potential outcomes, but I always aim for making decisions that will lead to a REALLY GOOD outcome.

[HI Bill]

Since ~50% of my budget is discretionary, and I'd presumably still have the house and SS, and I'm not worried about leaving an inheritance, I think $0 is just fine.

[tb001]

Quote:

Originally Posted by tb001 The caveat to the above is that if you’re married you have to assume two people dying, not one. We were ok with 94%, mainly because we had a fair amount of flex in the budget. I don’t think one of the failed cycles was the depression—pretty sure they were almost all stagflation related, but now I want to go back and check!

Doubled checked using the “other” fire calculator. At 94%, assuming a 40 year retirement, the only cycles that fail are the 60s stagflation years and 1906.

[Dtail]

Quote:

Originally Posted by tb001 Doubled checked using the “other” fire calculator. At 94%, assuming a 40 year retirement, the only cycles that fail are the 60s stagflation years and 1906.

Using the standard 30 year Firecalc numbers at 95%, there are 6 failures.
Are you saying that the 1960's had 5 stagflation years?
I believe based on other calculators that only 1965 and 1966 were the worse years.

[Turbo29]

Bernstein maintains that any estimate of success >80% over a 40yr period is meaningless due to the chance that the whole system may not survive that long.

Quote:

...For this [a retirement calculator result] 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).

The Retirement Calculator from Hell, Part III

[Dtail]

Quote:

Originally Posted by Turbo29 Bernstein maintains that any estimate of success >80% over a 40yr period is meaningless due to the chance that the whole system may not survive that long. The Retirement Calculator from Hell, Part III

Yeah, however for those that used a retirement calculator as part of their decision making process to retire, how many would accept only 80% as a success rate?

[big-papa]

Quote:

Originally Posted by cyber888 Just wondering, you run Firecalc, and you get 100% say over 40 years. What minimum balance are you comfortable with ? $300K left, $500K left ? $1 Million left ?

None of the above because I would never use that type of withdrawal method in retirement. I'll only use tools like Firecalc and Fidelity RIP to know if I'm in the ballpark to retire. I mainly use my own backtesting with my own dataset using a variable withdrawal method to see what sorts of worst-case withdrawals might have happened in the past in any given year. If, during that backtest, the lowest withdrawal is still above my bare minimum to live on (with a little margin), I consider myself good to go.

BTW, I'm good to go, but I am in OMY mode right now as I kinda like my job.

[Finance Dave]

I’m ok with zero...SS will cover 40% of our spending, we have LTC insurance, and we have bought a SPIA that will cover another 20% of spending. Combine those facts with knowing that 50% of our spend is discretionary and I’m comfortable.

[SAtoUS]

Quote:

Originally Posted by Finance Dave I’m ok with zero...SS will cover 40% of our spending, we have LTC insurance, and we have bought a SPIA that will cover another 20% of spending. Combine those facts with knowing that 50% of our spend is discretionary and I’m comfortable.

Agree, I'm also 100% fine with zero. I would like to die w nothing.

[EvrClrx311]

I want vs I need is important. Most of my FIRE planning is wants, not needs. So when my wants are projecting 100%... I can be pretty sure that my needs are more than covered, since my wants far exceed my needs. This helps me feel content -- that if things really got bad, worse than 100% could have prepared me for... then I can fall back on just my needs and be ok.

For planning purposes my end goal is $0... my wants will rise and fall over my time in FIRE to make sure I hit that mark as best I can

[stepford]

Quote:

Originally Posted by Turbo29 Bernstein maintains that any estimate of success >80% over a 40yr period is meaningless due to the chance that the whole system may not survive that long.

I manage my retirement funds so that I will have enough money to live comfortably for rest of my life. Should "the whole system" collapse before then and an unpleasant doomsday scenario unfold I figure I'll have lived long enough by that point and retirement planning will cease to be relevant.

In other words, plan as if the system will be in place forever, and it's not worth worrying about the alternative.

[Cayman]

Quote:

Originally Posted by ShokWaveRider +1, I forgot about the house equity...

We don't include house equity. It's not liquid, it's subject to market value fluctuations - possibly substantial fluctuations, and we need a place to live.

Also, equity lines of credit may be unavailable during economic downturns, as several members posted here in '08-'09.

[jkern]

I don't mind having an extra $1M. I self insure for earthquakes and LTC. Also, I'd like to leave a legacy for my daughter and hopefully grandchildren.