T-Minus
Recycles dryer sheets
I’ve created a spreadsheet where I compile the results of four models (FIREcalc, Fidelity Retirement Planner, McClung’s “Living on your money” spreadsheet, and VPW) - all with the most pessimistic outlook possible. I take the minimum value of allowable spend for 100% success, and apply my personal safety factor (for 2018 it was a 5% reduction), then set that as my target WR. Since my acutal spend for 2018 has been significantly less than the aforementioned formula allowed and, since the market has been fairly good for my portfolio, my net worth has increased by a bit. For 2019, even though changing my safety factor from 5% to 7% (trying to account for high market valuation), my maximum allowable spend will increase significantly. My plan is to halve my safety factor reduction after the first five years - as a method of reducing potential early sequence of return risk. After the first seven years (when Medicare kicks in), I wil be able to eliminate said additional safety factor entirely. Yes, it’s more conservative than any of the models, but it gives me the ability to relax, gradually adjust our spending from our draconian pre-retirement levels, and plan on a few luxuries in a few short years.
The downside is I have to run four models and track things a lot more closely initially. However, it’s a lot less than I was doing in my run-up for retirement!
The downside is I have to run four models and track things a lot more closely initially. However, it’s a lot less than I was doing in my run-up for retirement!
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