FireCalc Acceptable % Results - What is good?

[z777777z]

I'm certain that the results received after entering your personal information has a pass/fail acceptance that is individualized but is there a minimum number(e.g. 85%) that one should expect to feel comfortable? I'm feeling that 90% success is my minimum but...I really don't know.

Would like to see some knowledgeable responses and many thanks, in advance!

 

[dirtbiker]

I won't retire until I'm well past 100%. A 10 to 15% chance of failure is FAR too high in my book. I'll gamble and take risks on a lot of things in life, but not running out of money in retirement.

 

[Lawrencewendall]

Others may chime in here but I seem to recall seeing a study that anything over 80% was fine as it allowed for minor adjustments if things go sour. I got lucky as the first time I input my numbers, it said 100%. It was a shock to me. I just assumed I would be working until I collapsed in my cubicle. I thought that could not be right and tried every calculator that I could find. They all said the same thing.

 

[Gumby]

Even if I double my actual spending and get 100%, I still could run out of money. FIRECalc is just a model; it assumes the future will not be worse than the worst of the past 150 years. That may or may not prove to be the the case. As the saying goes - all models are wrong; some models are useful. Ultimately, we each decide to step off the ledge and find out for ourselves.

 

[Bigdawg]

100% with room to spare. Maybe 15-20% above that.

 

[ncbill]

One financial guru says anything past 80% is meaningless because of all the real-world stuff a model can't actually model...e.g novel coronavirus outbreak.

 

[calmloki]

Someone posted this great link in an earlier post:
https://engaging-data.com/will-mone...death=1&showlow=1&show2x=1&show5x=1&flexpct=0

Very neat as it allows one to visualize the odds of being dead vs. broke at different ages.
Had great fun playing with it, but for me it was just a fun exercise - put me in the belt, suspenders, duct tape, spray adhesive camp. Just don't know how to stop making money and at this point alien invasion, corona depopulation, zombie attack or being hit by a bus are more likely - but I still protect against running out of money.

 

[CRLLS]

Someone posted this great link in an earlier post:
https://engaging-data.com/will-mone...death=1&showlow=1&show2x=1&show5x=1&flexpct=0

Very neat as it allows one to visualize the odds of being dead vs. broke at different ages.
Had great fun playing with it, but for me it was just a fun exercise - put me in the belt, suspenders, duct tape, spray adhesive camp. Just don't know how to stop making money and at this point alien invasion, corona depopulation, zombie attack or being hit by a bus are more likely - but I still protect against running out of money.

I just noticed that that site also has another ER calculator :https://engaging-data.com/fire-calculator. It is not very sophisticated. It is interesting. as you say, More fun! it has some other interesting visuals also.

How long would it take me to count to 1,000,000?

it would take 2,104,945 sec to complete. If you counted for 8 hours/day, it would take 73.1 days or 2.4 months to complete.

 

[COcheesehead]

I do 100%

Fidelity's tool shows you the percent over or under your target and will go as high as 150%+. That is where I am at. So I feel pretty confident I will be able to blow the dough.

 

[corn18]

I use 95% because I have a COLA pension and SS @ 70 that covers 100% of my expenses. I guess if I only had SS, then I might go to 99%. I really only have to slide into age 70 with a nickel in my pocket. If I die, though, my wife will be kindof broke.

 

[SecondCor521]

It's a fairly individual decision, but here are some things to consider:

1. What alternatives do you have if your plan starts to look like it might fail? The more alternatives or backup plans you have, the lower a success rate you might need to feel comfortable.

2. What is your opinion about the future? Firecalc is based on historical data, and 100% means you would have survived the worst of economic times in the US. Perhaps you think things will be better. Perhaps you think things could be worse. Perhaps you don't think the past applies. Perhaps you think the US is a special case.

3. How much of your retirement income is "secure"? The more you have in pensions and Social Security and the more secure you consider those to be and the more they cover your basic cost of living, the lower a success rate you might be willing to accept.

4. How much of the spending that you put into FIREcalc is required versus optional? This is a variation on the first item, but the more of your FIREcalc spending is optional, the more you can handle a bad situation.

5. How many people depend on you being right? If you have dependents or heirs, you may choose to be more stringent in order to protect those other people.

For me, the answers are:

1. Lots of contingency plans.

2. I think the future will be economically better than the worst of the past, and I think the US is a special case that will endure in the future given certain criteria.

3. I don't have a pension, but my SS when I hit 70 looks like it will cover my current expenses with a little bit left over.

4. I put in my actual spending in Firecalc, and as a relatively frugal person, most of my spending is required, not optional.

5. I have no spouse, but I have three kids. But they're in the process of launching into adulthood and will probably do well without any further support from me (other than paying for college, which is saved for in a different bucket).

So for me the mix of all five of those factors means that I am willing to spend up to a level which Firecalc would consider 95% historically safe. In actual fact, my spending is currently about 40% of that number simply because I don't need to and don't have any good ideas for ways to spend money without being wasteful.

