Author Topic: cfiresim question  (Read 3612 times)

morning owl

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cfiresim question
« on: February 02, 2015, 01:47:56 PM »
hi Mustachians,

I've been playing around with the http://www.cfiresim.com/input.php calculator, and there's something that doesn't make sense to me. There's a section on the right panel that says "Criteria for marking a cycle as 'failed.'" The default is "Yearly Withdrawal falls below $0" and "Portfolio falls below $0."

When I try to change the 'yearly withdrawal' to $10,000, it doesn't seem to affect the results. Also, wouldn't you want the yearly withdrawal to be above zero as a default? I would think that a failure would be a number much higher than zero.

Also when I punch in the numbers and get a 0% chance of failure, I notice that on the output page in the "Final Third" there is a chance of the yearly withdrawal to be zero. Yet zero failures... How can this be? The 'Average Withdrawal' for that period is about 20% below the yearly rate that I'd set... Do they just automatically assume that you need less money at this age? What am I missing?

skyrefuge

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Re: cfiresim question
« Reply #1 on: February 02, 2015, 05:52:33 PM »
What method are you using for "spending plan"?

My assumption is that it ignores "Yearly withdrawal falls below" for the default "Inflation adjusted" method, since your yearly withdrawals will always be the same under that method.

But your second question implies you're using a different "spending plan" method. If so, then the spending pattern used is described in the documentation.

morning owl

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Re: cfiresim question
« Reply #2 on: February 02, 2015, 07:24:29 PM »
I'm using "inflation adjusted" for the spending plan.

My understanding is that the default of zero for the "yearly withdrawal falls below _____ " means that I won't be able to withdraw ANYTHING on some years. Maybe I should post a screenshot of my output chart if this isn't making sense... I want to withdraw 50k / year adjusted for inflation, and it seems to be saying at there's a chance the withdrawal might be zero in some instances, with the average of 39k in the Final Third or the calculations. But with a zero failure rate.

What I would expect is that if there's any chance the withdrawal falls below 50k in this case, that there would be a failure in that instance. But that doesn't seem to be the case.

I think I see what you're saying... But I'm confused by the results in the Final Third having the possibility of having a zero withdrawal on some years. I'll post a pic tomorrow.
« Last Edit: February 02, 2015, 07:27:59 PM by morning owl »

skyrefuge

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Re: cfiresim question
« Reply #3 on: February 02, 2015, 08:48:47 PM »
Yeah, a screenshot is probably best. I tried a variety of things, but couldn't find any way for it to tell me anything other than "$50,000" for the Final Third withdrawals when using the Inflation Adjusted spending plan.

morning owl

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Re: cfiresim question
« Reply #4 on: February 03, 2015, 06:57:37 AM »
I appreciate you trying this out, skyrefuge! I'm just playing around with numbers here, but just noticed this result in the output and am trying to make sense of it... Here's the screenshot.


bo_knows

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Re: cfiresim question
« Reply #5 on: February 03, 2015, 07:17:40 AM »
Morningowl,

Under the Criteria for marking a cycle as "failed" section, if you change the Yearly Withdrawal falls below to $10,000... all it is doing is considering the simulation a "failure" if your withdrawal falls below $10,000.  In your screenshot, I can tell that you set your spending to $50,000/yr (inflation adjusted).  Therefore, your simulation will never "fail" because it stays above $10,000.

That particular option is intended to be used with Spending Methods that are variable.  So, If you have a variable spending method that moves around, but you consider it a "failure" to get below say $20,000... you can set it there.  OR you can set a Spending Floor of $20,000, which won't actually allow it to go that low.

morning owl

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Re: cfiresim question
« Reply #6 on: February 03, 2015, 07:42:35 AM »
hi bo_knows,

For this simulation I ignored the "Yearly Withdrawal falls below __" because it doesn't seem to make a difference to the calculations. I am just wondering about the Final Third results here. I don't want my spending to fall below $50,000... but it appears that there's a chance of the yearly withdrawal being zero in the Final Third, with the "Average Withdrawal" of $30k in that period. Am I just reading this wrong?

Thanks!

bo_knows

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Re: cfiresim question
« Reply #7 on: February 03, 2015, 08:23:40 AM »
hi bo_knows,

For this simulation I ignored the "Yearly Withdrawal falls below __" because it doesn't seem to make a difference to the calculations. I am just wondering about the Final Third results here. I don't want my spending to fall below $50,000... but it appears that there's a chance of the yearly withdrawal being zero in the Final Third, with the "Average Withdrawal" of $30k in that period. Am I just reading this wrong?

Thanks!

Ah. That appears to be a bug.  My guess is that it's calculating the "final third" incorrectly.  I'd say that I'd look into it, but I'm in the middle of completely re-writing the code... so hopefully in the new version this issue will not be present.


morning owl

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Re: cfiresim question
« Reply #8 on: February 03, 2015, 08:59:44 AM »
OK cool, good to know. Great job on the calculator, by the way -- it's the most flexible and thorough one I've tried.