My First Post _ FIRECalc Question?

[fcwabeck3533]

My Boglehead friends sent me to this forum, and recommended I try the FIRECalc tool to model my long term financial picture. Love the tool, but need guidance on the "Pension" input. See the Data Table below. It makes sense that the Social Security value is "positive", but why is the Pension (annual income of $28,581) shown as "Other withdrawal change" as a negative value?
_____________________________________________________


Input Data for this model

Withdrawals 130,000
Plan End 35
95% Rule from WorkLess, Live More*
Percentage used for 95% Rule* 0
Bernicke Spending Reductions*
Current Age (for scheduling Bernicke spending reductions)* 65
Starting Portfolio 2,600,000
Percent in Stocks 60%
Expense Ratio 0.18%
Retirement Year* 2021
Contributions until then* 0
Social Security* 47,628
Starting in* 2026
Spouse Social Security* 0
Starting in* 2036
Other withdrawal change* -28,581
Starting in* 2021
Inflation adjusted* yes
Other withdrawal change* +0
Starting in* 2026
Inflation adjusted* yes
Other withdrawal change* +0
Starting in* 2030
Inflation adjusted* yes
Lump sum change to portfolio* +0
In year 2024
Lump sum change to portfolio* +0
In year * 2034
Lump sum change to portfolio* +0
In year * 2039
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

 

[pb4uski]

I suspect that you didn't select the radio button that is Pension Income.... the default is Off-Chart Spending.

 

[fcwabeck3533]

I suspect that you didn't select the radio button that is Pension Income.... the default is Off-Chart Spending.

Yes, I did check the radio button, and keyed in my annual pension and used the current year (2021)??

 

[pb4uski]

Ok, try a run with the pension at zero and see if your success rate declines as one would expect... if so then the input data must just present the pension numbers backwards... upon further review I think that is the case since a negative "other withdrawal" would be a positive (cash inflow).

Also, congrats on having an inflation adjusted pension... nice.

 

[Whisper66]

I believe you have input the pension correctly. I ran your case and got the same result..."Other withdrawal change* -28,581". Then changed radio button from Pension to Off Chart Spending and the result changed to...... "Other withdrawal change* +28,581". Looked strange until I read the definition of this input on the input page just above the input blanks. To confirm results would make sense, I looked at the results in both cases. As one would expect when you input the value as a pension, your retirement results are significantly better than if you input the value as a spend.

Edit: I keep reading the definitions on that page and wonder why SS and Pensions aren't shown the same way in the results page. They seem to be handled correctly but one is shown as positive and one negative. I suppose it's probably just in how the programmer was thinking of using those numbers in the calc.

 

[Alan]

Thread moved to the Firecalc Support forum. Should get more views and help here.

 

[Whisper66]

One other quick check I ran to confirm things were working right.
Input 10000 = spend, 10000= Portfolio, year=10, retire 2021
Then I ran two cases. One with SS = 10000 starting in 2021, one with a pension of 10000 starting in 2021. The results are the same as one would expect.
So the output wording is confusing but the numbers appear to be handled correctly.

 

[fcwabeck3533]

One other quick check I ran to confirm things were working right.
Input 10000 = spend, 10000= Portfolio, year=10, retire 2021
Then I ran two cases. One with SS = 10000 starting in 2021, one with a pension of 10000 starting in 2021. The results are the same as one would expect.
So the output wording is confusing but the numbers appear to be handled correctly.

Excellent! Thanks for confirming my inputs as accurate.

 

[volfan]

So I just read a comment on another forum where the person says that the pension income that you input is supposed to be a monthly amount. Said their results were skewed because when the yearly amount they used was assumed to be monthly by Firecalc, they were having a very high success rate with high amounts in the portfolio at the end even though it was a small pension. (For example, yearly was 12,000 but firecalc assumed that was coming in monthly)



I have always used a yearly amount since that is what the SS input uses. I wanted to comment that I thought his statement was incorrect but wanted to verify it here. The spending and pension inputs--yearly or monthly amounts?

 

[REWahoo]

I have always used a yearly amount since that is what the SS input uses. I wanted to comment that I thought his statement was incorrect but wanted to verify it here. The spending and pension inputs--yearly or monthly amounts?

Yearly.

 

[fcwabeck3533]

So I just read a comment on another forum where the person says that the pension income that you input is supposed to be a monthly amount.

I just read all the instructions on each tab of FIRECalc. I think it's pretty clear every input is an annual value (where applicable), but not ALWAYS stated as so. For clarity, the administrator of the site should add language to eliminate any confusion on this issue.

 

[volfan]

Yes I never thought monthly either since spending is annual, along with SS. When I read the directions in that section and it didn’t state explicitly, I wanted to verify that I have been doing it correctly and also know that if I replied on the other forum I was giving correct information. Hopefully that poster will run the numbers again if needed. A very small pension might not throw it off as much but if the calculator thought you were bringing in 40k a month…oh my[emoji33]

 

[Gumby]

I just read all the instructions on each tab of FIRECalc. I think it's pretty clear every input is an annual value (where applicable), but not ALWAYS stated as so. For clarity, the administrator of the site should add language to eliminate any confusion on this issue.

This is in the Pension/Off-Chart spending tab

If you expect a pension in the future, enter the information here. You can also use this section to enter "off chart" spending (or spending reductions). These entries are for changes to your yearly income or outflow that affect how much you will need to withdraw from your portfolio each year, but do not impact your spending on your ordinary lifestyle. For example, you might enter an inflation-adjusted pension in the first line, future annual contributions/spending for the grandkids' college fund in line two, and a non-inflation-adjusted spending reduction once your mortgage is paid off in the third line.

These changes are termed "off chart" because, as with Social Security, they will affect how much you need to take from your nest egg each year, but will not be shown in the annual spending chart that will be shown in the results. In addition, the spending changes are not used in the calculation of the phased reductions in spending in the "Bernicke" model, nor the minimum spending level in the model that uses a fixed percentage of your remaining portfolio.

Can't get much clearer than that.

PS - don't input negative numbers. Just check the appropriate button as to whether it is Pension income (or an equivalent spending reduction) or is increased spending and enter the amount as a positive number.

 

[volfan]

Agree Gumby! I’ve always used annual but wanted to verify because if someone reads the post on the forum where I saw the monthly comment there might be others who aren’t familiar with FireCalc who see it. So thanks to the experts!