Author Topic: Rich, Broke or Dead: Visualizing probabilities of outcomes in early retirement  (Read 14427 times)

dragoncar

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Shifting looks good to me.  Think of it like significant figures, itís already guesswork so make the best of what you have.  Iíd rather use the shifted distribution than the original distribution, which is definitely wrong

maizeman

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Shifting looks good to me.  Think of it like significant figures, itís already guesswork so make the best of what you have.  Iíd rather use the shifted distribution than the original distribution, which is definitely wrong

We may just have a fundamentally different approach to ethics on this point. The way I was trained, adding additional complexity to a model is only justifiable if you're increasing accuracy. More complexity just for the sake of feeling good for having other factors in the model is right up there with clubbing baby seals.

Anyway, good luck to ya.

Hvillian

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We may just have a fundamentally different approach to ethics on this point. The way I was trained, adding additional complexity to a model is only justifiable if you're increasing accuracy. More complexity just for the sake of feeling good for having other factors in the model is right up there with clubbing baby seals.

Anyway, good luck to ya.

It is common for actuaries to slide a mortality table forward or back a number of years.  A projection scale is often used for the reasons you site, but sometimes a simple set-forward or setback fits well enough.  Assuming CCCA is using a pretty recent mortality table, I think setting it back a few years it could increase accuracy for someone who has good reason to think they will live longer than average.   
I think a simple workaround is just to use a lower retirement age.  If you input 40 instead of 45 (and adjust the social security age similarly), I think everything should work the same except for setting the mortality back 5 years.

markbike528CBX

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Shifting looks good to me.  Think of it like significant figures, itís already guesswork so make the best of what you have.  Iíd rather use the shifted distribution than the original distribution, which is definitely wrong

We may just have a fundamentally different approach to ethics on this point. The way I was trained, adding additional complexity to a model is only justifiable if you're increasing accuracy. More complexity just for the sake of feeling good for having other factors in the model is right up there with clubbing baby seals.

Anyway, good luck to ya.

Them baby seals is EVIL, and in league with dragoncar!   Sounds like a disguise for a devilbunny ... http://www.faqs.org/faqs/devilbunnies-faq/part1/

Mgmny

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Can someone tell me why i would ever leave it on "nominal"? I'm not super-intelligent on nominal vs inflation adjusted info.

DreamFIRE

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Can someone tell me why i would ever leave it on "nominal"? I'm not super-intelligent on nominal vs inflation adjusted info.

It doesn't change the chance of being broke or the success rates, but it will base your balance wedges <start and >2x start on a nominal balance when you FIRE vs. the inflation adjusted balance in the future, when those dollars won't go as far as they will on the day you FIRE.  I always leave it set to use inflation adjusted.

Mgmny

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Can someone tell me why i would ever leave it on "nominal"? I'm not super-intelligent on nominal vs inflation adjusted info.

It doesn't change the chance of being broke or the success rates, but it will base your balance wedges <start and >2x start on a nominal balance when you FIRE vs. the inflation adjusted balance in the future, when those dollars won't go as far as they will on the day you FIRE.  I always leave it set to use inflation adjusted.

Ah! Thank you!

Mississippi Mudstache

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Re-reading my unsolicited rant from last night :) I think I was trying to get around to asking for a 'Mustachian' button.  It would be really awesome to toggle between statistical average (current version) to an optimized outcome (college educated, married, cope well with stress, etc for longvity + able to reduce withdrawal 25% during bear market, AA annually re-balanced, etc.)...  Just for fun.  Maybe it would nudge people in a good direction toward financial education and being more confident to ER.

I think the easiest way to handle life expectancy is just to have the system auto-populate the number it's using now, and let the user change it to anything they want.  Go nuts with a third-party LE calculator or just guess.  It's the least work for the creator with maximum flexibility

Another (big) thank you and a request for this ^. (Those of us in developed countries outside the US will typically have higher life expectancy.)

My guess is that there would be a major challenge here because you don't just need the average remaining life expectancy, but also the shape of the distribution of outcomes, so it wouldn't be as simple as typing in a single number.

This is particularly true because increases in life expectancy are primarily driven by reduced early death rates rather shifting the whole curve.

