Fidelity Retirement Planner Analysis Question

[MercyMe]

In the analysis "table" view, they show my starting balance for 2024 at $800k less than what they show my as my total current retirement savings.

Are they planning an $800k loss between now and then?

 

[COcheesehead]

Are you in the significantly below average display, the default? It assumes a 15% haircut in year one, a play on SORR. Read the methodology.

 

[MercyMe]

Are you in the significantly below average display, the default? It assumes a 15% haircut in year one, a play on SORR. Read the methodology.

I read the fully methodology page a couple of years ago but forgot. Thanks for the reminder.

 

[MercyMe]

I read the fully methodology page a couple of years ago but forgot. Thanks for the reminder.

I just went through the 19-page methodology paper again and I'm not seeing where they mention the 15% reduction (though for me it was about 12%).

 

[Dtail]

I just went through the 19-page methodology paper again and I'm not seeing where they mention the 15% reduction (though for me it was about 12%).

Not sure it is mentioned, but the decent size haircut upfront is used for all users.

 

[Al18]

The planner is very conservative. There’s a good chance you’ll have more than the planner suggests a year after you retire.

I’ve been retired 4 1/2 years and run the planner once a year for comparison. I’ve switched to relying on the ‘below average returns’ (75% success) because I believe this is the more accurate scenario for me.

 

[FLSUnFIRE]

Interesting, I don't use Fido but on my detailed cash flow spreadsheet I made (projecting withdrawals/expenses) going out past my expected lifetime I assume a 30% drop at the beginning. If I'm feeling poor, I reduce the haircut and feel better about my finances. I'll usually use a haircut when I look at FIREcalc too. I have a long time to go so conservative makes sense for me. If/when my portfolio reaches ~1.5x starting balance adjusted for inflation I'll probably feel I've won the game and may make a couple splurge purchases but for now I'm just playing with a healthy lead and trying not to blow it!

 

[LateToFIRE]

Interesting, I don't use Fido but on my detailed cash flow spreadsheet I made (projecting withdrawals/expenses) going out past my expected lifetime I assume a 30% drop at the beginning. If I'm feeling poor, I reduce the haircut and feel better about my finances. I'll usually use a haircut when I look at FIREcalc too. I have a long time to go so conservative makes sense for me. If/when my portfolio reaches ~1.5x starting balance adjusted for inflation I'll probably feel I've won the game and may make a couple splurge purchases but for now I'm just playing with a healthy lead and trying not to blow it!

Same thinking here, constructed own cash flow analysis, typically use a 10-15% haircut to reflect that some amount of $$$ will be always be held in cash as a safety valve for SORR. And will run heavier haircuts on top of that from time to time to see where things really blow up - 30% usually does it if no change in spending.

I won't have much of a pension, so next 30 years will depend largely on SS + WD from portfolio. In reality, of course, if encountered a big SORR hit early in ret, would make some spending changes to offset.

 

[MercyMe]

It seems reasonable to me to take the hair cut when doing a plan like this, but the amount to trim off might get slightly tweaked based on your AA. I'm 30% equities so I might trim a bit less than if I were 60% equities.

 

[COcheesehead]

Right now the Fidelity tool under the best case scenario shows less money than I actually have by almost $200k. I don’t think it takes into account the tremendous cashflow we have from bond ladders. I could add this income to the tool, but historically it may be higher than what our AA+Monte Carlo analysis generates. So for us, the tool appears very conservative.

 

[Dtail]

The planner is very conservative. There’s a good chance you’ll have more than the planner suggests a year after you retire.

I’ve been retired 4 1/2 years and run the planner once a year for comparison. I’ve switched to relying on the ‘below average returns’ (75% success) because I believe this is the more accurate scenario for me.

The "Significantly Below Average" module uses a 90% success rate concept. Being that it is a more conservative Monte Carlo simulation vs. a historical sequencing concept, it could be considered to be roughly in line with using a 100% success rate in Firecalc.

If you are using a 75% success rate, what success rate are using in Firecalc?

 

[COcheesehead]

The planner is very conservative. There’s a good chance you’ll have more than the planner suggests a year after you retire.

I’ve been retired 4 1/2 years and run the planner once a year for comparison. I’ve switched to relying on the ‘below average returns’ (75% success) because I believe this is the more accurate scenario for me.

I find that the average return scenario actually reflects my reality and I need to start spending more or some charity is going to get a lot.