FIREcalc results question

[dheb]

I'm trying to understand the results section of FIREcalc. If it says something like, "The lowest and highest portfolio balance at the end of your retirement was $-376,011 to $34,716,427, with an average at the end of $8,066,845. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)", is it telling me something like 'had you retired with X amount in today's dollars starting with the year in the past you specified, here's what your portfolio would be worth in today's dollars at the end of the lowest & highest cycles'?

Thank you -
-dean

 

[Out-to-Lunch]

I'm trying to understand the results section of FIREcalc. If it says something like, "The lowest and highest portfolio balance at the end of your retirement was $-376,011 to $34,716,427, with an average at the end of $8,066,845. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)", is it telling me something like 'had you retired with X amount in today's dollars starting with the year in the past you specified, here's what your portfolio would be worth in today's dollars at the end of the lowest & highest cycles'?

Thank you -
-dean

Close, but not quite. Something more like:

Had you retired with X amount in today's dollars starting with the each possible year in the past [-]you specified[/-], here's what your portfolio would be worth in today's dollars at the end of [-]the lowest & highest cycles'?[/-] the length of the retirement period in years that you specified.

 

[dheb]

Gotcha - thanks. But for the length of retirement period in years I selected, it's only showing me the endings of the highest-resulting cycle, and the result of the lowest-resulting cycle, correct?

Mostly I wanted to confirm that if it says, 'your lowest number was $500,000' that isn't a projection of the actual dollar amount that might be left 30 years out from now.

 

[Gumby]

For clarity, as Out to Lunch suggests, it is helpful to understand what FIRECalc is doing with your inputs. Assume you choose a thirty year period. Firecalc goes into its historical database and picks out as many thirty year periods as it has available. The data goes from 1871 to 2019, so there are 118 thirty year periods of data - beginning in 1871 and every year after that until 1989.

So FIRECalc runs a cycle with your inputs starting in 1871 and, using the historical performance data from 1871 to 1901, calculates your ending balance. It then runs another cycle beginning in 1872 and going until 1902 and calculates the ending balance. And so on and so forth. And it adjusts all those balances to today's dollars.

Then what FIRECalc is telling you is that of all those 118 periods, the lowest ending balance is -$376,011. The highest is $34,716,427. And the average over all 118 cycles is $8,066,085.

If I recall correctly, the 30 year cycle beginning in 1966 is the worst and will give the lowest ending balance.

 

[Gumby]

Gotcha - thanks. But for the length of retirement period in years I selected, it's only showing me the endings of the highest-resulting cycle, and the result of the lowest-resulting cycle, correct?

Mostly I wanted to confirm that if it says, 'your lowest number was $500,000' that isn't a projection of the actual dollar amount that might be left 30 years out from now.

If the 30 years following your retirement look like the period 1966 to 1996, then yes, the lowest value is what you can expect in present day dollars. It could be lower if the future is worse than the worst of the past.

 

[dheb]

Hi Gumby - thank you. Just to clarify, if the low number it calculates is $60,000, by "the lowest value is what you can expect in present day dollars" do you mean that I could expect an amount that has the equivalent buying power of $60,000 (say, 1 current base-model Corvette without dealer markup in 2050); or an actual $60,000, which 30 years out might buy a lot less? I think you're saying the former, but I just need to be 100% sure in my understanding of the results.

 

[Gumby]

The ending balance is expressed in today's dollars, not future inflated dollars.

 

[dheb]

Cool - thank you. That's what I thought; but I was having a moment of weird self-doubt today.

 

[SecondCor521]

Hi Gumby - thank you. Just to clarify, if the low number it calculates is $60,000, by "the lowest value is what you can expect in present day dollars" do you mean that I could expect an amount that has the equivalent buying power of $60,000 (say, 1 current base-model Corvette without dealer markup in 2050); or an actual $60,000, which 30 years out might buy a lot less? I think you're saying the former, but I just need to be 100% sure in my understanding of the results.

Not Gumby, but the answer to your question is the former. See this thread for discussion of this question, especially post #10:

https://www.early-retirement.org/fo...ut-firecalc-basic-question-really-106009.html