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General Discussion => Post-FIRE => Topic started by: freeatlast on December 01, 2020, 12:44:00 PM

Title: Firecalc success rate comfort level
Post by: freeatlast on December 01, 2020, 12:44:00 PM
Itís so hard to know how much we will need..... I especially think about this in the December spending period for holidays and giving when I see money going out the door.

I know how much I spend and how much I have.  I run Firecalc to see where I stand.

Just wondering - do folks on this board think that a 90 percent success rate on Firecalc is sufficient? Iím thinking thatís pretty good odds......

Thanks all and happy holidays!
Title: Re: Firecalc success rate comfort level
Post by: secondcor521 on December 01, 2020, 01:06:39 PM
I waited until I had 100% in FIREcalc with actual expenses measured over a six month period (then annualized, of course) (*) plus 5 years of expenses accessible for my Roth conversion ladder.  I then waited until my job environment turned ugly, then FIREd.

I think 90% can work for some people, but I think it would be wise to have a contingency plan for what you will do if history rhymes and you end up in one of the 10% failure cases.  Will you go back to work?  Tighten your belt?  Start SS early?  Sell assets?  If you can identify enough reasonable contingency plans that you'd feel comfortable doing - no fair saying you'd sell grandma's diamond ring if you wouldn't actually do it - then knock yourself out.

(*) I chose six months partly because I watched my expenses over several years on a monthly basis and noted that they varied by month but didn't vary much over six months.  Decembers are high for me too (Christmas and property taxes), and it's not rational to retire based on expenses from March to August.
Title: Re: Firecalc success rate comfort level
Post by: reeshau on December 01, 2020, 04:41:01 PM
There are a lot of people content with much lower numbers.  I haven't done a model / simulation in a couple of years--when I got serious about doing it, I was much more interested in the real world angle: annual budgets, investment allocations, withdrawal order, health insurance, etc.  But that is a tactical view.

I may get a hankering to check back with a model in a few years.  I am coming up on 1 year fire'd and could see re-engaging with a planning phase as I approach 59 1/2, and again around SS and Medicare decisions.
Title: Re: Firecalc success rate comfort level
Post by: FIRE 20/20 on December 01, 2020, 05:20:36 PM
Itís so hard to know how much we will need..... I especially think about this in the December spending period for holidays and giving when I see money going out the door.

I know how much I spend and how much I have.  I run Firecalc to see where I stand.

Just wondering - do folks on this board think that a 90 percent success rate on Firecalc is sufficient? Iím thinking thatís pretty good odds......

Thanks all and happy holidays!

I'm confused.  You say you know how much you spend, but you also say that somehow seeing money going out the door in December contributes to your uncertainty about how much you need.  Can you explain this apparent contradiction?

As for what success rate people want to see before pulling the plug, I've seen people FIRE anywhere from 30% to about 3 times an amount that would yield a 100% success rate.  I think this may be the most personal of the various aspects of FIRE.  There are a number of questions that factor into what number makes sense for each person, including but not limited to:

Do you have dependents who rely on you?  If so, then a much higher success rate is needed.
Does your budget include substantial fat you could trim, and would you and all who rely on that money be willing to cut those expenses if you suspect you're in a failure mode?
Are you willing and do you expect you'll be able to return to work if you suspect you're in a failure mode?  If yes, a lower success rate might be warranted.
Do you have a partner who could also return to work if needed?  If so, a lower success rate might be warranted because only one of you would need to find work to save a plan that requires unanticipated income.
How high is your income relative to expenses?  If it's very high, then working a bit longer can dramatically increase your odds.  If it's low, then a lot more work is required to get the odds up, and the more likely it is that you could pick up work that could bridge the gap if you find yourself in a failure mode.
How early are you considering FIRE?  The models are less valuable the further out they look.  It would be prudent to be a little more cautious if you're very young. 
Do you enjoy your work or not?  Are either your mental or physical health impacted significantly by working? You get the idea...

Everyone answers these questions differently.  I have a friend who has a child who will need support for her entire life.  My friend is very frugal and will probably FIRE, but he needs to be much more cautious than I do.  He must be very, very certain that he earns enough to support his daughter even after he and his wife are gone.  I have another friend who has a creative hobby that she could pretty easily monetize if she needed to, and she has no dependents.  She could probably FIRE with a 50% success rate and sell some of her work if it looks like things aren't going well.  I'd guess her annual expenses are about $30k, so just bringing in $10-20k from her hobby each year should easily bring her up to 100% success rate.

For me, I waited until I had a ~95% chance of success and then I worked an extra year.  And that success rate ignored my pension, my partner's pension, and both of our social security.  Why was I so conservative?  I was able to tailor the last year of my career to something interesting and low stress, and I essentially transitioned to part time in that easy role.  I also had a high paying job that would be impossible to re-enter after being out just a couple of years.  For me, just barely hitting 100% wasn't good enough because the percentages are based on the past and we don't know if the future will be enough like the past for the success rates to be valid.  If I had hated my job or if I thought I could re-enter my old career after 5-10 years or if I earned less money, then I would have quit earlier.  But in my case, the last year I worked was easy, fulfilling, low stress, about 32 hours a week, and allowed me to ease my way into FIRE while building up a substantial safety margin, and I knew I'd be locked out of high-paying work for good not long after I quit.  Your situation is different, so your answer will be different. 
Title: Re: Firecalc success rate comfort level
Post by: sparkytheop on December 02, 2020, 02:52:52 PM
I've run numbers for my MRA (57) and numbers for getting out early (hopefully around 51 or so for the best scenario for me, even though I'd be eligible at 46).  I aim to FatFIRE, because I want to travel frequently, hire household help (housekeeper, yard guy, handyman guy for maintenance and repair-- it would be really nice to hire all that out instead of having to continue doing it all myself).  I set spending to more than my current income, and I will need to spend a lot less for most retirement years (since I'll now longer be paying a mortgage or trying to get a house built at the same time).  I even up the spending again for late retirement years to account for in-home care or living in an assisted living or nursing home place.

My success rate at projected numbers is 100%.  I'm pretty happy with that.  If I had any other success rate, I'd need to know that I could easily reduce spending in lean years.
Title: Re: Firecalc success rate comfort level
Post by: SwordGuy on December 02, 2020, 03:03:15 PM
We have a mentally handicapped daughter and we're not young folks like some of you are.   So we had a need for a very high chance of success and with gobs of fallback positions that would protect us.    So I over-engineered our FI process.   Bigly.

The cost in extra years vs. the chance of leaving our daughter at the not-so-tender mercies and care of the government made that trade off really important to us.    We didn't want our mentally handicapped daughter to be a financial burden on our son, we wanted her to be a financial blessing instead.

I would have been happy to take higher risks without that.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 02, 2020, 04:05:06 PM
The factors that influence a 90% vs a 100% are nothing compared to the factors that influence the numbers you set for yourself in the first place.

That's means that the percentages spit out by Firecalc mean very little. It's great for comparing the relative impact of various factors, but absolutely abysmal at calculating actual risk.

If you input 40K of annual spending and you've got 1.5M saved, then Firecalc will tell you everything is fine. But what if your estimate of 40K is unrealistic? Fails to account for things like "unexpected expenses", etc?

Meanwhile, if you input 40K and have only 800K saved, you may look like you are much less secure than the previous guy with 1.5M. However, what if your annual spending is closer to 15K, and you padded that number with every possible emergency you could think of happening every year.
Chances are you would rarely actually spend anywhere near 40K, and would be far more secure than the previous guy.

It's the assumptions that go into your initial spending estimates that matter most, not the marginal factors that alter the calculator outputs.

Basically, estimate what you think you need, multiply that by 25X, and then from there estimate what your real risks are and whether you need to be more conservative or less.

If your estimated spending has huge buffer in it and you're cool with spending less when the markets are down, you have enormous wiggle room.

If you have relatively high fixed costs and very little buffer, then saving only 25X and using a 4% withdrawal rate could leave you vulnerable.