For example, look at the change in the distribution of age at death for men in the UK between the mid-1800s and the late 20th century:




Total life expectancy came close to doubling over that time frame, but if I just took the shape of the curve from the 1800s and either shifted it over 35 years, or multiplied all the ages by 2x, I'd do an awful job of modeling the mortality curve at the end of the 20th century.

Luckily we live now so you can just use the actual distribution and adjust it left or right based on the input.  It wonít be perfect, but itís not like life expectancy is a perfect predictor anyways.

Hell its close enough to a normal distribution, especially looking at a conditional distribution for people who have survived childhood.  just use a reasonable stdev

That curve could be easily approximated with a Weibull distribution. Sadly, I haven't used a Weibull in 15 years so I have no idea how to do it myself.

Much Fishing to Do

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Very Interesting, I was thinking about requesting a button to be able to switch to death probablilites for a couple (i.e. 'both are dead' would be the death line) but didnt think about all these other changes that does occur.  Which is funny because I never liked when people said there is no reason for life insurance after retirement because you are no longer making an income...I'm not saying life insurance is reasonable at an advanced age, but its simply not true that no one depends on your income after your retire if you have a spouse, I've seen it be a big hit to a couple of people when one of those SS checks disappears.



I believe surviving spouse gets the higher of the two social security amounts.  Say Joe is 72 collecting $2200/mo and Jane is 70 collecting $1500/mo and Joe dies, Jane can now collect $2200 instead of $1500.

This is correct: "If you are the widow or widower of a person who worked long enough under Social Security, you can receive full benefits at full retirement age for survivors or reduced benefits as early as age 60."

https://www.ssa.gov/planners/survivors/ifyou.html

Correct, but 2200 is much lower than 2200+1500 which is what the household use to collect in SS

CCCA

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I've been working on some other things so haven't put as much time into this but I cranked out one set of updates to the model:
- I added the ability to add multiple extra income streams and expenses.  In order not to add a ton of input text boxes, you can add multiple streams in the same box just separated with a semi-colon.  this will allow people to add social security and pensions and other income streams and expenses like college.

I didn't really touch the life expectancy questions that people were discussing heavily here.  I'm sort of on the same page as maizeman where i'm not comfortable making up the data, though I acknowledge all the other sources of uncertainty in the model.  And the issue of married couple survival and spending/income changes is complicated enough that I don't think I want to tackle it right now.
 
Anyway, here's the primary website link again if you need it (I took down the link to the beta-version since this is now the latest version):
https://engaging-data.com/will-money-last-retire-early/

as always, I appreciate the helpful feedback and all of the discussion here.



« Last Edit: July 30, 2018, 01:48:41 AM by CCCA »

letsdoit

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great tool, thanks.
 to beat a dead horse, i wonder if SS is going to be functional in 40 years

Hvillian

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Great update!  I have been stress testing the inputs a little bit this morning and so far everything seems consistent regardless of how I adjust the inputs (spending, income, ages, etc.).  Only way I have broke it is by clearing out the income or expense fields (blank instead of zero).

Thanks again.

CCCA

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great tool, thanks.
 to beat a dead horse, i wonder if SS is going to be functional in 40 years

I think nobody can know that, but you are welcome to put in different levels of SS into your calculation to see if that affects your long-term probabilities.  You can even set an end date (age) if you think it'll die in your lifetime after you start taking benefits.

Great update!  I have been stress testing the inputs a little bit this morning and so far everything seems consistent regardless of how I adjust the inputs (spending, income, ages, etc.).  Only way I have broke it is by clearing out the income or expense fields (blank instead of zero).

Thanks again.

thanks for the bug report.  I think fixed this little issue but would appreciate any other issue reports. 
of course, any other suggestions and comments are also appreciated.

maizeman

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Reminds me of the old joke: "QA Engineer walks into a bar. Orders a beer. Orders 0 beers. Orders 999999999 beers. Orders a lizard. Orders -1 beers. Orders a sfdeljknesv."

