What probability of success did you retire at (or plan to retire at)?

[tb001]

Uncertainty around taxes was what held us back. All of the calculators significantly over estimated them and don’t get me started on trying to project into the future! I finally came to the conclusion that if taxes started getting significantly higher than I was calculating, it would be because I was on a ‘good’ trajectory and decided to stop worrying about them.

[scrabbler1]

Here is how I handled income taxes.


I split up my tax estimate into two parts. The first is a basic tax amount, an amount based on the more predictable monthly bond fund dividends which provide me the regular cash inflows to pay the bills. The second is an excess tax amount , an amount based on the less predictable and more volatile cap gain distributions. I don't really worry about the taxes due on those because I can always take those distributions in cash, especially if they are large, and use them to pay the taxes.


Those large distributions in recent years, however, kept throwing me over the ACA subsidy cliff, so the added taxes due included the subsidy I had to return. With the value of the subsidy rising, I changed my portfolio to greatly reduce these income spikes and the excess taxes they generated.

[corn18]

I am planning to retire Mar 2021 @ 55. Right now, we are at 95% if I quit today. If I wait until Mar (which is what I requested), we are at 99%. I have a very large chunk of RSU's that vest when I leave in Mar vs. now, so that is the difference. Plus 3 more months of income.

[Blue531]

I never used FireCal if that what you are using to get your probability % of success. I went by the 4% rule. Once I reached 25x my annual expenses, I began cutting my hours at work and within about six months, went part time down to about 20. Spent 2 years part time until my net worth reached 33x my annual expenses. Then I retired and currently I am at about 50x expenses.


I also use a great 401k calculator on Moneychimp.com. It's very concise.

401k Calculator


I would guess that I was at 90% when I first reached FI and now am at 99%. I leave 1% for the unknown which is always probable.

[Aramis]

Quote:

Originally Posted by Gumby This is how I handle expected taxes: 1. Start with actual spending on everything but income taxes. 2. Assume that all money needed to support that spending is taxable ordinary income. 3. Gross up for taxes at the marginal rate. 4. Use the grossed up number in FIRECalc So, for example, suppose I actually spend $81k per year based on having tracked my spending for many years. That puts me at the bottom of the 22% federal bracket and in the 5.5% state bracket. To gross up, so that after I've paid taxes I have $81k left to spend, I use the following formula: Gross draw = actual spending/(1- marginal rate). In this case $81k/(1 -.275) = $111.72k gross draw. That's what I put in for spending on the first tab of FIRECalc. Will my actual taxes be that high? No, because I didn't take into account the standard deduction, nor the fact that some of my income will be non-taxable social security and some will be withdrawals from Roth and after tax accounts, nor that some may be long term capital gains. It also assumes taxation of income at the marginal rate instead of the effective rate. But doing it this way ensures that I am being conservative in estimating my chances of success. It is also far simpler and easier to do. Tax rates may go up in the future, but there is really no way to predict when and by how much, so the best I can do now is just use the current ones and err on the conservative side. Perhaps one big difference in our situations is that I have no heirs, so I care not one whit about my ending balance, as long as it is above zero. FIRECalc says it will average 8 figures. That's good enough for me.

Dad? Is that you?

[Green Papaya]

FIRECALC indicated 100% before I retire.

Actually I am spending less than 3% NW without counting SS, so I'll say 100%+

[Dtail]

Quote:

Originally Posted by Blue531 I never used FireCal if that what you are using to get your probability % of success. I went by the 4% rule. Once I reached 25x my annual expenses, I began cutting my hours at work and within about six months, went part time down to about 20. Spent 2 years part time until my net worth reached 33x my annual expenses. Then I retired and currently I am at about 50x expenses. I also use a great 401k calculator on Moneychimp.com. It's very concise. 401k Calculator I would guess that I was at 90% when I first reached FI and now am at 99%. I leave 1% for the unknown which is always probable.

Effectively using an historical sequencing concept, Firecalc is calculating in its default format using the 4% WR "rule".

[FatBob]

Quote:

Originally Posted by stepford Similar for me. 100% in all calculators was a requirement, but also used a spend rate well in excess of what I actually expected. The upshot is that I retired 3-5 years later than I probably could have, but at a much reduced level of worry. This may or may not be a worthwhile trade for many, but I had just recently been through a halving of my assets (and subsequent recovery) during the Great Recession and was ill inclined to take chances.

Same here...100%. My passive income is 3x my living expenses. On top of that, I have a pension I can collect at 60 and then SS is the "fun money" at 62 (or maybe later). I don't suspect I will touch my portfolio...that will just continue to grow.

[dheb]

My plan is that I need to have at least (and ideally more) than the amount that FIREcalc says would have given me 100% success rate in the past. I've built into my plan a longer lifespan than I expect (102, 10 years older than my grandfather). I'm omitting the equity in any real estate, etc. I own. I'm also completely omitting any possible inheritance from my plan, as well as the possibility that I might want to get a PT job (retiring at 55, if I make a few thousand a year from a PT job, I can put that in my Roth). I think it's likely that if I'm careful and manage my finances pretty much as I have all my life, my nest egg will continue to grow throughout my retirement even as I draw an income from it.

[couch]

I am 10 years out and coasting towards fire. I have two buckets, one for before my pension and one for after. The one for before I am requiring 100%, the one after is 80%. It's a little easier to feel safe when you have a pension.

[meleana]

I used a lot of different tools but hired a fee only Financial Planner and he was the one who convinced us we would be ok.

[mickeyd]

I have been retired 15+ years and have yet to tap into my retirement stash even though I have executed several RMDs (I did pay taxes).

[lem1955]

Mine was 100% but I used a more conservative estimate of spending than I am actually living. Despite spending more each of the five years since retiring my portfolio is about a third larger than it was when I retired.

[WWDog]

I have no idea what success rate I would have been before retirement. I retired some time before I ever knew of this site. I save, in retirement, anywhere from $2,000 to $10,000 per month depending on what bills come in that month including interest on what I have saved. I would guess that I am probably 100%.

[Old Microbiologist]

Same as Travelover. Pensions are 150% of our needs so all savings just sit there growing.

[DrRoy]

Our Firecalc was 100% and my Fidelity score was 150+. Because our NW has continued to grow since RE 4 years ago, I am going to take my highest ever WR for next year of 3%, but I don't expect to spend it all.

[indiajust]

The merits of sleeping in a nice tent or camper by the river are not to be underestimated. It depends greatly on the river. I ended up retiring in 2008 at just over 100k in an IRA, with a half paid mortgage on a half finished fixerupper. 65k on the taxable side. My odds had to be closer to 0 than 1, long before I heard of FIRE. 2015 the house sold, the IRA rolled to a roth, I discover FIRE and I'm already there. Surprised to break finish tape while hearing starter gun.

[flyingaway]

One can always twist the budget to get 100% success rate. If you have a choice of retiring or not, that makes the decision a lot easier.