Essentially, 100% "success rate" could mean that you're good to go, but it could also mean that you've failed to assess your own situation very well. Firecalc can't figure that out for you.
Title: Re: Firecalc success rate comfort level
Post by: SwordGuy on December 02, 2020, 06:56:15 PM
@Malcat, you nailed it!
Title: Re: Firecalc success rate comfort level
Post by: 2sk22 on December 03, 2020, 05:14:05 AM
It's the assumptions that go into your initial spending estimates that matter most, not the marginal factors that alter the calculator outputs.

Basically, estimate what you think you need, multiply that by 25X, and then from there estimate what your real risks are and whether you need to be more conservative or less.

If your estimated spending has huge buffer in it and you're cool with spending less when the markets are down, you have enormous wiggle room.

@Malcat hits the nail on the head. Estimating expenses is the hardest part of FIRE'ing. I love this relevant quote from the famous physicist Richard Feynman:

Quote
The first principle is that you must not fool yourself, and you are the easiest person to fool.

If you really want to quit, it's tempting to ignore known expenses to come up with a sufficiently low expenditure.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 03, 2020, 05:24:13 AM
@Malcat, you nailed it!

I've repeated this many times, but FIRE simulation calculators are real math with made up numbers.

They only give an illusion of accuracy because they cannot capture the really important variables, like what the hell your "spend" estimate is based on.

Also, as I've said many times, they're based on an assumption about withdrawals that's completely insane. Absolutely no one, upon no one will spend exactly their planned withdrawal rate plus estimated interest year over year with no fluctuation. That's ridiculous, but it's exactly how the math is calculated.

It's all just rough guidelines, very rough guidelines, so the outputs are only marginally better than meaningless.

Again, great tool for understanding the relative impact of things. I would not have been able to make responsible choices without spending hours and hours with calculators figuring out which factors had the greatest magnitude of impact on my possible outcomes.

That's how I figured out that I would end up a lot wealthier if I focused on part time work that I enjoy, because time does the heaviest lifting.

Everyone needs to figure out their own priorities and risks, and playing with calculators is incredibly helpful with that. But not with predicting the future, that's just silly.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 03, 2020, 05:33:05 AM
It's the assumptions that go into your initial spending estimates that matter most, not the marginal factors that alter the calculator outputs.

Basically, estimate what you think you need, multiply that by 25X, and then from there estimate what your real risks are and whether you need to be more conservative or less.

If your estimated spending has huge buffer in it and you're cool with spending less when the markets are down, you have enormous wiggle room.

@Malcat hits the nail on the head. Estimating expenses is the hardest part of FIRE'ing. I love this relevant quote from the famous physicist Richard Feynman:

Quote
The first principle is that you must not fool yourself, and you are the easiest person to fool.

If you really want to quit, it's tempting to ignore known expenses to come up with a sufficiently low expenditure.

It goes both ways, and there are far more ultra conservative be over estimators here than the other way around.

But yes, what's sad about the burnt out people is that well before FI, they have ample resources to leave their jobs, but they don't feel comfortable doing so until a calculator spits out a number that makes them feel safe, even though it's largely nonsense.
Title: Re: Firecalc success rate comfort level
Post by: jeroly on December 03, 2020, 06:14:46 AM
The biggest risk to success isnít assuming a lower than actual spending pattern.
Itís assuming a lower than actual inflation rate.
I ran firecalc with a set of assumptions on savings and spending. With an assumed 3% inflation rate it had 86% success. With the same assumptions except for a 6% assumed inflation rate, it had a 12% success rate.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 03, 2020, 06:20:18 AM
The biggest risk to success isnít assuming a lower than actual spending pattern.
Itís assuming a lower than actual inflation rate.
I ran firecalc with a set of assumptions on savings and spending. With an assumed 3% inflation rate it had 86% success. With the same assumptions except for a 6% assumed inflation rate, it had a 12% success rate.

Ah, but it's the same nonsense.

In what world will inflation remain the exact same 6%, year over year, for decades on end?

And in what same world does a person *not* adjust their discretionary spending when the cost of things sky rockets?

You've shown it's a great tool for understanding the relative impact of inflation, but not much more.
Title: Re: Firecalc success rate comfort level
Post by: jeroly on December 03, 2020, 06:34:25 AM
The biggest risk to success isnít assuming a lower than actual spending pattern.
Itís assuming a lower than actual inflation rate.
I ran firecalc with a set of assumptions on savings and spending. With an assumed 3% inflation rate it had 86% success. With the same assumptions except for a 6% assumed inflation rate, it had a 12% success rate.

Ah, but it's the same nonsense.

In what world will inflation remain the exact same 6%, year over year, for decades on end?

And in what same world does a person *not* adjust their discretionary spending when the cost of things sky rockets?

You've shown it's a great tool for understanding the relative impact of inflation, but not much more.

If youíve created a budget with a lot of fat in it, sure you can cut inflation-adjusted spending.  But how can you eat less bread when the cost of bread is $10,000/loaf if youíve set out a lean FIRE budget and your stash hasnít kept up with inflation?

The assumption that inflation is a constant 6%/year, year after year... yes that is unrealistic, but thatís not really the point.  If you take a geometric average of a 6% rate you (probably) mostly wind in in the same place. It would be an interesting study to look at the inflationary equivalent of sequence of returns risk.
Title: Re: Firecalc success rate comfort level
Post by: reeshau on December 03, 2020, 06:54:47 AM
The assumption that inflation is a constant 6%/year, year after year... yes that is unrealistic, but thatís not really the point.  If you take a geometric average of a 6% rate you (probably) mostly wind in in the same place. It would be an interesting study to look at the inflationary equivalent of sequence of returns risk.

There is no inflationary equivalent of sequence of returns risk.  You should be considering your real rate of return, which is net of inflation anyway.  It's baked in.  I do admit, people mostly think of it as "lousy markets," but that's a mental shortcut, not a gap in the definition.

In fact, it's the defining moment of the 4% rule.  The minimum withdrawal is not defined by the 1929 crash + Great Depression.  It is actually retirees in the late 1960's, who then faced the stagflation of the 1970's.
Title: Re: Firecalc success rate comfort level
Post by: swashbucklinstache on December 03, 2020, 07:59:09 AM
I'd agree that anything above 90% is good enough that you should be focused on the other factors. The big one mentioned is how accurate are your expenditure estimates. I'd further include thinking about how lumpy those estimates are, particularly in the early years against a backdrop of sequence of returns risk. Most people will naturally do this, e.g. work an extra x months and replace their roof.

The other thing to consider is emotion. It's easy to believe in the obvious 4% successes. Will you be enjoying life if your stash is down X% three years into FIRE, if the odds of firecalc success have dropped 8% to a still really high percentage? It might be worth working one more year rather than biting your nails for ten, if you're the type. Only you can know that answer.

Another option is VPW, particularly for those with a budget with fat to trim.
Title: Re: Firecalc success rate comfort level
Post by: freeatlast on December 03, 2020, 11:31:17 AM
Thanks!!!

Seems like most people do wait til 100 percent.... but I burned out before I made it quite there....

Since I have already FIREd, tried part time and not for me. So I am going to have to make 90 percent Firecalc work. Biggest unknown is healthcare and length of life. My 90 percent includes nothing for social security (I donít think FirecCalc includes SS) and I do think there will be a little there when I reach it (Iím turning 52 shortly). So, I guess that is my ďfatĒ in my picture. Also, part of my savings is in a single family rental. So for Firecalc, I used the market value of that rental, but in actuality it throws off income while the market value(hopefully) stays stable or increases. I havenít found a good calculator that takes real property into account.

Thank you again for the input.
Title: Re: Firecalc success rate comfort level
Post by: sparkytheop on December 03, 2020, 12:12:21 PM
Firecalc does include social security if you input info.

I find it more useful than other calculators because I can add my pension (many don't have that function), I can change spending in later years (I play with needing extra care around age 75 or 80 and beyond, which is going to cost a lot more than living in a paid off house), and can also account for extra money I'll be receiving between ages 57 and 62 ("snowflake money").

My pension will, for the most part, cover all my bills and regular expenses (until I end up with poor health, can't live on my own, whatever). 

