Adjust Spending Level for Success Rate Strange Results

[faridghar]

Hello,
When I use this input data:

Withdrawals 60,000
Plan End 50
95% Rule from WorkLess, Live More*
Percentage used for 95% Rule* 0
Bernicke Spending Reductions*
Current Age (for scheduling Bernicke spending reductions)* 48
Starting Portfolio 50,000
Percent in Stocks 90%
Expense Ratio 0.04%
Retirement Year* 2032
Contributions until then* 65,000
Social Security* 0
Starting in* 2035
Spouse Social Security* 0
Starting in* 2037
Other withdrawal change* +0
Starting in* 2025
Inflation adjusted* yes
Other withdrawal change* +0
Starting in* 2027
Inflation adjusted* yes
Other withdrawal change* +0
Starting in* 2031
Inflation adjusted* yes
Lump sum change to portfolio* +135,000
In year 2032
Lump sum change to portfolio* +75,000
In year * 2032
Lump sum change to portfolio* +0
In year * 2040
Inflation Rate selected* CPI
Fixed income model * LongInterest
Override start year* 1871
Terminal Value* 0
US Micro Cap** 10
US Small** 10
US Small Value** 10
S&P 500** 40
US Large Value** 40
US LT Treasury** 10
LT Corporate Bond** 15
1 Month Treasury** 5

and select "Given a success rate, determine spending level for a set portfolio, or portfolio for a set spending level" in the Investigate tab, I'm getting a flat line in the resulting graph (see attachment) that is only showing very low spending levels:

If I increase the "starting portfolio" value to something high enough, then the resulting graph makes more sense.

Any idea why this is happening?

 

[steady saver]

I am getting strange results as well. When I do some experimenting to see what my spending level could be at a 99% safety rate, I get a ginormous number.
Anyone else having these issues pop up?

 

[COcheesehead]

I just reran my numbers and all seems fine.

 

[steady saver]

Interesting. I'll close it all and try again. Then again, I wouldn't mind having over 800K to spend each year...

 

[steady saver]

Nope, I got the same when I went to the "investigate" button to see how much I could actually spend, given a 99% success rate. I would be broke before you know it if I spent the $866K it is suggesting...

I've used it in the past and it has worked well and been helpful as I tend to have a hard time thinking I can actually branch out and spend more money. I'm setting up a new kind of budget right now so that I can have the confidence to go ahead and spend a bit more. But, wow, not $866K!!

 

[COcheesehead]

Nope, I got the same when I went to the "investigate" button to see how much I could actually spend, given a 99% success rate. I would be broke before you know it if I spent the $866K it is suggesting...

I've used it in the past and it has worked well and been helpful as I tend to have a hard time thinking I can actually branch out and spend more money. I'm setting up a new kind of budget right now so that I can have the confidence to go ahead and spend a bit more. But, wow, not $866K!!

Try FIcalc. It’s just like FireCalc, but with more options, withdrawal plans and what ifs. See if it gives you any different results. Here is the link
https://ficalc.app/

 

[steady saver]

Thanks! I'll give that a try. I do love playing with these toys.

 

[steady saver]

Try FIcalc. It’s just like FireCalc, but with more options, withdrawal plans and what ifs. See if it gives you any different results. Here is the link
https://ficalc.app/

Okay, I did some preliminary playing around with it. What's the percentage that's reasonable on the "large end portfolio" area? I understand if that figure is high then it means you could spend a lot more and still be comfortable. But I'm not sure I completely understand what's a good conservative percentage. It has be being able to withdraw/spend about 40% more than I was allowing and still with a reasonable% in that large end portfolio area.

It is SO hard to go from saving to spending. I know I'm not the only one that struggles with this.

 

[steady saver]

wow, now I'm really confused. Firecalc seems to change everytime I plug a new withdrawal number in. I have checked and triple checked my inputs but it is back to a fairly conservative number while the FIcalc is much more lenient in what it says I could comfortably spend.

 

[Sunset]

wow, now I'm really confused. Firecalc seems to change everytime I plug a new withdrawal number in. I have checked and triple checked my inputs but it is back to a fairly conservative number while the FIcalc is much more lenient in what it says I could comfortably spend.

When I use a calculator, I always just compare it to the 4% rule plus the extra income like SS that is often entered.
To have a rough number since I'm not taking SS right now, is to use 80% of my SS.

Are the numbers somewhat close to that rough calculation ?

