Future Withdraw Amounts - Inflation Adjusted / Bernicke's Reality Retirement Plan

[pb4uski]

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Originally Posted by SnowballCamper Yeah, umm some of you guys are real jerks. I actually answered the OPs question accurately. If you would like to see another way to compute how much you need to retire (without a probabilistic answer) you could ask in a new thread...

Still waiting for an answer. The point was that's the best we got, so unless you got a better idea I don't get the criticism.

[BaseballCoach]

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Originally Posted by USGrant1962 Whenever I fiddle with Bernicke in FIRECalc I subtract 10 years from my age so that the decline starts at 66, not 56. Seems more appropriate to me. OTOH, Bernicke is based on real data of how Americans spend as they age, so it has a basis. Hardly optimistic when you consider all the pessimism built into FIRECalc. I.E., the failure cases in FC assume you are retiring into the Great Depression (stocks went down 90%!) or Stagflation (inflation hit ~14%!). And, Bernicke in FIRECalc is still inflation adjusted.

Thank you. So all I change is my age on the Bernicke page of firecalc. I'm 38, so I would put in 28. Then all other numbers and inputs are the same. Is this correct? Thanks again.

[USGrant1962]

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Originally Posted by BaseballCoach Thank you. So all I change is my age on the Bernicke page of firecalc. I'm 38, so I would put in 28. Then all other numbers and inputs are the same. Is this correct? Thanks again.

Yup, that's what I do. But I don't "plan" based on Bernicke, rather I use it as another datapoint to see how I'm doing. Each of the options in FIRECalc is valid within their assumptions, and each should be considered in answering the fundamental FIRE question - "am I comfortable that I can live off my portfolio (including SS and pensions)?".

What FIRECalc/Trinity suggest is that if you could have retired through the Great Depression and The Great Stagflation, you can retire today. To me that's the bottom line. If you think the near future (see SORR) is likely to be worse than those, just keep working to fund the federal deficit and SS trust fund! But I wouldn't recommend it.

[Dtail]

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Originally Posted by USGrant1962 Interesting question and I just looked at it. Two things pop out. 1. FIRECalc reduces your spending immediately if you are 56 or older. "If you indicate you are 56 or older, then the spending will be reduced immediately." Which is just weird. Even though it says you spend 7% at 66, if you look at the default graph it starts out at 2.72%. So Bernicke is kind of broken in FIRECalc for anyone who retires after it kicks in. Bottom line is that FIRECalc is an Early Retirement calculator and is not designed for later retirements. 2. Regardless, you should expect under Bernicke to start higher than the 4% rule because you trend down over 20 years with your terminal spending being only ~50% of your starting spending (inflation adjusted). So I would be very careful using Bernicke in FIRECalc if you're retirement date is after 55 (or 65 if you subtract 10 like I do). But again, it is based on real data of how American's spend as they age. And all that does not even consider having SS as a floor.

Your explanation makes more sense. I didn't delve further, but was thinking theoretically along those lines that something is amiss/different with Bernicke if one retires after 56 y.o.
Thanks for the research.