I use it to see more than "can I eek by with leanFIRE dreams", but "can I aim for extravagant travel and other spending in the early years, covering extra expenses of old age, and not be a financial burden to my son?"  My retirement budget has a lot of "fluff" spending (again, retirement spending of more than I make now, while I currently make six figures and have a mortgage and other expenses that will be eliminated before retirement.)

It's a great tool to add to an arsenal of tools, but I wouldn't rely on it if I was trying to make a slim retirement budget "work".  No retirement tool can predict the future, so I'm not concerned about that argument against it (otherwise, you could jump into "retirement calculators are worthless!" and I'm not there.)  It's definitely a fun tool to play with when you are looking at a large retirement income and decently long life expectancy.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 03, 2020, 01:56:31 PM
The biggest risk to success isnít assuming a lower than actual spending pattern.
Itís assuming a lower than actual inflation rate.
I ran firecalc with a set of assumptions on savings and spending. With an assumed 3% inflation rate it had 86% success. With the same assumptions except for a 6% assumed inflation rate, it had a 12% success rate.

Ah, but it's the same nonsense.

In what world will inflation remain the exact same 6%, year over year, for decades on end?

And in what same world does a person *not* adjust their discretionary spending when the cost of things sky rockets?

You've shown it's a great tool for understanding the relative impact of inflation, but not much more.

If youíve created a budget with a lot of fat in it, sure you can cut inflation-adjusted spending.  But how can you eat less bread when the cost of bread is $10,000/loaf if youíve set out a lean FIRE budget and your stash hasnít kept up with inflation?

The assumption that inflation is a constant 6%/year, year after year... yes that is unrealistic, but thatís not really the point.  If you take a geometric average of a 6% rate you (probably) mostly wind in in the same place. It would be an interesting study to look at the inflationary equivalent of sequence of returns risk.

I mean...c'mom, you can't give me the example of bread and not expect me to be cheeky and say that you could learn to bake bread.

Point being, if someone is working on a very lean and very tight budget, then yeah, they're going to have enormous risk of having to generate more income at some point in their retirement, but that brings up a whole other factor that the simulation can't account for, which is just how easily the person can generate income and willing they are to do it.

Now, if you believe that inflation will average out to 6% for the next several decades, then yeah, you should plan for that.

People should plan for whatever risks they are most concerned about, and those who will have the hardest time generating income in the future if needed should be building more resiliency and buffers into their plans.

Again, it all comes down to the individual picture, which a calculator really can't capture. Your example of inflation beautifully points out how it can illustrate the relative risks though.
Title: Extra Info in ForeCalc? Re: Firecalc success rate comfort level
Post by: freeatlast on December 04, 2020, 09:42:16 AM
How do you input extra info into FIREcalc like social security?  I thought it only took amount needed, savings and years.....

Thanks!!!!!
Title: Re: Extra Info in ForeCalc? Re: Firecalc success rate comfort level
Post by: FIRE 20/20 on December 04, 2020, 09:47:30 AM
How do you input extra info into FIREcalc like social security?  I thought it only took amount needed, savings and years.....

Thanks!!!!!

At the top, click the "Other Income/Spending" tab.  There is a section to input your SS, your spouse's SS, and things like rental income.  Make sure you input data for all the tabs, like the "Not Retired?" tab. 
Title: Firecalc success rate comfort level
Post by: rmorris50 on December 06, 2020, 04:50:12 PM
Skimming this thread reminds me of two sayings:

ďAll models are wrong, but some are usefulĒ

ďPlans are useless, but planning is invaluableĒ

Also, one of our greatest strengths as humans is adaptability.

If youíre close enough to fire to have 90% success, youíll be ok. Youíll see failure coming long before it happens and adapt. Your worse case scenario will be most other peoplesí norm. Cut expenses, go be a Starbucks barista to supplement cash, sell the house and get a smaller place, etc.

Adapt.


Sent from my iPhone using Tapatalk
Title: Re: Firecalc success rate comfort level
Post by: Much Fishing to Do on December 08, 2020, 06:05:17 AM
At 90% I think there is a lot more chance of potential failure due to unforeseen changes in expenses going forward and/or longevity.

In the end I would feel the need to hit 100% only if I was lean firing.  Maybe plug in a lean fire expense number just to make sure that's hitting 100%.  For better results with this (given you're gonna be spending more and then at some point realize you might need to cut) I really like the spending flex/threshold number option in the "Will My Money Survive Early Retirement?" calculator.  In the end if I FIREd in a year like 2000 I think I would have cut back at some points to keep the portfolio in good shape, and if there's fat to cut so be it.
Title: Re: Firecalc success rate comfort level
Post by: MasterStache on December 08, 2020, 06:35:38 AM
I absolutely agree with @Malcat as well. In fact I ran simulations a couple of times years ago, but haven't looked at it since. Calculators are great at numbers. Unfortunately real life, ehhh not so much. Variables are just that. Flexibility really is the key. 

Discussing Firecalc always reminds me of a couple quotes from Murphy's Laws of War:
- No plan survives the first contact intact
- Perfect plans aren't
Title: Re: Firecalc success rate comfort level
Post by: xbdb on December 11, 2020, 11:24:27 AM
I absolutely agree with @Malcat as well. In fact I ran simulations a couple of times years ago, but haven't looked at it since. Calculators are great at numbers. Unfortunately real life, ehhh not so much. Variables are just that. Flexibility really is the key. 

Discussing Firecalc always reminds me of a couple quotes from Murphy's Laws of War:
- No plan survives the first contact intact
- Perfect plans aren't

Everybody has a plan until they get punched in the mouth - Mike Tyson
Title: Re: Firecalc success rate comfort level
Post by: ysette9 on December 11, 2020, 03:30:08 PM
More than just be happy with a success percentage, I did modeling to understand how tweaking different variables by little bits impacted success. I wanted to understand how robust my 90% success rate (or whatever) really was. That gave me more confidence in our plan than anything else.

For example, my plan has extra robustness because: we will get a small amount of SS, Iíll get a small pension, we are willing to cut our spending by up to 10% in a down market, and we are employing a reverse equity glide path for our asset allocation, starting at 40% bonds and then slowly increasing our stock back upwards of 90% after the first ten successful years of retirement.

Being willing to be a little flexible with spending combined with the reverse equity glide path add a lot of robustness to the overall picture.
Title: Re: Firecalc success rate comfort level
Post by: norajean on December 11, 2020, 03:43:25 PM
Each person must make their own assumptions. But given the criticality of retirement funding, most people are conservative. A 10% chance of running short of funds at age 85 is too high for most. Age 85 can be when you need the most cash flow if you end up in an assisted living situation. And no, you are not going back to work at that point.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 11, 2020, 05:05:20 PM
Each person must make their own assumptions. But given the criticality of retirement funding, most people are conservative. A 10% chance of running short of funds at age 85 is too high for most. Age 85 can be when you need the most cash flow if you end up in an assisted living situation. And no, you are not going back to work at that point.

Sure, but FIRE calculators can't actually tell you if you have a 10% chance of failure. That's not how they work.
Title: Re: Firecalc success rate comfort level
Post by: markbike528CBX on December 11, 2020, 09:02:22 PM
For those wringing your hands about 10%  chance of failure, @CCCA from this forum has put a calculator that includes your very likely (at some point) death.

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

FWIW if you are male then at 85 you only have a 1/3 chance of still being alive to worry.

If you toggle the "death" off, then you get answers similar to all the other calculators that assume will live to an exactly specified age.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 12, 2020, 08:09:51 AM
For those wringing your hands about 10%  chance of failure, @CCCA from this forum has put a calculator that includes your very likely (at some point) death.

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

FWIW if you are male then at 85 you only have a 1/3 chance of still being alive to worry.

If you toggle the "death" off, then you get answers similar to all the other calculators that assume will live to an exactly specified age.

I repeat though, what calculators spit out is NOT a prediction of 10% chance of failure. That is an ENTIRELY nonsense concept.

What they produce is a percentage of incidence where a plan will fail under a specific set of circumstances based on market performance in the past. The assumptions in those circumstances don't mimic any actual human being's spending patterns, so it's not even remotely accurate.

