What is ‘good enough’ when it comes to Planner success rates?

[Travelwanted]

Quote:

Originally Posted by Senator I see a lot of people’s assets on here and I think ‘That’s a no-brainer, retire’, but when it comes to me, it’s somehow different. I have use Fidelity Retirement Income Planner, FireCalc, Flexible Retirement Planner, Quicken Lifetime Planner, AARP calculator, MarketWatch planner, my own spreadsheets, you name it. I have used literally 100’s of them in the past year. All seem to be 100% success. I even discount rental income by at least 20% and increase personal expenses by 100%, just in case, and they all still work. I plan for $100K in spending, and I do not spend $40K now. But I do want to travel the USA a bit with an RV (5th wheel) that I still need to purchase. Trust me; I have no love for my job. It’s easy, and great money, but I would take a severance in a heartbeat. But I still think I need to go until 7/1/2016 at my ‘real’ job, just to be sure. Part of the hesitation are the many ‘what ifs’. What if the market performs way worse? What if inflation is extreme? What if my expenses are a lot more? What if taxes go up a lot? What if a polar bear (or asteroid) comes through my house and it somehow impacts me negatively? Rental income is not as sure as a pension or Social Security. But I have $297K in gross income today, with just at $100K going to the large expenses of mortgages, taxes and association dues. Much of the rental income is offset by depreciation, and there are many other business write-offs, so my tax bill should be lower too. So there should be at least $100K there for the foreseeable future, until any small pensions (~$14K) and Social Security (close to max) and I start at my investment accounts ($1M now). BUT, I still have hesitation. Of course I am not calculating into the picture “what if my expiration date is closer than I think”. It’s also a real mental game for me to picture myself actually drawing from any retirement account, not adding to it, as I have been squirreling money away for so long. I will want to save some no matter what, because that’s just what you do. So, when you did your retirement budgeting and planning exercises, what success rate in the planners did you feel was good enough? And did you discount any income streams or add to any expenses ‘just in case’? Did you ever wish you would have worked longer as you did not have enough income in retirement? (Not those of you who go back for fun). Or actually had to pick up a minimal wage job because you needed the money?

Senator, I completely understand. I am in your similar position. I analyze and plan. Then repeat x1000. I recheck...daily! Seriously

Every CALCULATOR says 100% with 2x current spending level, no SS, below average returns. Yet, my BRAIN says 90%. It is the UKNOWN that we fear. Especially if you are younger like us. Longer time horizon = greater risk.

But, I also believe in us. Meaning, if things go south, we can adjust our spending to account for unforeseen events. After all, we made it this far!

But, leaving a very high paying job to ER feels like the first time I went skydiving. . . exhilarating but scary as hell!

[Senator]

Quote:

I analyze and plan. Then repeat x1000. I recheck...daily!

Whew...! I thought I was insane doing that everyday. Now I know I am normal.

I look at every scenario. Then double check. Update the numbers and run them again. Change them higher and lower. Collect SS at 62, 66 and 70.

And I can always find a failure, somewhere. High inflation, low returns fails. So I better stay working.

[dallas27]

Polar bear invasion! I knew there was a scenario i forgot to plan for.


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[daylatedollarshort]

Quote:

Originally Posted by Senator Whew...! I thought I was insane doing that everyday. Now I know I am normal. I look at every scenario. Then double check. Update the numbers and run them again. Change them higher and lower. Collect SS at 62, 66 and 70. And I can always find a failure, somewhere. High inflation, low returns fails. So I better stay working.

We base our plan on 0 - 1% real, which historically has not been too hard to get with TIPS, I bonds, stable value, CD ladders, etc. We don't have a lot of our AA in stocks, so that takes out much of the uncertainly / volatility. At this point in our lives we are more interested in capital preservation and low volatility than growth.

Plus we have part-time hobby job income that I don't put in the plan so we don't have to work unless we want to, and that adds a bit more cushion.

[brewer12345]

Quote:

Originally Posted by Senator Whew...! I thought I was insane doing that everyday. Now I know I am normal. I look at every scenario. Then double check. Update the numbers and run them again. Change them higher and lower. Collect SS at 62, 66 and 70. And I can always find a failure, somewhere. High inflation, low returns fails. So I better stay working.

