What's your FIREcalc success rate?

[Lusitan]

Quote:

Originally Posted by USK Coastie To second may others on this forum "If I'd known how good it was going to be, I'd have left a LOT sooner."

Actually I haven't noticed too many posters singing this tune. I asked those who were already FIREd about this in a post a while back, whether looking back anyone would have done anything differently (and if so what). Very few people said they would have retired sooner if they knew then what they know now.

I point this out only because I have always suspected that it's in our nature to over-save and to be very conservative when it comes to saving for FIRE and actually taking that leap from the daily grind of the workforce. It's easy to understand how the focus always drifts towards saving more.

I suspect I will do the same, and that down the road I'll look back and wish that I would have FIREd sooner and been able to enjoy more of the finite days of my life, and that I saved more money (sacrificed more years of my life) than I needed to.

[Lsbcal]

Lusitan, I'd say that it's in our nature to enjoy being in the herd. For the average worker that means getting up each weekday and knowing there is some group that needs us plus there is that pay check and other little perks. It can be a lot more scary to take charge of your life day to day.

But being really independent in retirement has its rewards for many of us. This Monday I was enjoying my lunch near a beautiful small pond at a winery watching dragonflies move over the water lillies after having done an oil painting -- it was just great and sure beats the old corporate cubicle. Still I will admit there was some angst in my decision to stay out of the work world after being busted in the tech bust.

Les

[me_no_boss]

Maybe work is not be such a bad thing for some people?
My work environment went downhill since the dot-bomb era.
If I had a decent boss and didn not lose trust with the company, I may have put ER on backburner for 5 more years.
At one time, it was a two way street where I bust my buns like work wknds and call-in on vacations. My employer suck it in during slow quarters and walked the walk, not just talked.
Then it became, lets crank up the speed, cut bennies/pension and management spin out of control - hear bad news first on CNBC. But, don't forget to be good teamplayers to dutifully train your replacement from India/China.
If not for family, I would probably pull the pin before I even heard of SWR/firecalc.
Follow the herd is ok, except the view was tiring.
I do worry about losing my edge in ER. Full time recreation is never a goal for me. So something tells me I will be itchy once decompressed.

[SecondCor521]

I thought a 4% withdrawal rate at my projected retirement age (53) would be 100% safe. However, if I use the Vanguard life expectancy calculator and use the 95th percentile life expectancy for a 53 year old male to enter into Firecalc, I only get a 95.3% success rate.

However, as I have pointed out to intercst before, you can calculate your probability of failure more accurately by taking the probability you will live to a certain age (in my example, 5% because I am using the 95th percential life expectancy) and multiply it by the probability of a portfolio failure during that period of time (in my example, 4.7% because Firecalc says I am 95.3% safe). This is true because the two events can be modeled as independent random variables, and a true failure occurs only if you run out of money and are still alive. So my probability of failure is actually 5%*4.7% or 0.235%, or a 99.765% success rate. Close enough for me.

I think intercst took my idea, extended it, and posted an article on his website somewhere.

2Cor521

[Texas Proud]

Dang.... made me go and actually do the calc....

Got 100% (plus) on a withdrawal higher than what I needed... and then asked how much can I take... and it was higher still...

But, there are potential changes that might bring it down to a real 100%... I had said when I was 16 or 17 that I would retire when I was 55... I don't want to make a liar out of myself . Right now, I have a cush job with good pay and some 'silver' handcuffs (wish they were gold...)... and as long as they don't piss me off I will continue with the paycheck...

[Alan]

Quote:

Originally Posted by lsbcal This Monday I was enjoying my lunch near a beautiful small pond at a winery watching dragonflies move over the water lillies after having done an oil painting

I need to retire now !! I had no idea that dragonflies could paint, I'm obviously missing all sorts of things stuck in my office

[Lsbcal]

Quote:

Originally Posted by Alan I need to retire now !! I had no idea that dragonflies could paint, I'm obviously missing all sorts of things stuck in my office

Hey, after 30+ years working in corporate cubicles you'll see dragonflies painting too .

Les

[Alan]

Quote:

Originally Posted by lsbcal Hey, after 30+ years working in corporate cubicles you'll see dragonflies painting too

I'm sure you're right. A week ago our MegaCorp was bought by another Megacorp (again) and we all went through all the communication meetings, no layoffs, (yet) blah blah blah.

On Monday we come into work to find that a higher bid has been tabled and we are in a bidding war. We haven't finished the lay-offs from the last sell off yet - several colleagues including my boss are finished at the end of the month. sigh, come on dragonflies, let me see you paint.

[Lsbcal]

Alan, it's tough out there. I was lucky to work for a good company for many years that was well known for not laying people off -- mostly because they never expanded too fast. But the founders died, the new guard came in, and the tech mania took over.

Oh well, nothing is forever. Not even me . I keep reminding myself of that one everytime I see another famous person kick the dust in his 60's or whatever. Still I'm aware some of us have to keep on slogging until we can ER, but in the scheme of things that's not really so bad, just read a little history to remind yourself of how good we all have it .