Much Fishing to Do

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 to beat a dead horse, i wonder if SS is going to be functional in 40 years

It'll likely be different, but not sure enough that many will notice.  Maybe it pays 10% less for future retirees, or lifts the full retirement age, which effectively is the same thing given you can take it early at a discount, but I'm not sure most people today not in retirement could tell you within 10% what their SS Benefits are supposed to be.  Maybe they add a couple percent to FICA, maybe they raise or eliminate the cap, or even tax higher incomes with an additional tax above the regular rate.  They already did that with Medicare and I'm not sure how many people really noticed. 

So maybe just type a number in the SS part 20% lower than what you estimate and you've covered the dysfunction.

DreamFIRE

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great tool, thanks.
 to beat a dead horse, i wonder if SS is going to be functional in 40 years

It's off topic, so I don't think we should derail this thread.  See this thread for more on the SS topic:

https://forum.mrmoneymustache.com/welcome-to-the-forum/social-security-will-not-be-bankrupt/

matchewed

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Reminds me of the old joke: "QA Engineer walks into a bar. Orders a beer. Orders 0 beers. Orders 999999999 beers. Orders a lizard. Orders -1 beers. Orders a sfdeljknesv."

Okay I'll admit I had to look that one up.

<---- (Obvious non software engineer person)

CCCA

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Reminds me of the old joke: "QA Engineer walks into a bar. Orders a beer. Orders 0 beers. Orders 999999999 beers. Orders a lizard. Orders -1 beers. Orders a sfdeljknesv."


good one.  Making public-facing web tools is a relatively new thing for me but I'm learning. 

CCCA

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Re: Rich, Broke or Dead: Visualizing probabilities of outcomes in early retirement
« Reply #118 on: September 27, 2018, 04:46:07 PM »
Made a couple of small updates to the calculator:
  • added a >5x initial starting balance wedge as well.  This is the largest wedge in most scenarios after about 45 years at 4% withdrawal rate (not counting the death wedge of course). 
  • added a Generate URL button to save the parameters into the URL so you can share your scenarios with other folks.
In other news, I shared these calculators with friends and family and a friend starting a new business said he needed some interactive visualizations done for his website.  So I've now got a small side gig of web programmer (after just learning this web stuff earlier this year).

Glenstache

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Re: Rich, Broke or Dead: Visualizing probabilities of outcomes in early retirement
« Reply #119 on: September 27, 2018, 05:18:53 PM »
Made a couple of small updates to the calculator:
  • added a >5x initial starting balance wedge as well.  This is the largest wedge in most scenarios after about 45 years at 4% withdrawal rate (not counting the death wedge of course). 
  • added a Generate URL button to save the parameters into the URL so you can share your scenarios with other folks.
In other news, I shared these calculators with friends and family and a friend starting a new business said he needed some interactive visualizations done for his website.  So I've now got a small side gig of web programmer (after just learning this web stuff earlier this year).
Nice job on the side hustle!

Blindsquirrel

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Re: Rich, Broke or Dead: Visualizing probabilities of outcomes in early retirement
« Reply #120 on: September 27, 2018, 07:35:16 PM »
 LOve the calculator but ages do not show up for me at the bottom in Chrome but they do in Edge, odd.

Mgmny

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Re: Rich, Broke or Dead: Visualizing probabilities of outcomes in early retirement
« Reply #121 on: September 28, 2018, 08:00:38 AM »
Just me or does the page take FOREVER to load?

Mgmny

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Re: Rich, Broke or Dead: Visualizing probabilities of outcomes in early retirement
« Reply #122 on: September 28, 2018, 08:03:57 AM »
LOve the calculator but ages do not show up for me at the bottom in Chrome but they do in Edge, odd.

Ages show for me in chrome, just fyi

Hvillian

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Re: Rich, Broke or Dead: Visualizing probabilities of outcomes in early retirement
« Reply #123 on: September 28, 2018, 08:30:35 AM »
Love the updates (as always).  Everything seems to be loading quickly and displaying fine in chrome for me.

Only bug I found is that it lets me click on the chart labels for Broke and Dead (but not any of the "Bal . . ." ones) to remove that color from the chart.  But it does not spread out the remaining probabilities correctly like it does when I use the check boxes above, it just removes the color and fills it with whatever color is above.  I can try to post screen shots if that is unclear.