Well, I am glad that you are ready to sacrifice more of your life to pay my Obamacare subsidy service the national debt.

[Animorph]

I was happy with 85%, but I can tolerate a cut in my spending fairly easily also.

One thing I always think of is that I may not be so active after age 70 or so. I'm 59.5 now, so I've only got about 10.5 hopefully "good" years to do my active traveling and whatever. Delay just one more year at this point and there goes 10% of your best retirement years. You never know, it may turn out better or it may turn out worse. But those years become more valuable the older you get. It's a shame to waste them working if you don't have to.

[Senator]

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Delay just one more year at this point and there goes 10% of your best retirement years.

How true. I always think of 70 year olds as being a bit old and not able to do much, and that's only 15 years away. In my head, I am still 30.

[48Fire]

Some of it comes down to having the "guts" to pull the trigger, then having them to remind yourself you made the right call. I was surprised when a coworker said he admired me for my guts.

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[LRDave]

Quote:

Originally Posted by Animorph I was happy with 85%, but I can tolerate a cut in my spending fairly easily also. One thing I always think of is that I may not be so active after age 70 or so. I'm 59.5 now, so I've only got about 10.5 hopefully "good" years to do my active traveling and whatever. Delay just one more year at this point and there goes 10% of your best retirement years. You never know, it may turn out better or it may turn out worse. But those years become more valuable the older you get. It's a shame to waste them working if you don't have to.

Thank you for posting those words, Animorph. In the calculus of retirement planning, I think the non-linearity of the value of time will sway me out of the estate preservation stage.......

[REWahoo]

Quote:

Originally Posted by Animorph One thing I always think of is that I may not be so active after age 70 or so. I'm 59.5 now, so I've only got about 10.5 hopefully "good" years to do my active traveling and whatever. Delay just one more year at this point and there goes 10% of your best retirement years. You never know, it may turn out better or it may turn out worse. But those years become more valuable the older you get. It's a shame to waste them working if you don't have to.

+1

This is the critical equation missing from every retirement calculator.

When I retired at age 58 I believed the value of the next few years of retirement was far greater than the value of adding to my nest egg by continuing to work. Nine years into retirement I'm even more convinced of that belief. That was reinforced over the 4th of July weekend when my best friend growing up died of a heart attack at age 67. He was still working...

[Aus_E_Expat]

Quote:

Originally Posted by Animorph One thing I always think of is that I may not be so active after age 70 or so. I'm 59.5 now, so I've only got about 10.5 hopefully "good" years to do my active traveling and whatever. Delay just one more year at this point and there goes 10% of your best retirement years.

There is an interesting book on this by a New Zealand planner called "20 good summers". It basically looks at retiring at 50 - 55 as you may be lucky to have 20 years to have an active retirement, the remaining years will be less active.

Which brings me to my next point, none of the retirement calculators appear to factor in that for the first 10-20 years of retirement you will be more active and spend much more, in the later years you can still enjoy retirement but probably spend less.

My father is in his 90s now and basically spends nothing apart from on food and electricity.

For me, I do not want to spend the first 20 years of my retirement living frugally - I want to enjoy my time. Plus, I will still be supporting children so I think a budget of $150,000 per year is appropriate but when I get to 75, I would expect $50,000 (in today's money) will probably be adequate.

[user5027]

Quote:

Originally Posted by Aus_E_Expat Which brings me to my next point, none of the retirement calculators appear to factor in that for the first 10-20 years of retirement you will be more active and spend much more, in the later years you can still enjoy retirement but probably spend less.

Check out Firecalc's "Other Income/Spending" tab and read under "Pensions, "Off Chart" Spending Changes, etc."

You can also use this section to enter "off chart" spending (or spending reductions).

[Jager]

A few months ago ha ha, in another thread, posted that retirement is, among other things "... a leap of faith." That simple phrase instantly struck me with its wisdom. It encapsulated for me - for a lot of us, I think - the uncertain nature of this FIRE business.

We try and bring certainty to the question of when we're good-to-go, but are forever denied. We're denied because it's more a question of philosophy, of trying to pin down the vicissitudes of life, than about numbers.

It's probably even worse for us, the cohort mostly seen on this board, because we're detail-oriented, we're especially wired for crunching the numbers, for tracking expenses, and for LBYM. The very things that got us to the finish line are the things that impede our finally stepping across it.

