Author Topic: 10 year Fire Plan. Need expert advice on FireCalc  (Read 3035 times)

fmzip

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10 year Fire Plan. Need expert advice on FireCalc
« on: September 12, 2014, 07:19:56 PM »
I am 48, the wife is 50 and hoping to be FIRE'd in 8-10 years

We have $440K in Retirement Accounts, $190K in Taxable account. $11K in Roth's. We will continue to covert the max per year from the taxable account from here on forward.

$30K is left on our mortgage which will be paid off in 4 years, we have no other debt.

We are saving $6666 per month, the majority going into 401K's. We spend $6000 per month.

I'd like to have $80K per year in spending and call it quits in 8-10 years.

Our asset allocation is:

Vanguard Total US Bond Market 22%
Vanguard Hi Yield Corporate Fund 8%
Vanguard Short Term Inflation Protected 8%
Vanguard Total US Stock Market Index 37%
Vanguard Total International Index 19%
Vanguard REIT Index 6%

According to the Social Security Benefits, for me at 62 it will be $1800 per month, for the wife $790 per month. As I will fall 4 years short (58) and she will fall two short (60), I assume the benefits will be more like $25K instead of $30K annually?

I think we are on track but would like some reassurance. Just trying to save as much as we can and hope the markets are kind!

Thanks to the help of this forum, this is the first time in my investing life that I've broken free from managed money and have taken the reigns on my investments. Hopefully my asset allocation will get me to goal sooner rather than later.

I'm a Firecalc novice but it looks like I have a 100% success rate in 8 years with a 61/39 mix of equities. Even if I make it 35% equities, it shows 100% success with a 40 year retirement pulling out $80K per year. Should I lower my equity exposure even further than I currently have?

http://www.firecalc.com/index.php?wdamt=80000&PortValue=640000&term=40&ss1=20400&ssy1=2028&ss2=9132&ssy2=2026&signwd1=%2B&chwd1=0&chyr1=2017&wd1infl=adj&signwd2=%2B&chwd2=0&chyr2=2019&wd2infl=adj&signwd3=%2B&chwd3=0&chyr3=2023&wd3infl=adj&holdyears=2024&preadd=80000&inflpick=4&override_inflation_rate=3.0&SpendingModel=constant&age=48&pctlastyear=95&infltype=PPI&fixedinc=Commercial+Paper&user_bonds=4.0&InvExp=0.35&monte=history&StartYr=1871&fixedchoice=LongInterest&pctEquity=50&mix1=10&mix2=10&mix3=10&mix4=40&mix5=40&mix6=10&mix7=15&mix8=5&user_growth=10&user_inflation=3.0&monte_growth=10&monte_sd=10&monte_inflation=3.00&signlump1=%2B&cashin1=0&cashyr1=2017&signlump2=%2B&cashin2=0&cashyr2=2027&signlump3=%2B&cashin3=0&cashyr3=2032&process=survival&showyear=1960&delay=10&goal=95&portfloor=0&callprocess=Submit&FIRECalcVersion=3.0&

Can someone double check my entries to make sure I am doing it right and not overlooking something please?


My other concern is that my taxable accounts hold all equities due to the suggestions of tax efficiency. Should I reconsider that given an 8-10 year plan or just wait? Seems to me that being asset balanced across all accounts may make more sense?

I posted this on the Boglehead forum and the few that replied said that it is likely not possible that I will reach my goal in 10 years time. What am I missing here??

http://www.bogleheads.org/forum/viewtopic.php?f=1&t=146787&p=2189878#p2189878
« Last Edit: September 12, 2014, 08:11:53 PM by fmzip »

TomTX

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Re: 10 year Fire Plan. Need expert advice on FireCalc
« Reply #1 on: September 12, 2014, 08:46:16 PM »
That seems awfully low on equities.

MDM

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Re: 10 year Fire Plan. Need expert advice on FireCalc
« Reply #2 on: September 12, 2014, 09:13:49 PM »
The following from the Bogleheads thread (emphasis added) seems a good summary:
Quote
Please don't misunderstand, what we are trying to say is it may or may not work.
Short of a guarantee such as a defined benefit plan that is solidly funded or purchasing a single premium immediate annuity that is inflation adjusted, there is no absolute solution or formula that will provide you with that magic asset allocation. There are only three things you can control - rate of savings, time in before you begin drawing down and living beneath your means. The actual return can not be controlled - you take what the market gives you less some nominal expense. No model is 100% accurate - they are based on historical returns, what is that caveat added in each prospectus "past performance is not indicative of future performance".

Do the best you can to invest more and spend less, and what will be will be.  You are already doing well, but as with most folks there is likely room for improvement....