Congrats on the side gig.  Well deserved.

maizeman

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Re: Rich, Broke or Dead: Visualizing probabilities of outcomes in early retirement
« Reply #124 on: September 28, 2018, 08:32:10 AM »
Nice updates. And congrats on turning this -- quite useful to the community -- hobby into a new source of income!

CCCA

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Re: Rich, Broke or Dead: Visualizing probabilities of outcomes in early retirement
« Reply #125 on: September 28, 2018, 11:38:34 AM »
Love the updates (as always).  Everything seems to be loading quickly and displaying fine in chrome for me.

Only bug I found is that it lets me click on the chart labels for Broke and Dead (but not any of the "Bal . . ." ones) to remove that color from the chart.  But it does not spread out the remaining probabilities correctly like it does when I use the check boxes above, it just removes the color and fills it with whatever color is above.  I can try to post screen shots if that is unclear.

Congrats on the side gig.  Well deserved.

Thanks I fixed that issue by properly preventing the legend from being clicked. 


Nice updates. And congrats on turning this -- quite useful to the community -- hobby into a new source of income!


Yeah the side gig was unexpected, but is fun to work on (and got a check yesterday!).  Don't really need a sidegig but I could imagine doing small fun little individual projects that take ~5-20 hours total each. 

EnjoyIt

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Re: Rich, Broke or Dead: Visualizing probabilities of outcomes in early retirement
« Reply #126 on: September 28, 2018, 01:40:41 PM »
I'm surprised I missed it when you first posted it.  Really nice job CCCA.  The death wedge is very humbling.

BTW, this really needs to be posted on bogleheads to maybe smack some sense into the 2% withdrawal rate population.  If it hasn't been already I would be glad to share it for you.

CCCA

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Re: Rich, Broke or Dead: Visualizing probabilities of outcomes in early retirement
« Reply #127 on: September 28, 2018, 01:46:38 PM »
I'm surprised I missed it when you first posted it.  Really nice job CCCA.  The death wedge is very humbling.

BTW, this really needs to be posted on bogleheads to maybe smack some sense into the 2% withdrawal rate population.  If it hasn't been already I would be glad to share it for you.


I don't have an account on bogleheads, but if you do, go for it!  Thanks.

EnjoyIt

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Re: Rich, Broke or Dead: Visualizing probabilities of outcomes in early retirement
« Reply #128 on: September 28, 2018, 03:08:26 PM »
I'm surprised I missed it when you first posted it.  Really nice job CCCA.  The death wedge is very humbling.

BTW, this really needs to be posted on bogleheads to maybe smack some sense into the 2% withdrawal rate population.  If it hasn't been already I would be glad to share it for you.


I don't have an account on bogleheads, but if you do, go for it!  Thanks.

Posted.  Here is the link if you are interesting in watching
https://www.bogleheads.org/forum/viewtopic.php?f=10&t=260050

If you want me to add or change anything to the OP let me know.

TomTX

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Re: Rich, Broke or Dead: Visualizing probabilities of outcomes in early retirement
« Reply #129 on: September 28, 2018, 06:51:53 PM »
Just me or does the page take FOREVER to load?

Loads fine for me.

So, I'm not sure how to set up my income streams accurately.  I will have a pension - the monthly payout will be fixed (no COLA) so the real value will drop over time. Once I get Social Security, that will have a COLA, so the real value will remain notionally constant.

CCCA

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I'm surprised I missed it when you first posted it.  Really nice job CCCA.  The death wedge is very humbling.

BTW, this really needs to be posted on bogleheads to maybe smack some sense into the 2% withdrawal rate population.  If it hasn't been already I would be glad to share it for you.


I don't have an account on bogleheads, but if you do, go for it!  Thanks.

Posted.  Here is the link if you are interesting in watching
https://www.bogleheads.org/forum/viewtopic.php?f=10&t=260050

If you want me to add or change anything to the OP let me know.


Thanks for posting that there.  I liked that the default you shared was $100k in spending and $2.5M in initial stache. 
In looking over the comments there (I haven't set up an account to respond), the stereotype of bogleheads being very risk averse seems to be playing out.  It's eye-opening.

EnjoyIt

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I'm surprised I missed it when you first posted it.  Really nice job CCCA.  The death wedge is very humbling.