Think about is from the reverse, if someone gets a 100% safe result, does that represent the level of risk that they'll never run out of money? Of course it doesn't! That conclusion would be insane. Utterly and completely irrationally insane.

There is so much that the calculator can't account for, and that's not even touching that it can't predict future market behaviour.

Let's assume that future markets behave, because that's the fundamental leap of faith we all need to make to retire. So let's assume they fluctuate exactly in line with the existing historical models. Cool.

Okay, what's still not accounted for is that spending can change, that the more money you spend, the more security you have baked in because you have the ability to dramatically cut costs.

If I'm living bare bones on a sub 20K budget, but I have enough buffer to generate a 100% success result, am I more secure than someone living a ridiculously lux life on 200K, but generating a 90% success rate?

Well, if shit hits the fan, my 20K budget has a few grand wiggle room here and there. Meanwhile, on my 200K budget, I can sell my McMansion at a major loss and one or two of my sports cars and end up with an additional lump sum a few times larger than my 20K budget self retired on in the first place.

All I have to do in my 200K life is give up my champagne and caviar lifestyle and drop my expenses down to a still luxurious sub 100K spend, and I'm suddenly drowning in more money than I could possibly need.

Now, let's look at personal risk, which is FAR more realistic than market risk anyway. Let's say I have a stroke that significantly compromises my function. This is a far more likely risk for most people than the markets doing something truly out of whack.

On my 20K budget, I don't have a huge ton of wiggle room to afford care, or maybe even more accessible living quarters, and could very easily end up bankrupt. On my 200K budget, I can sell all the cars, the McMansion, cancel the club memberships, skip the international first class travel, and divert my resources to securing what I need, while possibly even lowering my overall spending, despite buying the Porsche of wheelchairs.

I'm being extreme to make a point, but the point matters. People change their lives according to their financial circumstances, and they change their finances according to their life circumstances. This is the MOST predictable of human behaviors, and yet, the calculator has no capacity to account for it, and therefore no capacity to account for budget flexibility, which is ORDERS OF MAGNITUDE larger a factor in predicting success than most of what the calculators factor in. 

Let's also examine the concept of the 10% failure as presented above. Let's say the calculator does predict the future and that somehow magically leads to a scenario where the person ends up 85 and out of money.

What kind of person just passively sits back and let's that happen? Certainly not the kind of person who runs their finances through a FIRE sim calculator.

Are we imagining that our mathematically inclined Mustachian retires with a tight budget because an online calculator spits out 90% and they shrug and say "good enough" and then never ever run those numbers again?

They just peacefully spend 4% +estimated inflation for years on end never checking their account balances or market performance until one day at 85 they try to pay for their blood pressure medication only to see "insufficient funds" on the machine, and then finally after decades login to their accounts and say "WTF?!!! An online calculator once said I would probably be fine! Holy shit, I guess this is that 10% I should have worried about!!!"

It's nonsense. Pure nonsense.
Title: Re: Firecalc success rate comfort level
Post by: Mmm_Donuts on December 12, 2020, 08:20:44 AM
There was a really great thread a while back from Sol (I think ) about how it's safe to retire on anywhere above a 50% success rate, if you believe the future will be anything like the past was, on average. It's been a while since I've read it so may be misremembering, does anyone else know what I'm talking about, or remember this thread?

I'll try to find it.

ETA this might be it? not sure, but there's still some helpful info here:

https://forum.mrmoneymustache.com/ask-a-mustachian/firecalc-and-cfiresim-both-lie/
Title: Re: Firecalc success rate comfort level
Post by: shuffler on December 12, 2020, 10:56:40 AM
There was a really great thread a while back from Sol (I think ) about how it's safe to retire on anywhere above a 50% success rate ... does anyone else know what I'm talking about, or remember this thread?

Maybe this?


Of course, that assumes that the future will be no worst than the past.

If you assumed that the future would be no worse than the past, then you would target a 50% success rate.  Targeting 80% success means that you are expecting the future to be as bad as the worst 20% of historical periods.  Targeting 100% success, like many here do, means you expect the future to be worse than anything that has ever happened, including world wars, oil embargoes, presidential assassinations, and global catastrophic economic collapse.  All of that has happened.
Title: Re: Firecalc success rate comfort level
Post by: Mmm_Donuts on December 12, 2020, 01:45:58 PM
Shuffler - thatís the one. Thank you. That whole thread is really enlightening.
Title: Re: Firecalc success rate comfort level
Post by: norajean on December 12, 2020, 02:11:01 PM
4% assumes the worst possible historic scenario. If you are happy with an average scenario I think you can use an SWR of about 7%.
Title: Re: Firecalc success rate comfort level
Post by: Mmm_Donuts on December 12, 2020, 02:16:28 PM
Another way to think about it:

I would just note, however, that in addition to assuming the future is no worse than the past, this idea also assumes that every retirement has an equal chance of success regardless of what market conditions exist when the retirement commences

An 80% success rate never means that 20% of this year's retirees will fail, it generally means either 100% or 0% of this year's retirees will fail and you have an 80% chance of this being one of the good 100% years.  At least it's usually been pretty obvious when you're headed towards one of the 20% failure scenarios, so that's something to be glad about.

Title: Re: Firecalc success rate comfort level
Post by: chevy1956 on December 12, 2020, 02:47:45 PM
It's nonsense. Pure nonsense.

People play games with success rates. A good example is the ERE idea of getting your expenses really low and then getting to a 3% WR. Talk about having a plan that is completely choreographed to meet the math of ER. I feel that these plans have a high chance of failure because of the fact that they are dependent on really low expenses. What if your circumstances change ? The point being that a 3% WR with a 100% success rate may be built on quicksand. It's not a true representation of the risk within your ER plan.

I track my expenses accurately. I have a good feel for my expenses. I also have a couple of points of buffer. I should be fine without using some of my buffer but if I have too it's cool.

I was continually increasing my budget because I'd continually come up with new potential expenses. At some point I just said I've got enough and I'm going to retire. I figure I'm going to be fine but I'll just adjust if I have too.

Another thing that changes is that your expenses go down. I went out this week and saw a friend. We had a hamburger and some beers. It cost $50. This is crazy stuff for me. I don't even enjoy it that much. I would do stuff like this more when I was working. Guys would state let's go and get chicken wings and beer. It was a $50 lunch time event easily. Then there are work clothes. Then there are transport costs. I also was a low spender on these categories.

Expenses aren't so easy to manage especially when you have 3 kids.

Title: Re: Firecalc success rate comfort level
Post by: secondcor521 on December 12, 2020, 02:58:32 PM
I think most people who end up on a site like this one do a fairly deep dive on their personal situation and what their numbers say before FIREing.

Most also seem to naturally build in as much buffer as they need to in order to feel comfortable pulling the trigger.  Some ignore SS, or ignore an asset, or add in extra expenses that they can do without, or overestimate inflation or underestimate returns.  Some do all of those.

Some people are desperate to leave (or have to leave due to medical reasons or other reasons) and thus don't build up as much of a buffer as others would, or as much as they might in a different situation.
Title: Re: Firecalc success rate comfort level
Post by: MasterStache on December 13, 2020, 06:37:01 AM
"60% of the time, it works every time"
Title: Re: Firecalc success rate comfort level
Post by: tj on December 13, 2020, 09:44:44 AM
4% assumes the worst possible historic scenario. If you are happy with an average scenario I think you can use an SWR of about 7%.

This seems extremely optimistic to me, if one uses a high SWR like this, depending on one's age and proximity to SS, one must be willing to go back to work to generate income if needed.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 13, 2020, 10:02:41 AM
4% assumes the worst possible historic scenario. If you are happy with an average scenario I think you can use an SWR of about 7%.

This seems extremely optimistic to me, if one uses a high SWR like this, depending on one's age and proximity to SS, one must be willing to go back to work to generate income if needed.

*Sigh*

Yes, if they blindly spend 4% +estimated inflation year over year with total disregard for market conditions even if the market performs poorly for years on end and they chip away at their principle with reckless disregard for what's happening to the state of their savings.

Which is behaviour that no one here would do.