Ergo the never-ending OMY stories.

My advice to the OP... just do it.

[rodi]

I just retired 3 weeks ago. And I find myself terrified at times, and thrilled at other times.

I'd run every calculator, every possible way. But unlike some others here, I used 100% of SS and pension, and 70% of rental income. My spending amount was based on the last several years gross income, less mortgage, retirement savings, medicare and SS tax, and then added in healthcare increases. I planned for continued college fund savings for my two minor children - since I still have that big bill ahead of me. Since I'd led a very comfortable lifestyle prior to retiring, I planned for the same lifestyle. I paid off my house the same week I retired.

I also set aside $100k for "other stuff" - didn't include it in my nest egg figure. That's earmarked for the new driveway (mid process right now), new master bath, new car in a few years, a big trip next year, and "extra" emergency fund. (Already had 6 months of spending set aside in an off books emergency fund.)

I think it's easier for folks with COLA pensions that cover a large percentage of their spending. I look at rental income as COLA adjusted.

3 weeks in - I still run the calculators. I hope with time I'll get less nervous.

For me, I'd gotten 100% from calculators for close to a year but was nervous to pull the plug. I was firmly in OMY mode. The thing that tipped me over the edge was learning that I'd likely have to travel for 1 week work trips, every 3-4 weeks for the summer and fall.... I didn't want to impact my non-work life with this travel. Then I had some awful commutes home due to freeway construction - construction that will be continuing for another 2 years.... I came home and ran it by my husband, and gave notice the following Monday.

[daylatedollarshort]

Quote:

Originally Posted by rodi I came home and ran it by my husband, and gave notice the following Monday.

Good for you. I hope ER is everything you had hoped it would be.

[MRG]

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Originally Posted by rodi I just retired 3 weeks ago. And I find myself terrified at times, and thrilled at other times.

I called that normal. It got better for me with each month, took probably a year for me to not be terrified. YMMV. Congratulations on retiring.

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[Midpack]

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Originally Posted by REWahoo "Good enough" is whatever results give you the confidence to retire. That number is different for almost every individual - what works for me probably won't work for you and vice versa. OMY can be a good thing - or it can be a sad loss of opportunity. Only you can make the call.

+1. I needed more than a 100% success rate to have the "confidence to retire." But there is no right answer, each of us has to make the call for ourselves. And some have contingency plans, going back to work or some other income source, while others have to rely on their nest egg alone.

[W2R]

Quote:

Originally Posted by Jager A few months ago ha ha, in another thread, posted that retirement is, among other things "... a leap of faith." That simple phrase instantly struck me with its wisdom. It encapsulated for me - for a lot of us, I think - the uncertain nature of this FIRE business.

Retirement day felt to me like skydiving (= "jumping out of a perfectly good airplane") must feel. Exhilarating and terrifying at the same time.

Quote:

Originally Posted by rodi I just retired 3 weeks ago. And I find myself terrified at times, and thrilled at other times.

Exactly! But as MRG pointed out, it gets less terrifying for many of us with the passage of time, as you begin to absorb the fact that the money really IS there each month as planned. At least for me, it was just the uncertainty of it all that scared me so much. Well, that plus knowing that I probably would never find a job like the one I had again at my age.

[SJ1_]

So, when you did your retirement budgeting and planning exercises, what success rate in the planners did you feel was good enough?
for me 100%
And did you discount any income streams or add to any expenses ‘just in case’? In a way. We have a huge travel budget and if we have large medical expenses it comes from that.

Did you ever wish you would have worked longer as you did not have enough income in retirement? no - I actually wish I left a little earlier. I have
met a number of people who have said the exact same thing and so far it is about 10 to 0 on the wishing one left earlier vs wishing I stayed there longer.
It is really hard to grasp how good retirement is.
(Not those of you who go back for fun). Or actually had to pick up a minimal wage job because you needed the money?
Not yet. We just got back from a week in Glacier National park and thought
about spending a summer working there but so far I have not got past the
"thinking about it".

[grasshopper]

We retired at 54/50 in 2006 Quicken Lifetime planner guessed 90% chance of success. Than 2007-2008 and we lost plenty, today QLP says I will kick the bucket with more than I have now. By the way 7/2016 I will be cruising the Galapagos and than on to Machu Picchu.