BTW, this really needs to be posted on bogleheads to maybe smack some sense into the 2% withdrawal rate population.  If it hasn't been already I would be glad to share it for you.


I don't have an account on bogleheads, but if you do, go for it!  Thanks.

Posted.  Here is the link if you are interesting in watching
https://www.bogleheads.org/forum/viewtopic.php?f=10&t=260050

If you want me to add or change anything to the OP let me know.


Thanks for posting that there.  I liked that the default you shared was $100k in spending and $2.5M in initial stache. 
In looking over the comments there (I haven't set up an account to respond), the stereotype of bogleheads being very risk averse seems to be playing out.  It's eye-opening.

There are plenty of Bogleheads who are looking to retire at normal retirement age with $1 million and SS. Though $80-$100k in yearly spending seams to be close to average from my experience. There is a decent population there that thinks 3% withdrawal rate is pretty risky and even talks about 2%.


maizeman

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Thanks for posting that there.  I liked that the default you shared was $100k in spending and $2.5M in initial stache. 
In looking over the comments there (I haven't set up an account to respond), the stereotype of bogleheads being very risk averse seems to be playing out.  It's eye-opening.

Wow, you weren't kidding. At least one person over there arguing for assuming 0% real returns going forward others for sub 2% withdrawal rates (which if you don't retire until your 60s means you're assuming less than 0% real returns or that you'll live past 110).

I can understand the desire to save $3+ million and have a more luxurious retirement, even if that isn't for me. But it's hard to understand people being quite that risk adverse (if risk adverse is even the right word at this point).

dragoncar

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There are plenty of Bogleheads who are looking to retire at normal retirement age with $1 million and SS. Though $80-$100k in yearly spending seams to be close to average from my experience. There is a decent population there that thinks 3% withdrawal rate is pretty risky and even talks about 2%.

My god, they must not have been factoring in HEALTHCARE

PhilB

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Made a couple of small updates to the calculator:
  • added a >5x initial starting balance wedge as well.  This is the largest wedge in most scenarios after about 45 years at 4% withdrawal rate (not counting the death wedge of course). 
  • added a Generate URL button to save the parameters into the URL so you can share your scenarios with other folks.
In other news, I shared these calculators with friends and family and a friend starting a new business said he needed some interactive visualizations done for his website.  So I've now got a small side gig of web programmer (after just learning this web stuff earlier this year).
This tool was already great when I last checked it, and it just keeps getting better!  I'm starting to think I may have built a teensy bit too much of a safety margin into my plans given the embarrassingly large size of my 5x wedge even on the inflation adjusted basis.  I'm too scared to look how bad it will be if I stop budgeting for a 10% spending increase over my pre retirement budget (which most years I've been beating by 10%).  I've worked too long haven't I?  Doh!

Linda_Norway

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I get a little worried about this graphs showing me having a 50% chance on being broke at 67. I just really hope that my excel sheet with Norwegian tax rules is more correct for me. It probably is, but it doesn't show the chances of different outcomes like this graph does. One thing that is wrong with these numbers is of course that I won't FIRE this year, but earliest next year, so I would need to run the calculator again next year. And we should prepare for doing some consultancy work during FIRE.
I do realize very well that death can appear at any time, as my father passed away unexpected when he was 50.

I put in our entire stash. DH and I will receive normal pensions from the age of 67, that is why I put 67 in as last age to need FIRE stash. DH is a few years older than I am, so I put in his income from 65. For taxes I put in what we need to pay yearly on wealth taxes, which is 1%. What we take out of stash is not taxed the first 14 years, but taxed 30% for the remaining years (delayed tax). I cannot enter that in the graph. That's why I have an excel sheet.


matchewed

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Couldn't you add that 30% via additional expenses?

PhilB

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Hi Linda, do you have any flexibility in your budget if markets don't perform well?  If not then I would be very nervous about your numbers too.  Even ignoring taxes you would need to achieve a 4% above inflation return on your assets to have your 700,000 run out pretty much precisely when your pensions come on line.  That's not an unreasonable return, but you have no allowance for any sequence of returns risk - which is why the historical modelling is showing a very high failure rate.  It may be still doable if you are able to trim your sails significantly in the face of a downturn and/or pick up some additional income, but it strikes me as a very ballsy approach.

maizeman

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At 7.1% for 20 years (maybe actually 19 when you retire?), it might actually make sense to experiment with putting more of your money into bonds and seeing what it does for success rates. At the 30-50 year horizons a lot of folks on the board use, bonds are actually "riskier" than stocks, but since you have a much shorter timeframe, more of your success depends on being able to spend down your principal without having its value decline dramatically, so a higher bond allocation MIGHT increase success (I haven't run the numbers).