It is fair to say that the higher your WR, the more flexible you need to be either in terms of reducing spending or adding earning of both when needed.

Simply put, the more money you have and the more money you spend on unnecessary luxuries that you can comfortably give up, the less likely you will need to generate more income in retirement.

The lower your savings and the leaner your expenses, the more likely you are to need to generate more income at some point.
Title: Re: Firecalc success rate comfort level
Post by: Blissful Biker on December 13, 2020, 10:24:11 AM
I agree with the theme that firecalc probabilities are only a rough guide but I do find them quite useful for planning.

The effort required to move from 90% to 100% is significant and has diminishing returns as you get closer and closer to 100%. I am targeting a 90% success rate, using the withdrawal plan of consistent inflation adjusted withdrawals, and that feels plenty conservative for me.  In reality I will vary my withdrawals based on market conditions and achieve the 100%.

I still need to research and select a variable withdrawal plan.  I see there are a number to choose from.

Being too conservative can cost years of my precious life.
Title: Re: Firecalc success rate comfort level
Post by: tj on December 13, 2020, 11:54:51 AM
4% assumes the worst possible historic scenario. If you are happy with an average scenario I think you can use an SWR of about 7%.

This seems extremely optimistic to me, if one uses a high SWR like this, depending on one's age and proximity to SS, one must be willing to go back to work to generate income if needed.

*Sigh*

Yes, if they blindly spend 4% +estimated inflation year over year with total disregard for market conditions even if the market performs poorly for years on end and they chip away at their principle with reckless disregard for what's happening to the state of their savings.

Which is behaviour that no one here would do.

It is fair to say that the higher your WR, the more flexible you need to be either in terms of reducing spending or adding earning of both when needed.

Simply put, the more money you have and the more money you spend on unnecessary luxuries that you can comfortably give up, the less likely you will need to generate more income in retirement.

The lower your savings and the leaner your expenses, the more likely you are to need to generate more income at some point.

We obviously have no idea what behavior the variety of people here would have. How many people were invested through 2000-2002 and 2007-2009?  Everyone is different. Behaviorally, a lot of people sell at the bottom which is irrational. Would people here know better? Hopefully, but not necessarily.

I personally found it very hard to spend money when I was not working because I know I did not have enough to be permanently retired, and I did not know when more money would come rolling in. My recollection is that when I decided to take a career gap, I had one year of cash, one year of bonds plus other investments.

The whims of the markets did not have much of an influence.  My prediction was that I would get bored before I ran out of cash, and that was mostly true. Actually the first job I found wasn't a good fit, so I quit that one and had another gap, I initially enjoyed having the free time again, but then I was bored again and it was some months before I got another job offer. I regret that I did not do more traveling during those gaps because I had the time then and now I don't (and now even if I had the time, I wouldn't be traveling because there is a pandemic). There was also some guilt that my dad was still working so should I really be not working in prime earning years? Now that my dad has retired, perhaps it would be different in the future.

I'm hopeful that life would be different in a true retirement scenario when I have enough money to not work in perpetuity, or even that it would be different in a gap scenario where I have someone else to share the time with and don't have to rely solely on myself 24/7 for life planning.

Regardless, I think it can be a very big mental shift to go from accumulation phase to the decumulation phase, which has nothing to do with finances, SWR's, money, or any of it. When you are a natural saver, and your hobby is optimizing your personal finances, that's not going to be a fulfilling retired life. I found it to be very odd to to go from saving to spending.

Would I feel comfortable financially chucking a career the day that I hit 25x expense? Yes, I probably would, with the caveat that the expenses were inflated to account for ACA going away, and taxes on the income that needed to generate to pay the expenses, and big ticket replacements. I think too many people just go based off their current expenses which might under-predicts the future expenses. On the other hand, it really will depend at what age I am at when that occurs. Because, If I stay until 57,  I get the retiree health insurance and the immediate pension. It works out that the longer i am willing to work, the less I need to invest for retirement.  But I think it also doubles that the longer I am willing to work, the longer I have to kick the can down on the road on designing a retirement life. Is it financial question or is it really something else?

I think @Nords post from almost 12 years ago still rings true. For me at least. I found it very difficult to develop a retirement life at a very pre-retirement age, particularly when my personal life had not been established in the way that I would prefer:

https://www.early-retirement.org/forums/f30/the-fog-of-work-42328.html

I think a 7% SWR is too risky, but then again,  there's a 150+ page thread of people who retired on very little by default, not by design, and certainly the average retiree does not have the luxury to math it out:  http://www.city-data.com/forum/retirement/653489-retiring-literal-shoestring-support-group.html
Title: Re: Firecalc success rate comfort level
Post by: Villanelle on December 13, 2020, 12:46:20 PM
Itís so hard to know how much we will need..... I especially think about this in the December spending period for holidays and giving when I see money going out the door.

I know how much I spend and how much I have.  I run Firecalc to see where I stand.

Just wondering - do folks on this board think that a 90 percent success rate on Firecalc is sufficient? Iím thinking thatís pretty good odds......

Thanks all and happy holidays!

I'd be good with 90%.  That's based in large part because I plan for a fairly fat, or certainly overweight, FIRE.  So in a very down year, I wouldn't continue to blindly withdraw 4%.  I'd downgrade travel plans for the year, cut back on holiday gifts, push off a new sofa or new (to me) car purchase another year, etc.   And suddenly, I'm spending $5000 less.  Easy day.  In a horrifically down year, maybe I also cut back on charitable donations and supporting local artists and small businesses and that's probably another $1000+.  Add some meatless Mondays and a few other hacks, and probably another $1000.

Humans are not robots.  We can adapt and adjust.  We can see that the markets is down and decide to withdraw 3.5% instead of 4%.  If someone has a very lean FIRE planned, then coming up with $7000 in cuts clearly won't be easy.  But for us, it wouldn't be an issue and likely wouldn't feel like deprivation for a couple years. 

So that 90% likely edges closer to 95% or 99%.
Title: Re: Firecalc success rate comfort level
Post by: Nords on December 13, 2020, 01:08:45 PM
We obviously have no idea what behavior the variety of people here would have. How many people were invested through 2000-2002 and 2007-2009?  Everyone is different. Behaviorally, a lot of people sell at the bottom which is irrational. Would people here know better? Hopefully, but not necessarily.
[...]
Humans have to deal with the emotional aspect (behavioral finance) of financial independence as well as the math & logic part.

The 4% SWR is all about math & logic.  It doesnít bolster self-confidence or help people sleep better at night.  It does not help someone shift from an attitude of scarcity to one of abundance. 

However Iíve invested through 2000-02 and 2007-09, as well as 1981, 1987, 1998, and 2020.  By the time youíve been through those experiences (with an asset allocation plan and perhaps a Bogleheads Investment Policy Statement) youíre either gaining confidenceó or youíre permanently terrified into staying in the workforce.

At what point do you shift from scarcity to abundance?  Reaching exactly 25.0000x annual spending?  Deciding that 20x offers some sabbatical time?  26x for FI with even more margin?  33x?  50x? 

After 18 years of retirement, my spouse and I are >60x and itís still going up.  Weíre working hard on legacy and philanthropy.

I think my abundance shift happened after 2012, and by then we were back above 30x.  At that point it was more about being comfortable with volatility rather than worrying about the 4% SWR.  Ironically during that first decade of retirement we were always well within the bounds of the 4% SWR.  Even though our withdrawal rate might have risen to 7% in 2002, 2008, and 2009, there was still plenty of portfolio to support a recovery.

Ironically, the 4% SWR doesnít guarantee 100% successó that can realistically only be done with an annuity.  For most Americans, Social Security (and its COLA!) may be all the annuity income thatís necessary. 

For others (American or the rest of the world) a single-premium immediate annuity might add to their comfort level.  Even then weíll have people who are far beyond the 4% SWR and still wondering whether 2% is conservative enough or whether the stock market will implode or whether <insert extinction event here>.

My prediction was that I would get bored before I ran out of cash, and that was mostly true.

Actually the first job I found wasn't a good fit, so I quit that one and had another gap, I initially enjoyed having the free time again, but then I was bored again and it was some months before I got another job offer.

