cFIREsim results

[FiguringItOut]

So, for the first time I tried to see where I may end up if I am going to continue with my current savings.  I plug all of my assumptions into the cFIREsim and to my shock and surprise it told me that I will be fine. 100% success rate. 

However I'm not sure if I put in the information correctly as the interface is anything but intuitive and user friendly.  I was wondering if anyone could check my simulation because I am feeling somewhat flabbergasted that I may actually be able to retire in the foreseeable future and not die in my cubicle of old age. 

There are my assumptions/inputs (numbers I used are on a very very conservative side).
Age now - 42
NW now - $178K ($40K in cash, $138 in tax deferred accounts - $18K in bonds, $120K in stocks - 22%, 11%, 67%) - this is what I have now, but not sure how to adjust/change it for different allocation in the future on the simulation.

Income from 2017 to 2022 $85K indexed for inflation - current salary
Income from 2023 to 2026 $70K indexed for inflation - what I expect to make when kids enter college and I can move to lower COL area
Child Support from 2017 to 2022 $22K/yr not indexed
Social Security from 2037 to infinity or 2075 $14,400/yr

Savings $27K annually from 2017 to 2026 - maxing out 401k, HSA, and IRA
One time deposit of $67K in 2018 in tax deferred account.

Spending $40K/yr in retirement from 2027 to infinity or 2075  - ages 52 to 100
Additional spending $25K/yr from 2017 to 2020 (this is to bring $40K to my current spending level of $65K until kids leave for college)
Additional spending $35K from 2021 to 2026 (to bring $40K to spending of  $75K while kids are in college and I have to pay some tuition)  The younger will graduate college in 2026

Stop working in 2027 at age 52. 

I know that these assumptions are very simplistic but can this really work? 
Also, any opinions on my plan are welcome.

[Mmm_Donuts]

It's hard to tell, but is what you have for "Income", where did you put this in? If it's in the "other income" part of the form - it should be net of expenses. Also I can't tell where the Savings part of 27k is going. Can you do a screen cap of your entries?

[FiguringItOut]

It's hard to tell, but is what you have for "Income", where did you put this in? If it's in the "other income" part of the form - it should be net of expenses. Also I can't tell where the Savings part of 27k is going. Can you do a screen cap of your entries?

Yes, I put into Other Income.
I put in the whole amount (i.e. total salary of $85K etc).  Should I put in there $85K minus $65K spending?

I probably screwed this up and will be very disappointed.

[FiguringItOut]

I going to play with this some more and use more realistic numbers, not what I used before for savings, spending, and salaries as all of those are a lot more optimistic in reality.

[Mmm_Donuts]

OK at quick glance - yes, the numbers you have in there in Other Income need to be net your yearly spending IF the dates that money is earned is before your retirement date. In other words, this input says you are going to start spending $40k in 2027, any other 'income' before that needs to be just whatever you save, not the total of what you earn. The Spending Plan amount only applies to your post retirement date.

[FiguringItOut]

OK at quick glance - yes, the numbers you have in there in Other Income need to be net your yearly spending IF the dates that money is earned is before your retirement date. In other words, this input says you are going to start spending $40k in 2027, any other 'income' before that needs to be just whatever you save, not the total of what you earn. The Spending Plan amount only applies to your post retirement date.

Thank you.  I'll tinker with the inputs now.

[The_Dude]

Also, keep in mind that when you put really long windows of saving/retiring into cfiresim it reduces the number of iterations it can run.  Any window log enough that it can't fit in the horrible starting years in the 1960's is missing the worst case scenario from a historical point of view.

[Mmm_Donuts]

hi FiguringItOut,

I ran your numbers with the 40k spend (I really like playing around with cFiresim).

Here's what I found:

As your numbers are currently (if I understand them right, that is!) you will have a 73% success rate, and average starting portfolio (in 2027) of $719,178.

However, your cash allocation is currently very high, as are your investment fees.