Much Fishing to Do

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I get a little worried about this graphs showing me having a 50% chance on being broke at 67. I just really hope that my excel sheet with Norwegian tax rules is more correct for me. It probably is, but it doesn't show the chances of different outcomes like this graph does. One thing that is wrong with these numbers is of course that I won't FIRE this year, but earliest next year, so I would need to run the calculator again next year. And we should prepare for doing some consultancy work during FIRE.
I do realize very well that death can appear at any time, as my father passed away unexpected when he was 50.

I put in our entire stash. DH and I will receive normal pensions from the age of 67, that is why I put 67 in as last age to need FIRE stash. DH is a few years older than I am, so I put in his income from 65. For taxes I put in what we need to pay yearly on wealth taxes, which is 1%. What we take out of stash is not taxed the first 14 years, but taxed 30% for the remaining years (delayed tax). I cannot enter that in the graph. That's why I have an excel sheet.

The graph looks about right to me.  Even though it is obviously more grey than this, I often view my ER as being two distinct periods as well, a similar 20 years before age 67 where my plan is to spend from my taxable accounts, and then the time after 67 where I'll spend from my retirement accounts, have SS and Medicare, kids will all be independent, etc.

Even though 20 years is a lot less time than 50, or whatever number we should use to consider the rest of our lives, once your swr goes over 5% the chance of failure increases pretty quickly if you're that invested in equities.

To see actual returns for some time periods I backtested portfolios close to yours and if you had retired in 2000 it would have run dry in a very quick 12 years at that withdraw rate.  That was obviously an absolute horrible date to retire, but even if it was 1998 you would have run out in 18 years and if 2002 it looks like you'd run dry in a similar 18 years.

Running dry in my taxable account in 18 years was not a disastrous result for me as I would have access to my retirement accounts and/or early SS, etc, and of course its not like the portfolio disappeared at once so slight adjustments to the withdraw could have helped it survive the 20.  But I guess that may not be the case with your plan if this is a barebones spend number for you and you don't have early access to those retirement pensions (or early access would reduce their income below future needs).  You still don't have the problem of having run out of money and still have 30 years left with nothing, b/c the time between running out of money and the pension starting is not gonna be huge even in a bad case scenario, but there definitely is a fair chance there will be some time period between running out and the pension starting to think about and plan for.

But in the end, as you note re: your father's death, and as how I love this graphing tool throws in your face, one of your biggest risks to having a nice long successful retirement is not retiring early enough, as though your money may or may not become a problem the death curve is definitely gonna catch you at some point....so just figure out your tweaks (sounds like potential consulting work may be your answer if things do start to go south too early)
« Last Edit: October 03, 2018, 06:51:46 AM by Much Fishing to Do »

Linda_Norway

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Contingency plan:

In 2017 we spent approx 27,500$. Much less than our FIRE budget of 50,000$. I didn't change the FIRE budget though, because we count on having some big expenses every couple of years and I think on average it might be that high. Our main car won't live forever, or some major future home renovation. The 50,000$ in the scheme is not bare bones. We can live comfortably on a lot less.

Beside the FIRE stash we have another 400,000$ reserved for buying another house after FIRE. We can always decide to rent and eat up the house. There are many houses for sale in my country for a much lower price. So we can always just live in a cheaper place. As we intend to rent a house first after FIRE, to figure out which area we might like to live in, I calculated the difference between renting and putting the 400,000$ in the stock market. It pays off to rent if the rent isn't too high. And we have seen a couple of acceptably looking rentals for low prices.

We expect to inherit 3-400,000$ from our parents someday in the future, which is not included in the calculations.

