A New Twist on Firecalc

[Hyperborea]

I've been playing with Firecalc to model my savings and investment pre-FIRE along with withdrawals.

What I do is set the starting portfolio to be my current portfolio value, the withdrawal is set to a negative amount to account for savings, set a future change to the withdrawal to cover my planned FIRE spending at the point in time that I plan to FIRE, and add the number of years till I FIRE to my normal planned portfolio lifetime. That future change has to be the positive value of my savings (the amount I entered as a negative for the initial withdrawal) plus what I plan to take in FIRE. If you don't do this then you won't be correctly modeling the withdrawals. Any other things like selling your house to travel the world or buying a boat can be added as usual.

 

[bongo2]

Neat. Keep in mind that the longer the time period the less data that FIRECalc has to work with. If you are accumulating for 20 years, and then drawing down for 30, the last full 50 year period in FIRECalc started in 1952. Also, FIRECalc includes all the partial periods in your success percentage. So if you have a 90% success rate, that includes the fact that you didn't go broke during your accumulation phase from 1982-2002.

 

[Hyperborea]

Yup, the years of contribution affecting success rate is a limitation.  Another item that it doesn't account for that improves the odds are that you would likely be applying some judgement on whether to retire based on the value of your portfolio.  If the markets had a 1929 crash just before you planned to retire you would probably hang on to the job for a little while longer.

The same is true of planned large purchases such as retirement homes.  If my portfolio has done very poorly and is at half it's original value I won't be buying that retirement pad right then.  I might continue to travel and keep low budget for a few more years.  What I do also is look at the detailed results and look at the failing portfolios and check out the value just prior to the year that the big purchase (or retirement decision) would be made.  It is often down significantly.  Removing those, which you would hopefully do, improves the odds.