Les

[joesxm3]

Quote:

Originally Posted by Nords That would be the "Calculator From Hell" reference in the post immediately prior to yours... Here, maybe it's been too long since I linked these. A couple of them summarize earlier articles but the context is better when they're read sequentially: The Retirement Calculator From Hell - Part I The Retirement Calculator From Hell - Part II The Retirement Calculator from Hell, Part III, including the quote "Thus, any estimate of long-term financial success greater than about 80% is meaningless." Retirement Calculator from Hell, Part IV The Retirement Calculator from Hell, Part V

nords - thanks for taking the time to post the links. I really enjoed reading the articles.

[SecondCor521]

Quote:

Originally Posted by lsbcal Alan, it's tough out there. I was lucky to work for a good company for many years that was well known for not laying people off -- mostly because they never expanded too fast. But the founders died, the new guard came in, and the tech mania took over. Les

It sounds like you and I worked for the same company. Did the founders have a garage and sell oscilloscopes to Mr. Disney? I was there 1994-2005; caught the tail end of the good times and watched what you described above.

2Cor521

[Lsbcal]

Quote:

Originally Posted by SecondCor521 It sounds like you and I worked for the same company. Did the founders have a garage and sell oscilloscopes to Mr. Disney? I was there 1994-2005; caught the tail end of the good times and watched what you described above. 2Cor521

Yep, except after 2000 I worked for the spinoff which was a set of businesses Carly (or was it Platt?) thought she didn't need. Since then it's morphed into more separate entities. Hope it does well as I would like to keep my medical benefits in ER.

Les

[Alan]

Quote:

On Monday we come into work to find that a higher bid has been tabled and we are in a bidding war.

Today we hear that the higher bidder has been accepted, but there won't be any communication meetings until late next week in case another higher bid comes in. I wish they would keep all this private and just tell us when the new owner is known for certain. The first bidder now receives a cancellation fee of $200M We need to sell $2B of products to make $200M profit - sheesh

[cute fuzzy bunny]

Quote:

Originally Posted by Alan We need to sell $2B of products to make $200M profit

I think its safe to say that the people making more money off the higher bid wont be around to sell the $2B worth of stuff, or at least wont have to do any of the work.

[Meadbh]

Quote:

Originally Posted by Sam You mean "lower" withdrawal rate? Something like: I got 100% success rate at 4%, 3.5%, 2%, and also 1%, right?

I think it would be a competition to see how MUCH you could safely withdraw. e.g. if your can safely withdraw 4% but not 5% and I can withdraw 6%, I must have more reserve.

[Sam]

Huh? Care to elaborate?

[Meadbh]

Sam, the original discussion several pages back was about shooting for a FireCalc success rate >100%. Obviously not mathematically possible, but CFB suggested

"It sort of does...if you're at 100% you can have it look for a higher withdrawal rate to suit the overage".

I think CFB is correct. The more you can withdraw while still keeping your success rate of 100%, the safer you are. Say you had 100% success at SWR of 2%. Most of us who want that 100% would not feel FI ready to RE. Let's say we save like mad and run it again in a year, and get 100% success at 3%. Close, but no cigar. Another year and bingo! 100% success at SWR of 4%. I would feel FI. But if I waited yet another year and it came out to 100% success at SWR 5%, I would feel positively rich and more likely to send in the resignation letter.

Other people might aim at a lower success rate. Both the success rate and the %SWR that you feel comfortable with reflect your risk tolerance (and confidence in FireCalc).

[Sam]

Oh that.

Anyway I was the one bringing up the >100% sucess rate. I was being sarcastic. I need to use emoticons more often.

As far as confidence in FIRECalc, I have no reason to doubt it at all. There is nothing arbitrary about its operation. It's just a model based on historical data.

[SecondCor521]

Quote:

Originally Posted by Meadbh I think CFB is correct. The more you can withdraw while still keeping your success rate of 100%, the safer you are. Say you had 100% success at SWR of 2%. Most of us who want that 100% would not feel FI ready to RE. Let's say we save like mad and run it again in a year, and get 100% success at 3%. Close, but no cigar. Another year and bingo! 100% success at SWR of 4%. I would feel FI. But if I waited yet another year and it came out to 100% success at SWR 5%, I would feel positively rich and more likely to send in the resignation letter.

This makes no sense to me. You're actually safer the less you withdraw, not more. Unless you mean that you're safer because you have the option of withdrawing at a 4% rate but only need 2% of your portfolio to live on.

And waiting a year to get a success rate of 100% withdrawal at a 5% withdrawal rate in year 3 vs a 4% in year 2 will only happen if you significantly change your investment portfolio, investment expenses, or life expectancy inputs, not just because you saved more money.

2Cor521

[cute fuzzy bunny]

Hmm...I dont think there'd be a "S" WR at 5%, 4% is the max so far, without skulduggery. But your annual withdrawal amount could go up a whole hell of a lot more. So the thesis is correct, just the terminology needs a little help.

For example, if you have a million, and a 40k swr, but you cant live on that...its not workable. But if you squirrel away a million and a half, with a 60k swr, and you only need 50k...way good to go.

But if firecalc is telling you that you're at 100%, find that upper limit. Find your lowest workable budget. Theres your spread. I'm thinking that if your "happy budget" level is below 100% 4% SWR, and you can live at your baseline for 5 years without hating life...theres no financial reason to still be sitting at work.