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Forgive me if this has already been processed somewhere, and redirect me to that discussion. I looked but didnt see anything pertinent.
I was thinking today (in case anyone smelled smoke) and it occurred to me that there is one concern on using firecalc with very long retirement periods, such as those endured by an early retiree. After all, by IRS standard age ranges I should live at least another 40-45 years, excluding any improvements in medical technology.
The chief problem is that for ranges this long, you get no complete periods (ie, ones that count) in the modern era. All of the 40-45 year full periods will be back in the time of JFK and prior. Perhaps not representative of modern times. I know the calc also does partial periods, but those are less helpful the less data is in them. I know this is where monte carlo simulations are supposed to improve except that those dont demonstrate real trends that have occurred.
So I did this: instead of running firecalc with a 40 year period, I ran it with a 20 year period (which gives me more modern examples), took the very worst terminal portfolio size from that and ran it again for another 20 years. Gave me 100% on the first run and 80.something% on the second run. With a few tweaks to my portfolio mix I was able to get it to 100% and 95%. That was useful to learn. My prior runs with a 40 year period gave me 98% with the port as it was, but this was clearly not worst case.
Was this completely silly or am I poking something interesting, preferably with a stick?
I was thinking today (in case anyone smelled smoke) and it occurred to me that there is one concern on using firecalc with very long retirement periods, such as those endured by an early retiree. After all, by IRS standard age ranges I should live at least another 40-45 years, excluding any improvements in medical technology.
The chief problem is that for ranges this long, you get no complete periods (ie, ones that count) in the modern era. All of the 40-45 year full periods will be back in the time of JFK and prior. Perhaps not representative of modern times. I know the calc also does partial periods, but those are less helpful the less data is in them. I know this is where monte carlo simulations are supposed to improve except that those dont demonstrate real trends that have occurred.
So I did this: instead of running firecalc with a 40 year period, I ran it with a 20 year period (which gives me more modern examples), took the very worst terminal portfolio size from that and ran it again for another 20 years. Gave me 100% on the first run and 80.something% on the second run. With a few tweaks to my portfolio mix I was able to get it to 100% and 95%. That was useful to learn. My prior runs with a 40 year period gave me 98% with the port as it was, but this was clearly not worst case.
Was this completely silly or am I poking something interesting, preferably with a stick?