I regret that I did not do more traveling during those gaps because I had the time then and now I don't (and now even if I had the time, I wouldn't be traveling because there is a pandemic).

There was also some guilt that my dad was still working so should I really be not working in prime earning years? Now that my dad has retired, perhaps it would be different in the future.

I'm hopeful that life would be different in a true retirement scenario when I have enough money to not work in perpetuity, or even that it would be different in a gap scenario where I have someone else to share the time with and don't have to rely solely on myself 24/7 for life planning.

Regardless, I think it can be a very big mental shift to go from accumulation phase to the decumulation phase, which has nothing to do with finances, SWR's, money, or any of it.

When you are a natural saver, and your hobby is optimizing your personal finances, that's not going to be a fulfilling retired life. I found it to be very odd to to go from saving to spending.

... with the caveat that the expenses were inflated to account for ACA going away, and taxes on the income that needed to generate to pay the expenses, and big ticket replacements.

I think too many people just go based off their current expenses which might under-predicts the future expenses. On the other hand, it really will depend at what age I am at when that occurs. Because, If I stay until 57,  I get the retiree health insurance and the immediate pension.

It works out that the longer i am willing to work, the less I need to invest for retirement.  But I think it also doubles that the longer I am willing to work, the longer I have to kick the can down on the road on designing a retirement life.

Is it financial question or is it really something else?
Iíve broken your quote into smaller chunks to highlight how little this is about the finances... and how much itís about moving from the workplace toward a different (still fulfilling) life.  If you canít design a more fulfilling life then you might as well stay in the workplace.  You might not be happy but you could be less unhappy.

I think @Nords post from almost 12 years ago still rings true. For me at least. I found it very difficult to develop a retirement life at a very pre-retirement age, particularly when my personal life had not been established in the way that I would prefer:

https://www.early-retirement.org/forums/f30/the-fog-of-work-42328.html
Weíre going on 13 years now!  I wouldnít have picked that post to be the most popular lifestyle post on the blog.
https://the-military-guide.com/the-fog-of-work/

I think youíve hammered the financial part into the ground, and youíre ready to refocus on the lifestyle.  Your mental/emotional shift has to go from leaving the workforce (and then being bored) to designing a lifestyle which still offers autonomy, complexity, challenge, and fulfillment.  If you canít make the time to do it during your working years, at least you could take a look at Ernie Zelinskiís Get-A-Life Tree:
https://the-military-guide.com/one-year-syndrome/
http://bestretirementquotes.blogspot.com/2009/10/get-life-tree-great-retirement-planning.html

Finally, although Iím only halfway through Designing Your Life, Iím very impressed with what Iíve read so far.  Itís a process, not a goal line.
https://www.amazon.com/Designing-Your-Life-Well-Lived-Joyful/dp/1101875321/
Title: Re: Firecalc success rate comfort level
Post by: tj on December 13, 2020, 01:44:51 PM
Quote

Finally, although Iím only halfway through Designing Your Life, Iím very impressed with what Iíve read so far.  Itís a process, not a goal line.
https://www.amazon.com/Designing-Your-Life-Well-Lived-Joyful/dp/1101875321/

Thanks for this recommendation - I checked and there's even an eBook loan available from the library.

I did read one of Ernie Zellinski's books before i took my career break - and I remember it being quite helpful.

For me, there was a disconnect in between the preparation of my career break and then the actual career break.  The preparation was all very exciting and very fun. It created this epic idea that was something to look forward to. The plan was to do all this solo travel for all this time and do all these things, but then I very quickly learned that I did not enjoy solo travel at all. It felt extremely lonely.  And I did not have a plan B lined up and so it very much felt like failure.

I obviously did do some sightseeing in new places, which was great, but I also spent a significant amount of time alone in a room, and that was no bueno.
Title: Re: Firecalc success rate comfort level
Post by: markbike528CBX on December 13, 2020, 03:36:37 PM
Quote

Finally, although Iím only halfway through Designing Your Life, Iím very impressed with what Iíve read so far.  Itís a process, not a goal line.
https://www.amazon.com/Designing-Your-Life-Well-Lived-Joyful/dp/1101875321/

Thanks for this recommendation - I checked and there's even an eBook loan available from the library.

I did read one of Ernie Zellinski's books before i took my career break - and I remember it being quite helpful.

For me, there was a disconnect in between the preparation of my career break and then the actual career break.  The preparation was all very exciting and very fun. It created this epic idea that was something to look forward to. The plan was to do all this solo travel for all this time and do all these things, but then I very quickly learned that I did not enjoy solo travel at all. It felt extremely lonely.  And I did not have a plan B lined up and so it very much felt like failure.

I obviously did do some sightseeing in new places, which was great, but I also spent a significant amount of time alone in a room, and that was no bueno.

It is a little late now for sightseeing suggestions, but I did a solo tour that I called my "Ultra-Mega-Geeky Tour".  I had no significant other and wasn't planning on one anytime soon, so I saw all the places that _I_ wanted to check out and realized virtually _no one_ else would want to do.
New Mexico:
National Atomic Museum: https://www.nuclearmuseum.org/
The Very Large Array, Socorro NM : https://public.nrao.edu/visit/very-large-array/  - just as spooky in person as in the movies
Trinity Site: https://www.wsmr.army.mil/Trinity/Pages/Home.aspx   - only open 2 days a year
Roswell: https://roswell-nm.gov/348/Robert-H-Goddard-Dreamer-Tinkerer-Pionee  at which museum I met self-described aliens
 (the security guy said he had only been there 20 years, so he thought that made him an alien -- close enough for me)
Los Alamos Museum: https://www.lanl.gov/museum/   
What you say?   Of COURSE I borrowed a Geiger counter from work to take along on the trip.

Learned:  I finally understood why Goddard ran his motors really rich (black smoke out the back) as he had  continual problems with throat burnout. 
Half a Megaton of woop-ass fits into an overgrown coffee can. 
The dose rate at 30,000ft is 5 times the dose rate at a 60 year old nuclear ground zero.

Also, never say never, as my wife might want to do this trip :-)  Although we might have to include the artsy stuff in Santa Fe.
Title: Re: Firecalc success rate comfort level
Post by: tj on December 13, 2020, 03:44:46 PM
Quote

Finally, although Iím only halfway through Designing Your Life, Iím very impressed with what Iíve read so far.  Itís a process, not a goal line.
https://www.amazon.com/Designing-Your-Life-Well-Lived-Joyful/dp/1101875321/

Thanks for this recommendation - I checked and there's even an eBook loan available from the library.

I did read one of Ernie Zellinski's books before i took my career break - and I remember it being quite helpful.

For me, there was a disconnect in between the preparation of my career break and then the actual career break.  The preparation was all very exciting and very fun. It created this epic idea that was something to look forward to. The plan was to do all this solo travel for all this time and do all these things, but then I very quickly learned that I did not enjoy solo travel at all. It felt extremely lonely.  And I did not have a plan B lined up and so it very much felt like failure.

I obviously did do some sightseeing in new places, which was great, but I also spent a significant amount of time alone in a room, and that was no bueno.

It is a little late now for sightseeing suggestions, but I did a solo tour that I called my "Ultra-Mega-Geeky Tour".  I had no significant other and wasn't planning on one anytime soon, so I saw all the places that _I_ wanted to check out and realized virtually _no one_ else would want to do.
New Mexico:
National Atomic Museum: https://www.nuclearmuseum.org/
The Very Large Array, Socorro NM : https://public.nrao.edu/visit/very-large-array/  - just as spooky in person as in the movies
Trinity Site: https://www.wsmr.army.mil/Trinity/Pages/Home.aspx   - only open 2 days a year
Roswell: https://roswell-nm.gov/348/Robert-H-Goddard-Dreamer-Tinkerer-Pionee  at which museum I met self-described aliens
 (the security guy said he had only been there 20 years, so he thought that made him an alien -- close enough for me)
Los Alamos Museum: https://www.lanl.gov/museum/   
What you say?   Of COURSE I borrowed a Geiger counter from work to take along on the trip.

