Why Are You Worried If FIRECALC Says 100% Success

[Mdlerth]

Looks like that OMY paid off after all

For those of you who are retired and ran Firecalc with 100% success rate, why would you be worried about this market downturn? Wouldn't Firecalc have acounted for scenarios like this?

I'm irritated*, but not worried. FIREcalc does account for scenarios like this.

Conversely, if you were to run Firecal today with the current portfolio value (post-market downturn), would the results be any different?

Yes and no. My success rate is still 100% based on lower portfolio value but the same anticipated spend.

However, FIREcalc also caculates a maximum spending rate which is a bit higher than what I planned on and constitutes a cushion just in case things turn out a bit different than I figured. I now have a thinner cushion.

*I always get irritated when I see people suffering needlessly. I know I can't fix it for them, but it still bothers me.

 

[Midpack]

Thanks for all your replies.

I suppose FIRECALC success rate of 100% should always give one the peace of mind to ride through market downturns like the one we're having, but human nature being what it is, sometimes it's hard to stay the course and not panic. This is where having the experience of going through previous market downturns can help steady one's nerves, but one really can't know what it's like until one has gone through it.

I finally put my numbers through FIRECALC today and got 100%. I guess I can sleep tight now, however worse the market gets from this point on. I am ready---bring it on

Lucky Dude

What makes not panicking easy is the slim odds you can actually do anything without hurting your nest egg.

There’s no way to know where the bottom is, or where the recovery begins, even though some people will guess right after the fact. There will be fits and starts on the way down and the way up. And no one can time it just right. If you sell now, what if the market goes down another 20%, sell again? So you won’t know where the bottom is. Once it starts back up again for real, it often comes up really fast just as the downs have the past few weeks - and odds are you’ll miss all that wondering if it’s real. Once you buy back in, you’ve missed much of the short term recovery.

Annoying or worrisome as it may be, the only sure way to win is wait it out. That has worked 100% of the time in the past. And if it’s really different this time, it won’t matter what you did with your money, there will be many other issues.

 

[Chuckanut]

I ran FireCalc because it's based upon historical records which I think is important.

But, I also ran some MontiCarlo calculators that test out hundreds of not thousands of possible retirement scenarios. Both indicated I could retire successfully, so I found a good source of medical insurance, and then told my school district "This is my last year". It's been been beautiful days and a continual soiree since then.

 

[garyt]

Having survived two financial disasters that caused huge losses of my stash, I will say that I am more concerned with staying healthy and not catching the virus than worrying about money right now.

That's where I'm at now, also. Early on, it was all about the money, now I just want to survive it in full health and the same for family members. I'm still watching the markets of course but it's secondary.

 

[ER Eddie]

I think the best thing to do is listen to the people who've been through it before. They actually seem to be enjoying themselves.

Well, that might be a bit of a stretch, but we're certainly not panicking.

I was thinking of the guys rooting for it to drop lower, or the ones who seem kind of amused at the noobies running around with their hair on fire.

Being one of those noobies myself (although I'm relatively calm), I don't mind. I consider it a sort of initiation ritual: welcome to retirement, let me circumcise you with this rock, you're a real man now.

 

[Lewis Clark]

What makes not panicking easy is the slim odds you can actually do anything without hurting your nest egg.

There’s no way to know where the bottom is, or where the recovery begins, even though some people will guess right after the fact. There will be fits and starts on the way down and the way up. And no one can time it just right. If you sell now, what if the market goes down another 20%, sell again? So you won’t know where the bottom is. Once it starts back up again for real, it often comes up really fast just as the downs have the past few weeks - and odds are you’ll miss all that wondering if it’s real. Once you buy back in, you’ve missed much of the short term recovery.

Annoying or worrisome as it may be, the only sure way to win is wait it out. That has worked 100% of the time in the past. And if it’s really different this time, it won’t matter what you did with your money, there will be many other issues.

+1

I think Peter Lynch once said that more money is lost preparing for corrections than in the corrections themselves.

 

[luckydude]

Your real estate is what we like to call "reinforcements" around here. FIRECalc is not intended to model that type of asset, other than as an income stream. I'm a big advocate of cataloging the conservative assumptions in your plan. If you understand those, you understand how aggressive or conservative your plan is.

For example, in my case my conservative assumptions include:

• 20% haircut to SS
• Ignore a likely substantial inheritance
• Ignore equity in my two houses (no mortgages), I consider this my long-term care insurance
• Life expectancy to 95 (no males in my family lasted past about 65, no one in DW's family made it to 90)
• Ignore part time work by both me and DW
• Disregard asset allocation (e.g., international, REITs) and glidepath outside 60/40 in FIRECalc
• Disregard spending adjustments due to portfolio performance (i.e., the 95% rule or VPW)

Many people around here have these same conservatisms, and still advocate for sub-3.5% withdrawal rates. They are working longer than necessary and helping me avoid my 20% SS haircut assumption.

