Model results

[jklangen99]

I have been using this model off and on for years. All of a sudden, I am getting at best 50% success. Wondering what in the world I am doing wrong.

My portfolio value is $1,040,000
My annual spending is $140,000
My social security income is $50,680
I have rental income of $60,000

On a constant spending model success rate is 0%
Using the Bernicke spending model the success rate is 50%

I take a draw of $30,000 a year which is conservative but I do not enter that as income.

I am 72 years and use 30 years for the model end.

Thoughts?

Thanks,
Jim

 

[ProspectiveBum]

I plugged your figures into Firecalc and get 100% success rate. Seems like there must be an errant entry on one of the tabs throwing things off. Perhaps try opening Firecalc in an incognito tab and re-entering from scratch?

 

[USGrant1962]

Welcome to the Forum jklangen99,

To be sure we would need to know what dates you put in for starting SS, Pension (presumably that is where you put the $60K rental income), and retirement year.

FIRECalc cannot handle past dates - so if you put anything earlier than 2023 the model will break down. This quirk is one of the most common reasons FIRECalc gives goofy results.

I put in your numbers with 2023 for the SS/rental/retirement start dates and everything is 100%.

https://firecalc.com/index.php?wdam...oor=0&callprocess=Submit&FIRECalcVersion=3.0&

 

[jklangen99]

I was putting in 2022 instead of 2023. Corrected that and all good at 100%.

Thanks for the quick response. One of the other tools I use from time to time is Flexible Retirement Planner. I like the ability in the additional inputs to reduce my spending at 80, and again at 90.

Regards,
Jim

 

[Gumby]

Problem solved and happiness abounds. That's why I love this place - people will jump in and help.

 

[snowbound1]

I am having a similar problem and just don't want to be surprised by my errors.
IRA 900,000 tax deferred
SSA approx 50,000 Starting in 2026 at age 70
Military cola pension 50,000 started in '98
Drawing 90,000 per year in 24, 25, and 50,000 in 26 till SSA kicks in

AA approx 70/30 using approx 650,000 and the remaining 250,000 is in holding MM or CD so that I can do the 90k draws each year till 26 without changing investments

Can any one of you smart folks check my firecalc and see what you come up with. It will either ease my mind or make me worry but either way, clarity is better than guesswork.

 

[Gumby]

With FIRECalc, you cannot input pension income starting in the past. Whatever you are getting paid right now on your military pension, put that in as other income starting in 2023. Check the COLA box.

 

[LateToFIRE]

Also you need to put in your total spending, including taxes, not just the withdrawal amount. Looks like that would be $140K?

 

[snowbound1]

Thanks on the military $$ I did input correctly, as to the tax amounts. All my numbers assumed that as pretax. For instance, retirement is pretax. My withdraw of 90k till SS is assumed to be before withholding so I intake 130 and expect to live on 90k after taxes. After a full year, I still had 25k left but the year was spent caring for Dad. In 23 I suspect I will spend off most of the 90 including a fair amount of travel.

LateToFire: My assumption as I input data was that the 650,000 was investible and not touched till after age 70. My addition may be suspect. 30K draw. 55 K SS, and 40k Military for my 3 legged stool So before taxes I my gross take in after age 70 will be 125K less taxes to live on. Sound right? I chose 25 year span at 650K and 30K withdraw.

If I look at it a different way,
30 K draw
900K fund total
ssa at 2026, 50 k annual
40 K military cola
90k draw in 24
90K draw in 25
50 K draw in 26
the calculator will assume 30k each year from the beginning of the inputs so in essence it assumes I am drawing 120K for the first 2.5 years as it sees 30 and the one time reductions of 90,90, and 50 for the the next 2.5 years in my gap coverage to SSA. NO?

I hope I am understood. Thanks

 

[Gumby]

I think you may be overcomplicating things. Just put in your assets, your social security and when it will start, your military pension starting now and your desired spending. If you like, instead of specifying the spending, you can ask FIRECalc to tell you how much you can spend every year to the end point you picked and still get a 95% probability of success. The program is indifferent as to where you get the money. Obviously, prior to SS, you'll be funding that spending out of your military pension and draws from your accounts. Once social security starts, you'll be funding with military pension, SS and then any tIRA withdrawals.

 

[LateToFIRE]

snowbound, as Gumby stated, you need to simplify your inputs to FIRECalc.

For example, all you need is the following basic inputs:

Spending: (just total spending including taxes, forget about withdrawal amounts, looks like maybe this is $140K per year for 2023)

Portfolio: $900K

Full years: i.e, your remaining lifespan, default is 30 years, but you're ~67 so if I were you I'd use 20-25 years

Other Income / Social Security: $50K starting 2026

Other Income / Pension: $50K starting 2023, COLA'd

With the caveat that I am by no means an expert on using this thing, I got 67%. But, when I used the back-solve feature to determine spending level for 95% probability, I got $130K.

My interpretation is that your probability of success is driven largely by your pension and SS forming the base of the pillar, and your portfolio kinda being an enhancement that you'd have to be careful about depleting. Again - just one very inexperienced opinion.

 

[pb4uski]

Thanks on the military $$ I did input correctly, as to the tax amounts. All my numbers assumed that as pretax. For instance, retirement is pretax. My withdraw of 90k till SS is assumed to be before withholding so I intake 130 and expect to live on 90k after taxes. After a full year, I still had 25k left but the year was spent caring for Dad. In 23 I suspect I will spend off most of the 90 including a fair amount of travel. ...

I think that you are overestimating taxes at $40k a year... what is the source of that? Check out https://www.irscalculators.com/tax-calculator

If I input a single over 65 with $130k of income... $80k of unearned income (pensions and 401k withdrawals) and $50k of SS... for 2023 I get $19,032 in tax leaving $110,968 available for spending.

OTOH, if you want to calibrate it to $90k of spending then $52,548 of unearned income and $50k of SS results in $90k after-taxes available for spending.

So it looks like you are golden.

 

[Gumby]

And if your Portsmouth is in New Hampshire, you won't have state income tax to worry about. And even if it's not NH, many states do not tax military pensions.

 

[marko]

I think you may be overcomplicating things.

+1. Remember that all such calculators are never going to give you "accuracy down to six decimals".

I view them all as providing a "windage" or general, close enough result. Life just has too many variables.

 

[LateToFIRE]

I think that you are overestimating taxes at $40k a year... what is the source of that? Check out https://www.irscalculators.com/tax-calculator

If I input a single over 65 with $130k of income... $80k of unearned income (pensions and 401k withdrawals) and $50k of SS... for 2023 I get $19,032 in tax leaving $110,968 available for spending.

OTOH, if you want to calibrate it to $90k of spending then $52,548 of unearned income and $50k of SS results in $90k after-taxes available for spending.

So it looks like you are golden.

+1, makes sense to me