 

[GalaxyBoy]

Since this general topic has come up here several times in the recent past it’s probably worth posting the link to Bill Bernstein’s Retirement Calculator from Hell again. This is Part 3 where he points out that chances of global (or personal) apocalypse in one form or another overshadow the difference between a result of 80% and 100%.

The Retirement Calculator from Hell, Part III

 

[Dtail]

Many folks like seeing 95% on Firecalc. Many also like to see 100%.
As mentioned above, how much secure income you will have and how much of your expenses are discretionary comes into play.

Personally, I wanted to see 100%, as i wanted to feel like at least theoretically my plan survived the worst 6 outcomes in history, including the infamous 1966 and 1929 retirees.

 

[big-papa]

Remember - Firecalc is backwards looking. It can only tell you what the odds are of a successful retirement had you retired at some point in the past. It can not predict the future unless you believe that every scenario that could happen in the future has also happened in the past.

 

[Mdlerth]

Expect the unexpected

All the standard disclaimers apply, but for me the minimum acceptable is 100% plus a cushion. My cushion is there because, having never retired before, I don't have any data - nobody does - on where my nonessential expenses will end up.

Retirement offers an opportunity to pursue discretionary activities which we couldn't before due to lack of free time. Some of those activities cost nothing, but traveling and hobbies can be open-ended. Will DW be so enamored of touring Ireland that we go from there to Iceland? Will the wider, darker night sky at our retirement house entice me to upgrade to a larger telescope?

I recommend making some provision for spending in unforeseen arenas; you may not know in advance what they'll be, but you should anticipate that there will be some.

 

[Aerides]

I doubt you'd find many of us here being comfortable below about 95%. That also, however, can vary depending on how realistic your expenses are (are they tight or do you have a lot of discretionary baked in, ability to handle wild variability in healthcare, big occasional stuff like a new roof, enough travel to satisfy your real desires, etc.)

If you are running 85% but have a healthy amount of wiggle in your budget, that's probably on par with being 95% but less wiggle.

 

[corn18]

AN alternate way I run it in my Excel model is I use the Flexible Retirement Planner to tell me how much I need for 99% using just my base expenses. I subtract that amount from my starting savings to ensure I have 99% probability of success for my base budget. Anything that is left I VPW to age 80 for blow that dough.

Example:

$2M savings
$1.4M required for base budget @ 99%

That leaves $600k to VPW over 25 years. First withdrawal is 6% or $36k.

If the market tanks or stagflation rears its head, I can adjust the BTD withdrawals to mitigate.

 

[ncbill]

Remember - Firecalc is backwards looking. It can only tell you what the odds are of a successful retirement had you retired at some point in the past. It can not predict the future unless you believe that every scenario that could happen in the future has also happened in the past.

A past that includes the Great Depression, WWII, relatively high inflation in late 1960s-70s, 1973-74 stock crash, 1970s "stagflation" & the 2008-9 Great Recession.

 

[corn18]

A past that includes the Great Depression, WWII, relatively high inflation in late 1960s-70s, 1973-74 stock crash, 1970s "stagflation" & the 2008-9 Great Recession.

This time is different.

 

[tb001]

Comfort with % will be different for everyone, depending on portfolio, risk tolerance and expenses. SecondCor has great points above.

The only thing I’d add is that I found it helpful to see when the failures are. Knowing that at 95% we would be good through the Great Depression was the comfort level we needed. The failures for us at that rate were stagflation, which we have some protection against.

 

[badatmath]

95% for me personally with no SS included. Nothing scientific about it it just felt comfortable.

 

[Katsmeow]

I don't look at it in a mechanical fashion. I generally look at 95%. We are retired but I rerun it each year just to check how we are doing at the time. But, I am certainly vary it to get different results. How much discretionary spending do I allow, etc. I think a lot of it depends on how much you think you can cut if need be. If your desired spending is $X a year but you could fairly easily cut it $20k per year that is very different from someone who has to every penny of $X without major lifestyle changes.

 

[The Cosmic Avenger]

I do 100%

Fidelity's tool shows you the percent over or under your target and will go as high as 150%+. That is where I am at. So I feel pretty confident I will be able to blow the dough.

Same...kinda. I like to see 99-100% on Firecalc, and I had 150+ on Fidelity but had put in my worst-case scenario (retiring later, spending less), so I started putting in assumptions about what we really wanted -- retiring by 55, spending a lot on travel. I'm still above 110 (or was, last week), and that's after I recently added another grand a month to the travel budget!

 

[pacergal]

100% for me, you just never know what the future holds. If my kids benefit with an inheritance, so be it. We are happy with our spending, pays the bills and allows some travel and charitable donations/gifting.

 

[Major Tom]

Knowing that at 95% we would be good through the Great Depression was the comfort level we needed. The failures for us at that rate were stagflation, which we have some protection against.

One thing to bear in mind is that, even if your portfolio would have survived the worst that history could have thrown at it, the balance, at it's lowest ebb, could severely test your nerves. If you're comfortable with that, then that's fine. It's important that not only does your portfolio survive, but also your underwear