 

[REWahoo]

OP, the output variations you describe sound like you may have, on the "Your Portfolio" tab, selected the last button electing to use Random Performance (Monte Carlo) calculations. If that's the case, try using the total market button and plugging in your AA.

 

[steady saver]

Thanks Sunset and REWahoo. My Firecalc now seems back to "normal"...The Investigate tab is now magically working. The only thing that I did differently was to enter a 0 into the retirement date, rather than 2020.

I am still finding the FIcalc interesting but overstating what I can spend by a fair amount. I could probably work with it more and perhaps I will at some point. But I think I'll take the more conservative Firecalc approach for now with my budgeting.

I so appreciate everyone's input, and to COcheesehead for introducing me to FIcalc.

 

[REWahoo]

Thanks Sunset and REWahoo. My Firecalc now seems back to "normal"...The Investigate tab is now magically working. The only thing that I did differently was to enter a 0 into the retirement date, rather than 2020.

FiRECalc gets very bad indigestion when you put in any date prior to the current year. See the first sticky in the FIRECalc support forum: https://www.early-retirement.org/forums/f36/use-only-current-or-future-dates-for-firecalc-67540.html

 

[ncbill]

"any estimate of long-term financial success greater than about 80% is meaningless."

The Retirement Calculator from Hell, Part III

 

[COcheesehead]

Okay, I did some preliminary playing around with it. What's the percentage that's reasonable on the "large end portfolio" area? I understand if that figure is high then it means you could spend a lot more and still be comfortable. But I'm not sure I completely understand what's a good conservative percentage. It has be being able to withdraw/spend about 40% more than I was allowing and still with a reasonable% in that large end portfolio area.

It is SO hard to go from saving to spending. I know I'm not the only one that struggles with this.

I don’t look at the large portfolio end points as much as I look at the small portfolio endings. I can always spend or donate more, but it’s hard to live on nothing.

 

[Sunset]

"any estimate of long-term financial success greater than about 80% is meaningless."

The Retirement Calculator from Hell, Part III

"The historically naïve investor (or academic) might consider reducing his monthly withdrawals to a very low level to maximize his chances of success. But history teaches us that depriving ourselves to boost our 40-year success probability much beyond 80% is a fool’s errand, since all you are doing is increasing the probability of failure for political, economic, and military reasons relative to the failure of banal financial planning."

Interesting but not sure I agree, the basis is the thought that reducing risk1 increases the failure probability for risk2, risk3, etc...

But they are not related risks, if I decide not to drive a car so often, to reduce my risk, it does not increase my risk of an asteroid striking me.

My spending less money, does not mean increased probability of nuclear war.

 

[SecondCor521]

"The historically naïve investor (or academic) might consider reducing his monthly withdrawals to a very low level to maximize his chances of success. But history teaches us that depriving ourselves to boost our 40-year success probability much beyond 80% is a fool’s errand, since all you are doing is increasing the probability of failure for political, economic, and military reasons relative to the failure of banal financial planning."

Interesting but not sure I agree, the basis is the thought that reducing risk1 increases the failure probability for risk2, risk3, etc...

But they are not related risks, if I decide not to drive a car so often, to reduce my risk, it does not increase my risk of an asteroid striking me.

My spending less money, does not mean increased probability of nuclear war.

I agree with you, but I think the author's point is the converse (inverse?): that having a bulletproof plan is irrelevant because you're going to get bit by something else.

In other words, drive a tank if you want, but don't think it will protect you against an asteroid (or nuclear war).

 

[Sunset]

I agree with you, but I think the author's point is the converse (inverse?): that having a bulletproof plan is irrelevant because you're going to get bit by something else.

In other words, drive a tank if you want, but don't think it will protect you against an asteroid (or nuclear war).

True, we have a good plan, not perfect but good unless NK nukes us , then I'll have to adjust the plan

 

[ncbill]

I agree with you, but I think the author's point is the converse (inverse?): that having a bulletproof plan is irrelevant because you're going to get bit by something else.

In other words, drive a tank if you want, but don't think it will protect you against an asteroid (or nuclear war).

Basically, no matter how much you've saved, there remain significant factors negatively affecting your retirement but out of your control.

 

[steady saver]

FiRECalc gets very bad indigestion when you put in any date prior to the current year. See the first sticky in the FIRECalc support forum: https://www.early-retirement.org/forums/f36/use-only-current-or-future-dates-for-firecalc-67540.html

Thank you. I don't know how I missed that but, boy, it sure made a difference. I'm back on track...spending time now working on a "spending" budget. Thanks again for all responses.