Faith in online calculators Fidelity/Firecalc?

[Flieger]

Any surprises early on? Would love to hear. My official retirement starts in April 2025. Still living off of severance pay right now.

Nothing so far, but am REALLY early in this (October start with Severance through November. I'll keep forum updated!

Flieger

 

[audreyh1]

I really like that FIREcalc gives a range of end of period outcomes (based on history). For me, using the % remaining portfolio model, a portfolio of 50% Total Market Index, 50% 5 yr treasuries, for an annual withdrawal rate of 4.35% (each year) the average outcome was starting portfolio value inflation adjusted remaining after 30 years and worst case 1/2 portfolio remaining inflation adjusted. Same at 40 years. I could see from the resulting multi-plot graph of scenarios that it was pretty much self-sustaining. I was looked specifically for that number.

I had to do a lot more work running various FIREcalc sets to figure out intermediate worse case drawdown and which year it occurred. It’s not at the end. But still, FIREcalc was able to give me all that info, I just had to tease it out.

 

[G-Man]

I really like that FIREcalc gives a range of end of period outcomes (based on history). For me, using the % remaining portfolio model, a portfolio of 50% Total Market Index, 50% 5 yr treasuries, for an annual withdrawal rate of 4.35% (each year) the average outcome was starting portfolio value inflation adjusted remaining after 30 years and worst case 1/2 portfolio remaining inflation adjusted. Same at 40 years. I could see from the resulting multi-plot graph of scenarios that it was pretty much self-sustaining. I was looked specifically for that number.

I had to do a lot more work running various FIREcalc sets to figure out intermediate worse case drawdown and which year it occurred. It’s not at the end. But still, FIREcalc was able to give me all that info, I just had to tease it out.

I probably should give FIREcalc more attention. I only used it a couple of times. Any suggestions on inputting my data correctly in the tool or any gotchas I should pay attention to? Any help on using the tool correctly would be great.

 

[surprising]

For those of us who are active investors with a portfolio that doesn't mimic X% total market and Y% treasuries, I worry that the results of these calculators may not accurately reflect reality. Even if you could coerce the variables to look like your current portfolio, active investors are 'active' and so are potentially making changes throughout retirement.

Another issue I see with firecalc and others is not understanding early retirement, where you really don't want to withdraw from 401k until 59.5. I model this in firecalc as an initial balance that doesn't include 401k, then a lump sum addition when I turn 59.5, which seems to work well.

 

[audreyh1]

I probably should give FIREcalc more attention. I only used it a couple of times. Any suggestions on inputting my data correctly in the tool or any gotchas I should pay attention to? Any help on using the tool correctly would be great.

You need to understand exactly what withdrawal (spending) method you are using, and decide whether you want to select your own portfolio rather than the default. Beyond that I would recommend reading every tab! It’s a very powerful tool.

 

[audreyh1]

For those of us who are active investors with a portfolio that doesn't mimic X% total market and Y% treasuries, I worry that the results of these calculators may not accurately reflect reality. Even if you could coerce the variables to look like your current portfolio, active investors are 'active' and so are potentially making changes throughout retirement.

Another issue I see with firecalc and others is not understanding early retirement, where you really don't want to withdraw from 401k until 59.5. I model this in firecalc as an initial balance that doesn't include 401k, then a lump sum addition when I turn 59.5, which seems to work well.

I didn’t leave out the IRAs. They are still needed for growth and rebalancing, which you should take into account across the board even though you are only drawing from taxable accounts.

You just need to do the best you can in terms of the portfolio asset selections. Chose the most aggressive available. If you keep changing allocation opportunistically, then this tool may not be for you other than a very crude “do I have enough?” measure. But that is still valuable.

FIREcalc is definitely oriented towards a fixed asset allocation and withdrawing and rebalancing at the beginning of each year. If you are not planning on doing that then maybe it’s not a good tool for you.

 

[OldShooter]

I have faith in these calculators doing what they promise: Reporting what a user would have experienced in past market conditions.

