Is FIRECalc too optimistic?

[Anonymous]

OP, try the Rich, Broke or Dead fire calculator.

https://engaging-data.com/will-money-last-retire-early/

[Anonymous]

Anonymous wrote:OP, try the Rich, Broke or Dead fire calculator.

https://engaging-data.com/will-money-last-retire-early/

I'm the Firecalc fan. Just ran this one and have the same level of success here with less detail.

I found toggling along the axis points interesting.

[Anonymous]

Anonymous wrote:

Anonymous wrote:50/56yo with $5.25m in retirement/brokerage accounts, DH will have a pension of about $50k/y.

Trying to figure out if we can retire in 5 years. FIRECalc thinks that we are good to go as long as we spend less than $500k/year (using the Bernicke's Reality Retirement Plan that reduces the spending as one ages). Moreover, it projects us dying with possibly many millions left in our estate....

Do you think that FIRECalc is too optimistic?

What's the percentage success rate for being "good to go"?

When I plug your numbers in--assuming the 50k pension starts in about 10 years at 66 and that you'll retire in 5 years, the success rate is only 80%. I personally am not comfortable with that level of success. But maybe you're still contributing and the pension will start in 5 years so the numbers are different?

Also, because one of you is 56 already, Bernicke's model starts going down right away so your actual spending starts at 483K spending per year and then going steadily down to plateau after 20 years to around 220k/yr for your remaining years. So it's not "not going over 500k, but rather matching the rather precipitous decline Bernicke's shows in the graph and settling at a rate that's less than half what you started with. Are you going to be fine with that? Healthcare/long term care?

I would try a couple of different firecalc models and play with the parameters to get a better sense.

Thank you for this thoughtful response. The success rate is over 96%. I used the lower age for the model, but still your point is well taken. Spouse is a fed, so health insurance is taken care of.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:50/56yo with $5.25m in retirement/brokerage accounts, DH will have a pension of about $50k/y.

Trying to figure out if we can retire in 5 years. FIRECalc thinks that we are good to go as long as we spend less than $500k/year (using the Bernicke's Reality Retirement Plan that reduces the spending as one ages). Moreover, it projects us dying with possibly many millions left in our estate....

Do you think that FIRECalc is too optimistic?

What's the percentage success rate for being "good to go"?

When I plug your numbers in--assuming the 50k pension starts in about 10 years at 66 and that you'll retire in 5 years, the success rate is only 80%. I personally am not comfortable with that level of success. But maybe you're still contributing and the pension will start in 5 years so the numbers are different?

Also, because one of you is 56 already, Bernicke's model starts going down right away so your actual spending starts at 483K spending per year and then going steadily down to plateau after 20 years to around 220k/yr for your remaining years. So it's not "not going over 500k, but rather matching the rather precipitous decline Bernicke's shows in the graph and settling at a rate that's less than half what you started with. Are you going to be fine with that? Healthcare/long term care?

I would try a couple of different firecalc models and play with the parameters to get a better sense.

Thank you for this thoughtful response. The success rate is over 96%. I used the lower age for the model, but still your point is well taken. Spouse is a fed, so health insurance is taken care of.

A success rate of 75% is good. 80% is better. 96% means you are quite quite conservative.

[Anonymous]

I have never heard of this calculator but I use the 4% rule in my retirement planning. I only use retirement calculators that allow me to use this rule and apply my own asset allocation and assumptions about asset growth and taxation to plan retirement spending. Hth

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:50/56yo with $5.25m in retirement/brokerage accounts, DH will have a pension of about $50k/y.

Trying to figure out if we can retire in 5 years. FIRECalc thinks that we are good to go as long as we spend less than $500k/year (using the Bernicke's Reality Retirement Plan that reduces the spending as one ages). Moreover, it projects us dying with possibly many millions left in our estate....

Do you think that FIRECalc is too optimistic?

What's the percentage success rate for being "good to go"?

When I plug your numbers in--assuming the 50k pension starts in about 10 years at 66 and that you'll retire in 5 years, the success rate is only 80%. I personally am not comfortable with that level of success. But maybe you're still contributing and the pension will start in 5 years so the numbers are different?

Also, because one of you is 56 already, Bernicke's model starts going down right away so your actual spending starts at 483K spending per year and then going steadily down to plateau after 20 years to around 220k/yr for your remaining years. So it's not "not going over 500k, but rather matching the rather precipitous decline Bernicke's shows in the graph and settling at a rate that's less than half what you started with. Are you going to be fine with that? Healthcare/long term care?

I would try a couple of different firecalc models and play with the parameters to get a better sense.

Thank you for this thoughtful response. The success rate is over 96%. I used the lower age for the model, but still your point is well taken. Spouse is a fed, so health insurance is taken care of.

A success rate of 75% is good. 80% is better. 96% means you are quite quite conservative.

I agree with this. We have 100% success rate on all calculators we use, and we have a 50/50 portfolio.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:50/56yo with $5.25m in retirement/brokerage accounts, DH will have a pension of about $50k/y.

Trying to figure out if we can retire in 5 years. FIRECalc thinks that we are good to go as long as we spend less than $500k/year (using the Bernicke's Reality Retirement Plan that reduces the spending as one ages). Moreover, it projects us dying with possibly many millions left in our estate....

Do you think that FIRECalc is too optimistic?

What's the percentage success rate for being "good to go"?

When I plug your numbers in--assuming the 50k pension starts in about 10 years at 66 and that you'll retire in 5 years, the success rate is only 80%. I personally am not comfortable with that level of success. But maybe you're still contributing and the pension will start in 5 years so the numbers are different?