DH has been working as a consultant for all his career. He can do the same thing privately as well. I currently also have a small sidegig, but haven't considered working in my current profession after FIRE. We could also choose to work part time at any kind of job. There are also some ways in this country to earn some money that is free for income tax.

As we are planning to eat up our stash during these 20 years, the swr doesn't have an enormous effect on my calculations. We have tested my excel sheet with a 2% withdrawl rate and DH and I thought it still looked acceptable.
« Last Edit: October 04, 2018, 07:35:03 AM by Linda_Norway »

PhilB

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Contingency plan:

In 2017 we spent approx 27,500$. Much less than our FIRE budget of 50,000$. I didn't change the FIRE budget though, because we count on having some big expenses every couple of years and I think on average it might be that high. Our main car won't live forever, or some major future home renovation. The 50000$ in the scheme is not bare bones. We can live comfortably on a lot less.

Beside the FIRE stash we have another 40,000$ reserved for buying another house after FIRE. We can always decide to rent and eat up the house. There are many houses for sale in my country for a much lower price. So we can always just live in a cheaper place. As we intend to rent a house first after FIRE, to figure out which area we might like to live in, I calculated the difference between renting and putting the 40,000$ in the stock market. It pays off to rent if the rent isn't too high. And we have seen a couple of acceptably looking rentals for low prices.

We expect to inherit 3-400,000$ from our parents someday in the future, which is not included in the calculations.

DH has been working as a consultant for all his career. He can do the same thing privately as well. I currently also have a small sidegig, but haven't considered working in my current profession after FIRE. We could also choose to work part time at any kind of job. There are also some ways in this country to earn some money that is free for income tax.

As we are planning to eat up out stash during these 20 years, the swr doesn't have an enormous effect on my calculations. We have tested my excel sheet with a 2% withdrawl rate and DH and I thought it still looked acceptable.
Great to hear that you have lots of contingencies built in - I was feeling very guilty about having possibly depressed you by pointing out a hole in your numbers.  Is that really $40,000 for a house or should it be $400,000?  If the former then you've found some seriously cheap property up there!

Linda_Norway

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Is that really $40,000 for a house or should it be $400,000?  If the former then you've found some seriously cheap property up there!

That was a typo. I have changed it now. I get confused, because I am already dividing by 10 to make it a rough USD number. I obviously divide once too many times.

letsdoit

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Is that really $40,000 for a house or should it be $400,000?  If the former then you've found some seriously cheap property up there!

That was a typo. I have changed it now. I get confused, because I am already dividing by 10 to make it a rough USD number. I obviously divide once too many times.

sounds like a fool proof plan.  with living in (presumably)  norway, thrown on top as a bonus. 

Retire-Canada

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Wow, you weren't kidding. At least one person over there arguing for assuming 0% real returns going forward others for sub 2% withdrawal rates (which if you don't retire until your 60s means you're assuming less than 0% real returns or that you'll live past 110).

That just Boggles the mind! They are cunning though all those extra years of work mean they'll die with fewer years of FIRE to fund.

EnjoyIt

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Wow, you weren't kidding. At least one person over there arguing for assuming 0% real returns going forward others for sub 2% withdrawal rates (which if you don't retire until your 60s means you're assuming less than 0% real returns or that you'll live past 110).

That just Boggles the mind! They are cunning though all those extra years of work mean they'll die with fewer years of FIRE to fund.

0% real returns; How crazy is that?  Even TIPs pay better than that nothing.


Retire-Canada

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0% real returns; How crazy is that?  Even TIPs pay better than that nothing.

Not crazy at all if you were looking for an excuse to OMY a whole bunch. ;-)

letsdoit

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what is OMY

Retire-Canada

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what is OMY

One More Year aka OMY Syndrome aka If I die at my desk I can never run out of money in retirement. ;-)

Much Fishing to Do

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Contingency plan:

In 2017 we spent approx 27,500$. Much less than our FIRE budget of 50,000$. I didn't change the FIRE budget though, because we count on having some big expenses every couple of years and I think on average it might be that high. Our main car won't live forever, or some major future home renovation. The 50,000$ in the scheme is not bare bones. We can live comfortably on a lot less.



Then you're totally set. Go for it.  Given that pension is gonna be the spendy $50k, any tighter than you want to years you may have will not last long.