I have no faith in their ability to predict the future. Sometime in the past I may have experimented with one of them but I don't actually remember if I did or not. I don't have much interest

 

[surprising]

I didn’t leave out the IRAs. They are still needed for growth and rebalancing, which you should take into account across the board even though you are only drawing from taxable accounts.

This may give you a rosier picture than reality. You might run out of non-retirement money way before you have (penalty-free) access to the retirement funds. The lump-sum add is in today's dollars so at least you get the effect of inflation but yeah you're missing out on modeling those market gains.

 

[Rianne]

The very first page of firecalc says a lot. If you're RE in 2025 and plug in the future guestimates of SS, inflation, interest rates, and the market using various spending options. The market takes a downturn. Those first years of RE are so important. I find myself plugging in numbers much less than our portfolio starts with to envision this possible downturn. We have been graced with 10+ years of tremendous growth.

My point is, is 1973 (red line) the equivalent to 2025? Clearly, if you RE in 2010, you're the green line. We have no way of knowing but hope for the best.

 

[pacergal]

I found this Forum from researching free online retirement calculators, and running every one I could find. I felt comfortable when they were all giving me "good to go" signs.
I still run Firecalc yearly, often with multiple scenarios, just to check.

But I have learned so much more valuable information from the members here than any calculator could ever give me!

 

[Midpack]

I probably should give FIREcalc more attention. I only used it a couple of times. Any suggestions on inputting my data correctly in the tool or any gotchas I should pay attention to? Any help on using the tool correctly would be great.

The home page explains every entry for every tab - there are many options beyond the simple three entries on the first page. If you read through that, most if not all your questions should be answered.

 

[G-Man]

This may give you a rosier picture than reality. You might run out of non-retirement money way before you have (penalty-free) access to the retirement funds. The lump-sum add is in today's dollars so at least you get the effect of inflation but yeah you're missing out on modeling those market gains.

So FIRECalc does not account for the rule of 55 as it relates to 401k retirement account withdrawals before the age of 59 1/2?

 

[USGrant1962]

So FIRECalc does not account for the rule of 55 as it relates to 401k retirement account withdrawals before the age of 59 1/2?

FIRECalc has no inputs or outputs regarding taxes or tax-deferred/tax free accounts. It considers taxes as spending, which they are. Rule of 55 is just a tax law - you can avoid the extra 10% penalty. So not in FIRECalc.

 

[audreyh1]

This may give you a rosier picture than reality. You might run out of non-retirement money way before you have (penalty-free) access to the retirement funds. The lump-sum add is in today's dollars so at least you get the effect of inflation but yeah you're missing out on modeling those market gains.

No, that’s my total retirement investments which I model. Taxable investments generate taxable income too each year. Annual withdrawals/expected spending must include taxes as an expense. That’s taken into account in my budget.

 

[Koolau]

Not anything against any of these calculators but it isn't rocket science to see if you can't retire on what you have. A good expense history and what you have verses very conservative gains gives you a true answer if I can or not. The future is unknown so at the present time what we can do doesn't mean we can or not without knowing the future.
It is just math with numbers you have to get your fate. IMO

Right on the rocket science - It ain't!

The VERY first calculator I used was something like 10 questions on a magazine page (spending in retirement, total nut, expected inflation, expected portfolio results, expected time in retirement, etc.) The math was a chart of factors based on my inputs. (Multiply entry 2 by 0.03494 and then divide result 9 by 31.1) or some such. You could see how close you came to "yes" (or "no.") on a separate chart.

Heh, heh, years before I found the FIRE Forum site, the result said "yes." When I ran Firecalc years later - with the same general inputs, I got 100%.

My all time favorite calculator was something like: How much will you spend per year in retirement?

Multiply that by a number between 25 and 40 (25 if you are not very risk averse or are relatively "old" - closer to 40 if you are more risk averse or relatively young.)

Do you have as much saved in a "reasonable" stock/bond/cash portfolio as your calculated result? If so, you're probably good to retire.

No micrometer, just chalk and an axe! YMMV