Yes, I use pretty much the same assumptions (except I didn't count on SS).

After I retired in 2015, I was too focused on building on my real estate portfolio and ignored managing my retirement accounts. I let the AA ratio go out of whack, did no balancing and in general just rode the market. Since it was going up, everything was good.

The last two weeks have been a wake-up call. My financial account numbers are still very solid, but I am going curtail any real estate investment for the foreseeable future and build up my cash position just a bit more (never hurts to have too much cash at times like this). Also I'm finally getting around to doing some rebalancing in my retirement accounts.

DW was wise and went all cash in her retirement accounts just before the bloodbath, so she's sitting pretty. Sucks to lose money AND hear her gloat every day

 

[luckydude]

What makes not panicking easy is the slim odds you can actually do anything without hurting your nest egg.

There’s no way to know where the bottom is, or where the recovery begins, even though some people will guess right after the fact. There will be fits and starts on the way down and the way up. And no one can time it just right. If you sell now, what if the market goes down another 20%, sell again? So you won’t know where the bottom is. Once it starts back up again for real, it often comes up really fast just as the downs have the past few weeks - and odds are you’ll miss all that wondering if it’s real. Once you buy back in, you’ve missed much of the short term recovery.

Annoying or worrisome as it may be, the only sure way to win is wait it out. That has worked 100% of the time in the past. And if it’s really different this time, it won’t matter what you did with your money, there will be many other issues.

I agree 100%. At times like this, the best action is usually inaction. Wait it out, let the emotions wear off, then re-assess. Market timing is foolish and panic selling is the worst thing to do. This is the first market downturn that I've experienced since I retired, so even though my number is very solid, it was still a bit unnerving.

A friend of mine went all cash just as the bottom dropped out of the market during the Great Recession. He suffered huge losses, and that psychological scarring prevented him from going back into the market for almost a decade. He lost out on huge gains.

Lucky Dude

 

[luckydude]

Being one of those noobies myself (although I'm relatively calm), I don't mind. I consider it a sort of initiation ritual: welcome to retirement, let me circumcise you with this rock, you're a real man now.

I'd rather lose all my money than going anywhere near that...

Lucky Dude

 

[DogGone]

Being one of those noobies myself (although I'm relatively calm), I don't mind. I consider it a sort of initiation ritual: welcome to retirement, let me circumcise you with this rock, you're a real man now.

Me too... I’m just starting month 8. Relatively calm, but wondering if going back part time gives me options later. In mid fifties, it will be hard to go back after a few years off.

Most importantly, thanks for the rock quote, one of my highs today.

 

[jldavid47]

Based on the complete lack of worry here, I'd say the bear market has a long way to go.

 

[Mdlerth]

If you can keep your head when all about you are losing theirs

Based on the complete lack of worry here, I'd say the bear market has a long way to go.

It's not entirely clear to me how worrying would help.

Patient: "Doctor, I worry so much it's causing my hair to fall out."
Doctor: "What have you been worrying about?"
Patient: "I've been worried about losing my hair!"

 

[ERD50]

Based on the complete lack of worry here, I'd say the bear market has a long way to go.

It's not entirely clear to me how worrying would help.

Patient: "Doctor, I worry so much it's causing my hair to fall out."
Doctor: "What have you been worrying about?"
Patient: "I've been worried about losing my hair!"

It's not lack of worry so much, it's a realization that markets do what markets do. The current expectations are built in (right or wrong). Nothing we do can be reasonably expected to outsmart it, so we do nothing (other than rebalance).

If worrying will shorten the bear, please post some instructions for us to follow, I'm not sure I know how.

-ERD50

 

[jldavid47]

It's not entirely clear to me how worrying would help.

Patient: "Doctor, I worry so much it's causing my hair to fall out."
Doctor: "What have you been worrying about?"
Patient: "I've been worried about losing my hair!"

I didn't say people should worry. It's a sentiment indicator.

 

[jollystomper]

If FIRECALC and other calculators had shown that my finances could not withstand a drop like this (or worse), I would never have chosen to retire.

 

[Rianne]

Firecalc input:
80K spend
300,000K Portfolio
30 years
53K SS in 2027
40K Pension in 2023
DH still consulting until 2023 adding 8K/year to portfolio
Constant spending power

Consistent growth 0% inflation 2%
Results 100% Crystal Ball

Might fall below 100% if the $$ loses value.


Edit again: I put in -.1% using 0% growth as though cash, still 100%
Does it even register negative growth?


Edit again: I put in -4% growth and +2% inflation and the only change is ending balance $173,692
100%

 

[Koolau]

One of the few advantages of getting older is that, at some point, you can stop using 30 years as your time frame. I'm past that point, though I do know one man who just hit 100 and a lady who will soon turn 104. I suppose I should rerun FIRECALC. I'll do that tomorrow. (Couldn't find an Alfred E. Newman emoji.)