Learned:  I finally understood why Goddard ran his motors really rich (black smoke out the back) as he had  continual problems with throat burnout. 
Half a Megaton of woop-ass fits into an overgrown coffee can. 
The dose rate at 30,000ft is 5 times the dose rate at a 60 year old nuclear ground zero.

Also, never say never, as my wife might want to do this trip :-)  Although we might have to include the artsy stuff in Santa Fe.

I'm pretty sure I went to that very National Atomic Museum! I spent a month in Albequerque, so I went to a bunch of museums and such.

Some of the stands outs were White Sands National Monument, Zion National Park, Bryce Canyon, Grand Canyon, and Flagstaff Observatory. Also a Star Wars concert in Albequerque was fun. I did a couple month-long stays in for the purposes of monthly discount on AirBNB, in retrospect, if I did more of a rapid speed travel adventure, I may have enjoyed it more (less time sitting bored in a room) but also would have been pretty exhausted from all the traveling.
Title: Re: Firecalc success rate comfort level
Post by: markbike528CBX on December 13, 2020, 04:10:22 PM
Quote

Finally, although Iím only halfway through Designing Your Life, Iím very impressed with what Iíve read so far.  Itís a process, not a goal line.
https://www.amazon.com/Designing-Your-Life-Well-Lived-Joyful/dp/1101875321/

Thanks for this recommendation - I checked and there's even an eBook loan available from the library.

I did read one of Ernie Zellinski's books before i took my career break - and I remember it being quite helpful.

For me, there was a disconnect in between the preparation of my career break and then the actual career break.  The preparation was all very exciting and very fun. It created this epic idea that was something to look forward to. The plan was to do all this solo travel for all this time and do all these things, but then I very quickly learned that I did not enjoy solo travel at all. It felt extremely lonely.  And I did not have a plan B lined up and so it very much felt like failure.

I obviously did do some sightseeing in new places, which was great, but I also spent a significant amount of time alone in a room, and that was no bueno.

It is a little late now for sightseeing suggestions, but I did a solo tour that I called my "Ultra-Mega-Geeky Tour".  I had no significant other and wasn't planning on one anytime soon, so I saw all the places that _I_ wanted to check out and realized virtually _no one_ else would want to do.
New Mexico:
National Atomic Museum: https://www.nuclearmuseum.org/
The Very Large Array, Socorro NM : https://public.nrao.edu/visit/very-large-array/  - just as spooky in person as in the movies
Trinity Site: https://www.wsmr.army.mil/Trinity/Pages/Home.aspx   - only open 2 days a year
Roswell: https://roswell-nm.gov/348/Robert-H-Goddard-Dreamer-Tinkerer-Pionee  at which museum I met self-described aliens
 (the security guy said he had only been there 20 years, so he thought that made him an alien -- close enough for me)
Los Alamos Museum: https://www.lanl.gov/museum/   
What you say?   Of COURSE I borrowed a Geiger counter from work to take along on the trip.

Learned:  I finally understood why Goddard ran his motors really rich (black smoke out the back) as he had  continual problems with throat burnout. 
Half a Megaton of woop-ass fits into an overgrown coffee can. 
The dose rate at 30,000ft is 5 times the dose rate at a 60 year old nuclear ground zero.

Also, never say never, as my wife might want to do this trip :-)  Although we might have to include the artsy stuff in Santa Fe.

I'm pretty sure I went to that very National Atomic Museum! I spent a month in Albequerque, so I went to a bunch of museums and such.

Some of the stands outs were White Sands National Monument, Zion National Park, Bryce Canyon, Grand Canyon, and Flagstaff Observatory. Also a Star Wars concert in Albequerque was fun. I did a couple month-long stays in for the purposes of monthly discount on AirBNB, in retrospect, if I did more of a rapid speed travel adventure, I may have enjoyed it more (less time sitting bored in a room) but also would have been pretty exhausted from all the traveling.

Yep, my trip was probably a little _too_ quick, but it was predicated on the Trinity Site opening for 1 day in the spring.
Also learned, that people who visit the Trinity Site specifically, as in you can't casually visit, are still freaked out by a Geiger counter clicking around where they are walking.   I felt like Moses parting the Red Sea of people.

Maybe DW and I can incorporate your stuff into our future trip.  It's pretty. I'm into geology and astronomy.  We're retired, so we don't have to rush. 
Title: Re: Firecalc success rate comfort level
Post by: FIRE Artist on December 14, 2020, 09:16:48 AM
I think that it will depend on your FIRE level.  My number includes a healthy lifestyle buffer, so I can ride the waves of market downturn simply by tightening my belt on the down years and drop down to basic expense spend only. 

Someone who is Lean FIRE does not have the wiggle room, so 100% would be necessary. 
Title: Re: Firecalc success rate comfort level
Post by: Mmm_Donuts on December 14, 2020, 01:18:06 PM
I think I'm at about 93% success rate right now. I like the idea of a variable spend, but the interesting thing about getting to the ~90% situation is that the "bad start years" in the calculation are those around 1966, and those lean stagflation years lasted over a decade IIRC. So it's one thing to tighten the belt for a couple of years, but I'm not sure I'd want to tighten the belt for 10-20 years straight.

That said, if that was the ONLY situation in the past that caused failures at my stash level, I'm ok with FIREing below 100%. Who knows what the future holds but if that one scenario were to happen again and throw things off course, well, I think there's other ways of being flexible and that our future selves will figure it out.
Title: Re: Firecalc success rate comfort level
Post by: lutorm on December 15, 2020, 02:36:47 PM
For exactly the reasons Malcat outline, I think it's a lot more instructive to pick one of the dynamic withdrawal scenarios that never run out of money, like the "withdraw the lower of 4% of the initial stash, inflation adjusted, or 4% or the current stash", which sort of mimic how a real person would behave. Then look at what the minimum withdrawal rate was across the scenarios and see if you'd be OK with that number.

Instead of "you ran out of money in 5% of the realizations", it's a lot more instructive to know whether your $200k spend had to be reduced to $190k or $10k. If the "failure" is the former, you'd probably be OK with it. Not so much with the latter.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 15, 2020, 03:35:45 PM
For exactly the reasons Malcat outline, I think it's a lot more instructive to pick one of the dynamic withdrawal scenarios that never run out of money, like the "withdraw the lower of 4% of the initial stash, inflation adjusted, or 4% or the current stash", which sort of mimic how a real person would behave. Then look at what the minimum withdrawal rate was across the scenarios and see if you'd be OK with that number.

Instead of "you ran out of money in 5% of the realizations", it's a lot more instructive to know whether your $200k spend had to be reduced to $190k or $10k. If the "failure" is the former, you'd probably be OK with it. Not so much with the latter.

My argument isn't even to pick a variable WR, my argument is that most people will naturally vary their withdrawal rate given ongoing market conditions that threaten to erode their principle.

I don't recommend putting faith in any output from a FIRE calculator. Although, it is very helpful to compare fixed WR to variable to understand the magnitude of difference.

I don't really recommend anything beyond being realistic about what any of the math actually means.
Title: Re: Firecalc success rate comfort level
Post by: lutorm on December 15, 2020, 06:25:56 PM
For exactly the reasons Malcat outline, I think it's a lot more instructive to pick one of the dynamic withdrawal scenarios that never run out of money, like the "withdraw the lower of 4% of the initial stash, inflation adjusted, or 4% or the current stash", which sort of mimic how a real person would behave. Then look at what the minimum withdrawal rate was across the scenarios and see if you'd be OK with that number.

Instead of "you ran out of money in 5% of the realizations", it's a lot more instructive to know whether your $200k spend had to be reduced to $190k or $10k. If the "failure" is the former, you'd probably be OK with it. Not so much with the latter.

My argument isn't even to pick a variable WR, my argument is that most people will naturally vary their withdrawal rate given ongoing market conditions that threaten to erode their principle.

I don't recommend putting faith in any output from a FIRE calculator. Although, it is very helpful to compare fixed WR to variable to understand the magnitude of difference.