Also, because one of you is 56 already, Bernicke's model starts going down right away so your actual spending starts at 483K spending per year and then going steadily down to plateau after 20 years to around 220k/yr for your remaining years. So it's not "not going over 500k, but rather matching the rather precipitous decline Bernicke's shows in the graph and settling at a rate that's less than half what you started with. Are you going to be fine with that? Healthcare/long term care?

I would try a couple of different firecalc models and play with the parameters to get a better sense.

Thank you for this thoughtful response. The success rate is over 96%. I used the lower age for the model, but still your point is well taken. Spouse is a fed, so health insurance is taken care of.

A success rate of 75% is good. 80% is better. 96% means you are quite quite conservative.

A 96% success rate is great. But I'm really not into the idea that a 25% chance of running out of money is generally "good." Sure, for PP who has a pension and lots of budgetary breathing room it's fine, but I wouldn't draw a more general principle from that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:50/56yo with $5.25m in retirement/brokerage accounts, DH will have a pension of about $50k/y.

Trying to figure out if we can retire in 5 years. FIRECalc thinks that we are good to go as long as we spend less than $500k/year (using the Bernicke's Reality Retirement Plan that reduces the spending as one ages). Moreover, it projects us dying with possibly many millions left in our estate....

Do you think that FIRECalc is too optimistic?

What's the percentage success rate for being "good to go"?

When I plug your numbers in--assuming the 50k pension starts in about 10 years at 66 and that you'll retire in 5 years, the success rate is only 80%. I personally am not comfortable with that level of success. But maybe you're still contributing and the pension will start in 5 years so the numbers are different?

Also, because one of you is 56 already, Bernicke's model starts going down right away so your actual spending starts at 483K spending per year and then going steadily down to plateau after 20 years to around 220k/yr for your remaining years. So it's not "not going over 500k, but rather matching the rather precipitous decline Bernicke's shows in the graph and settling at a rate that's less than half what you started with. Are you going to be fine with that? Healthcare/long term care?

I would try a couple of different firecalc models and play with the parameters to get a better sense.

Thank you for this thoughtful response. The success rate is over 96%. I used the lower age for the model, but still your point is well taken. Spouse is a fed, so health insurance is taken care of.

A success rate of 75% is good. 80% is better. 96% means you are quite quite conservative.

A 96% success rate is great. But I'm really not into the idea that a 25% chance of running out of money is generally "good." Sure, for PP who has a pension and lots of budgetary breathing room it's fine, but I wouldn't draw a more general principle from that.

80% is what is often suggested.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:50/56yo with $5.25m in retirement/brokerage accounts, DH will have a pension of about $50k/y.

Trying to figure out if we can retire in 5 years. FIRECalc thinks that we are good to go as long as we spend less than $500k/year (using the Bernicke's Reality Retirement Plan that reduces the spending as one ages). Moreover, it projects us dying with possibly many millions left in our estate....

Do you think that FIRECalc is too optimistic?

What's the percentage success rate for being "good to go"?

When I plug your numbers in--assuming the 50k pension starts in about 10 years at 66 and that you'll retire in 5 years, the success rate is only 80%. I personally am not comfortable with that level of success. But maybe you're still contributing and the pension will start in 5 years so the numbers are different?

Also, because one of you is 56 already, Bernicke's model starts going down right away so your actual spending starts at 483K spending per year and then going steadily down to plateau after 20 years to around 220k/yr for your remaining years. So it's not "not going over 500k, but rather matching the rather precipitous decline Bernicke's shows in the graph and settling at a rate that's less than half what you started with. Are you going to be fine with that? Healthcare/long term care?

I would try a couple of different firecalc models and play with the parameters to get a better sense.

Thank you for this thoughtful response. The success rate is over 96%. I used the lower age for the model, but still your point is well taken. Spouse is a fed, so health insurance is taken care of.

A success rate of 75% is good. 80% is better. 96% means you are quite quite conservative.

A 96% success rate is great. But I'm really not into the idea that a 25% chance of running out of money is generally "good." Sure, for PP who has a pension and lots of budgetary breathing room it's fine, but I wouldn't draw a more general principle from that.

80% is what is often suggested.

I wouldn't be comfortable at less than 95%, and prefer 100%. I like Firecalc because you can use the Investigate tab and it can tell you how much you need to be 100% (or whatever percentage you put in.)

[Anonymous]

Use Cfiresim instead. It gives you a range of market outcomes based on actual historical returns. If your portfolio has a 95%+ success rate over a 30 year period you are probably fine.

[Anonymous]

Anonymous wrote:Use Cfiresim instead. It gives you a range of market outcomes based on actual historical returns. If your portfolio has a 95%+ success rate over a 30 year period you are probably fine.

Isn't that what firecalc does? You can see every line so you can see how quickly any failures happen etc.

[Anonymous]

Anonymous wrote:Use Cfiresim instead. It gives you a range of market outcomes based on actual historical returns. If your portfolio has a 95%+ success rate over a 30 year period you are probably fine.

I tried cfiresim and found it rather confusing. Maybe the desktop version is better.

[Anonymous]

I like cfiresim better but they are basically the same.

[Anonymous]

fwiw, I'm the Firecalc PP. I just ran Cfiresim again. Did Firecalc as well. Plus FA ran them for me yesterday on their massive system. I got the same #s from all three. The outcome on both Cfire and FireC you are putting basic categories in. With FA, he is using our actual accounts and how they have actually performed, in addition to the Monte Carlo on that data.

I think these are great tools as long as everyone understands that so much is dependent on timing in terms of when you retire--into what kind of a market.

[Anonymous]

I will also add that I am guesstimating our RMDs and income taxes. The FA's system is calculating the RMDs and income taxes on our actual allocations, at least as they stand now.