Are we FI according to FireCalc?

[PaloAlto]

I'm not sure this is the place for this question so Admin please move if necessary.

I have used FireCalc for many years to check our progress towards FIRE milestones and model "what if" scenarios.

I have had some job changes recently and become self-employed. Part of the reason I took the lead was that FireCalc gave me a reasonable assurance that things are on track.

DW has a steady high income job (works as tenured faculty at a leading Medical School) and our annual expenses are lower than her salary.

I recently re-ran FireCalc with our current portfolio and savings rates (using only the amount we save in retirement plans from DW's income - conservative because this doesn't even show up in her take-home pay). My income is a fraction of what it used to be because I am a co-founder in a medtech start up and we haven't raised funding yet- even if we do raise funds I don't expect a significant salary.

FireCalc shows 100% success rate for 2025 retirement and 40 year time horizon with current portfolio ($4.6M), annual savings of $50K (DW's savings in 403B and 457 plans) and $200K annual spend (actual spend rate is $150k today but i added $50K for taxes and uncertainty. I don't have mortgage payments in this number but home will be paid off in 2025. Also have not assumed any SS income.

Our current portfolio is $4M Equity (diversified holdings) and $600K cash and short term investments. I did not change the default settings in FireCalc.

Would appreciate any insights. We probably wont RE by 2025 (i will be 53 and DW will be 53) but wondering if we are on autopilot to FI.

The main question I have is related to assumptions in FireCalc - should I change any of the default settings to better model our situation? I have a supporter account so access to premium features.

Thanks in advance.

[respond2u]

If you have flexibility to spend less, you're set.

From running a sim on another tool, it looks like you're pretty well set to retire now if you wanted (on $150K).

[Whisper66]

Sure - you are in excellent condition to retire when you want to.

Suggestions:
(1) Don't get overly pessimistic with these calcs. They are just models. You can adjust your spending if things don't work out perfectly. Most find they are overly pessimistic and then work longer than they had to (not an issue if they liked work).

(2) 100% success rate is quite high. Many people here use it but many use lower. Even firecalc uses only 95% as the default when you ask it to calculate how much your assets can support (under the "investigate" tab). I'd use 95% at your age.

(3) include 75% of the social security you would expect to get. That's typical of what many here use after considering possible cut backs to SS. Assuming no SS is overly pessimistic

(4) Make sure you want to plan for $200k post retirement spend rate. That is a very high rate compared to most. You should expect to be doing a lot of expensive traveling or have other very expensive hobbies if you really spend that much in retirement. The key point is make sure you are considering the decrease in taxes that will occur with retirement. Also to consider decrease in spending due to mortage payoff or kids moving out.

(5) Make sure you are using an appropriate # of retirement years. The front page of the Firecalc has a tool to estimate your probability of living to an age. For example, the probability of either one of you living to 100 is only 5%. Probability of both living to 100 is minisule.

With $4.6M saved, you should have no issues retiring as long as you don't go hog wild on spending. Could retire today pretty easily if you really wanted to but would have to drop spending rate some. The Firecalc Investigate tab can be used to calculate that.