If you can change your allocation to 70% equities, 25% bonds, and 5% cash (still fairly conservative) you have a success rate of 85.39%, and a starting portfolio of $764,830.

If you do that and also lower your MER for your investments to .1% (which is still on the high side for this forum), you will have a 95.51% success rate, and a portfolio of $799,218 in 2027.

Food for thought.

[FiguringItOut]

Just curious -- where did you get your social security number from?   Because if you've been working for some time already and are planning to work at 75-85k salary level (adjusted for inflation) for another 10 years, your estimates seem pretty low.   My main working years when I was paying into SS were from 1999 to 2015 (I had a few years in my teens and during college where I earned credits but not  much money), and my estimated payout at age 62 (in 2030) is $1791 according to MDM's worksheet in the Case Study spreadsheet.

I use very conservative number for the simulation.  Based on SS website, if I start receiving SS at age 62, it will be between $1600 and 1700. 

[FiguringItOut]

hi FiguringItOut,

I ran your numbers with the 40k spend (I really like playing around with cFiresim).

Here's what I found:

As your numbers are currently (if I understand them right, that is!) you will have a 73% success rate, and average starting portfolio (in 2027) of $719,178.

However, your cash allocation is currently very high, as are your investment fees.

If you can change your allocation to 70% equities, 25% bonds, and 5% cash (still fairly conservative) you have a success rate of 85.39%, and a starting portfolio of $764,830.

If you do that and also lower your MER for your investments to .1% (which is still on the high side for this forum), you will have a 95.51% success rate, and a portfolio of $799,218 in 2027.

Food for thought.

Thank you! 
I had no idea how to input information into the simulation. 

Re: allocations - what I had in there is what I have right now, at this moment.  I don't plan to keep it that way, but don't know if there is away to have simulation adjust it over period of time.  I assume not.

Re: investment fees - that was a typo.  I meant to input 0.06, not 0.6, which is ridiculously high. I have 90% of my investments in VTSAX, VTI, and BND, except for current employer 401K which has fees of 0.55.  I'll be rolling that into Vanguard as soon as I'm out of here (looking for new job).

I reran simulation again changing things.  Since it doesn't take into account income and seems to be only concerned with savings.  I did the following:

$67K savings in 2018 - one time deposit.
$27K savings (401K/IRA/HSA) annually from 2017 to 2026 - when younger kid graduates college
$6K savings additional savings (cash) from 2017 to 2020 - when older one starts college.

Social Security of $14,400 ($1200/mo) starting at age 62 (year 2037).

Stop working (i.e. saving) at age 52 (year 2027)
Also changed allocation and fees and ending at my age of 90 instead of 100.  Someone suggested above that period that is too long does not pick up all periods on simulation.

So this gives me 100% success rate.
Changing retirement spending to $45K/yr give me 89% success rate.

I think I entered things correctly now. 
Also, my numbers are very conservative.  For example, based on SS site, my benefit at 62 will be $1620/mo, not $1400 that I'm using here.
The child support I'm receiving I only counted until younger kid graduates high school.  In reality, my ex is supposed to be paying child support until they both graduate college, so 4 more years.
I don't really know if I will stop working completely at age 52, or keep working full or part time and keep adding to savings or just be covering my living expenses. 
I may receive a significant inheritance some day (or I may not).
I may move to cheaper areas (Asia, Latin America) for part of the year, or slow travel, which should cost less than $40K/yr.

What I think all of this is telling me is that in the long run I will be ok even if I have to work a little longer.  I will not die homeless or in my cubicle.  And I shouldn't be a burden to my children.

Considering where I was financially only 2 years ago (deep dark hole of despair and hopelessness), this makes me very very happy.

[Mmm_Donuts]

Way to go! It sounds like you're on the right track.

As for changing the AA - why yes, you can do that with cFiresim :)

Just just need to change "Keep Allocation Constant" from "yes" to "no" (in the Initial Assets area of the form) and it'll give you more options for that. You can set a start date of where you're at now, and gradually change your AA to whatever you want it to be.