I don't really recommend anything beyond being realistic about what any of the math actually means.
I mean, there's some balance point between "f it, I'm sure it'll be fine" to "the calculator shows 0.64% risk of failure so it won't work". You need some tool to help tell you what the outcome would have been in different situations to give you an idea of whether you need to worry about a 2008-level recession or a 1930-level depression, or whatever. If you don't have that tool you're just as likely to react to minor market swings by excessively cutting spending as you are to thinking everything is fine until you've eroded your principal to an unhealthy point.
Title: Re: Firecalc success rate comfort level
Post by: Villanelle on December 15, 2020, 06:54:04 PM
For exactly the reasons Malcat outline, I think it's a lot more instructive to pick one of the dynamic withdrawal scenarios that never run out of money, like the "withdraw the lower of 4% of the initial stash, inflation adjusted, or 4% or the current stash", which sort of mimic how a real person would behave. Then look at what the minimum withdrawal rate was across the scenarios and see if you'd be OK with that number.

Instead of "you ran out of money in 5% of the realizations", it's a lot more instructive to know whether your $200k spend had to be reduced to $190k or $10k. If the "failure" is the former, you'd probably be OK with it. Not so much with the latter.

My argument isn't even to pick a variable WR, my argument is that most people will naturally vary their withdrawal rate given ongoing market conditions that threaten to erode their principle.

I don't recommend putting faith in any output from a FIRE calculator. Although, it is very helpful to compare fixed WR to variable to understand the magnitude of difference.

I don't really recommend anything beyond being realistic about what any of the math actually means.
I mean, there's some balance point between "f it, I'm sure it'll be fine" to "the calculator shows 0.64% risk of failure so it won't work". You need some tool to help tell you what the outcome would have been in different situations to give you an idea of whether you need to worry about a 2008-level recession or a 1930-level depression, or whatever. If you don't have that tool you're just as likely to react to minor market swings by excessively cutting spending as you are to thinking everything is fine until you've eroded your principal to an unhealthy point.

I agree that without "4%", I'd be completely lost.  Frankly, that one thing--that one blog post--completely transformed the way I look at retirement.  Before that it was "just save as much as you think you reasonably can and keep doing that and then... something will happen that I guess will indicate it's time to quit working".  It was an entirely nebulous concept.  "4%" gave me goals and understanding and clarity, even though I knew instantly that it would likely never be *exactly* 4%.  So I very much need the specific, exact math, to give me that.

But if FIREcalc tells me that the math gets me to 90%, I have tremendous faith in myself to get that other 10%.  I'm resourceful, sensible, aware, thoughtful, and intelligent.  That's more than enough to make of for a ten percent gap in the math.  IOW, my dollars get me to 90%, and if that's not enough, myself will get me to 100%.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 15, 2020, 07:38:57 PM
For exactly the reasons Malcat outline, I think it's a lot more instructive to pick one of the dynamic withdrawal scenarios that never run out of money, like the "withdraw the lower of 4% of the initial stash, inflation adjusted, or 4% or the current stash", which sort of mimic how a real person would behave. Then look at what the minimum withdrawal rate was across the scenarios and see if you'd be OK with that number.

Instead of "you ran out of money in 5% of the realizations", it's a lot more instructive to know whether your $200k spend had to be reduced to $190k or $10k. If the "failure" is the former, you'd probably be OK with it. Not so much with the latter.

My argument isn't even to pick a variable WR, my argument is that most people will naturally vary their withdrawal rate given ongoing market conditions that threaten to erode their principle.

I don't recommend putting faith in any output from a FIRE calculator. Although, it is very helpful to compare fixed WR to variable to understand the magnitude of difference.

I don't really recommend anything beyond being realistic about what any of the math actually means.
I mean, there's some balance point between "f it, I'm sure it'll be fine" to "the calculator shows 0.64% risk of failure so it won't work". You need some tool to help tell you what the outcome would have been in different situations to give you an idea of whether you need to worry about a 2008-level recession or a 1930-level depression, or whatever. If you don't have that tool you're just as likely to react to minor market swings by excessively cutting spending as you are to thinking everything is fine until you've eroded your principal to an unhealthy point.

I feel like I'm saying the same thing over and over again and never managing to say it clearly.

First, I wasn't saying that I I'm against recommending a planned variable WR, I meant that I never personally recommend any universal approach to anything. I was clarifying my previous point that I wasn't previously making a recommendation. That's all.

Second, sure there's a balance. There's a balance between understanding what the calculator can do and what it can't.

The calculator can indicate the relative impact of a market drop, and the relative impact of a fixed WR from a variable rate, but it cannot actually output a predictive value.

I spent ages with these calculators and they were invaluable to me in terms of understanding how all of this works, but the more I fiddled with them, the more I understood that the percentage output is only meaningful as a comparison.

The percentages could be changed to any scale from red-->blue, or grades F-->A+, or even the pain scale faces at the doctor's office. They would still be just as informative, and probably more helpful because they would remove the illusion of predictive value.

The only thing an output of 100% says compared to 80% is "given the inputs that you chose, there is a significantly higher magnitude of positive impact on projected outcome compared to your previously selected inputs."

If I'm being totally unrealistic my ability and willingness to cut my spending in down years, it doesn't matter if the calculator spits out 100% compared to 80%.

Put more simply, if the calculator has no inter-user predictive validity, then it has no predictive validity period. Given the same inputs, it can't tell the difference between an unrealistic person and an overly cautious person. One might be very likely to end up needing to go back to work and the other might be very likely to die rich, and the calculator might spit out the same 90%.

So is a variable WR a good idea? Sure, for some people.
Is a bond tent a good idea? Sure, for some people.
Is a sub 4% WR a good idea? Sure, for some people.
Is being prepared to have to generate money in retirement a good idea? Oh absolutely...for some people.

That's why I don't make generalized recommendations beyond very, very vague concepts, because the factors that determine which people those "some people" are are very personal and individual in ways that calculators can't effectively account for.
Title: Re: Firecalc success rate comfort level
Post by: chevy1956 on December 15, 2020, 07:39:10 PM
Someone who is Lean FIRE does not have the wiggle room, so 100% would be necessary.

I really don't think this is the case but this is just a play on expenses ala the ERE way to retire. If you manage your expenses really strictly and get to a really high success rate than you should be good to go. The point being if your expenses increase than because you've saved to such a low WR you should be okay.

To me you can't manage your expenses that tightly. It's just a guide which makes the math a guide. It's interesting to think about but I don't think it helps that much in RE.

I suppose one thing you can do is just updated your figures annually and see how it is looking. Then you decide if and how much to withdraw. I think this is what I will be doing. Keep tracking the numbers unless the amount of money becomes way more than I can spend in my lifetime. I fully expect this to happen rather than running out of money.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 15, 2020, 07:48:16 PM
For exactly the reasons Malcat outline, I think it's a lot more instructive to pick one of the dynamic withdrawal scenarios that never run out of money, like the "withdraw the lower of 4% of the initial stash, inflation adjusted, or 4% or the current stash", which sort of mimic how a real person would behave. Then look at what the minimum withdrawal rate was across the scenarios and see if you'd be OK with that number.

Instead of "you ran out of money in 5% of the realizations", it's a lot more instructive to know whether your $200k spend had to be reduced to $190k or $10k. If the "failure" is the former, you'd probably be OK with it. Not so much with the latter.

My argument isn't even to pick a variable WR, my argument is that most people will naturally vary their withdrawal rate given ongoing market conditions that threaten to erode their principle.

I don't recommend putting faith in any output from a FIRE calculator. Although, it is very helpful to compare fixed WR to variable to understand the magnitude of difference.

I don't really recommend anything beyond being realistic about what any of the math actually means.
I mean, there's some balance point between "f it, I'm sure it'll be fine" to "the calculator shows 0.64% risk of failure so it won't work". You need some tool to help tell you what the outcome would have been in different situations to give you an idea of whether you need to worry about a 2008-level recession or a 1930-level depression, or whatever. If you don't have that tool you're just as likely to react to minor market swings by excessively cutting spending as you are to thinking everything is fine until you've eroded your principal to an unhealthy point.

I agree that without "4%", I'd be completely lost.  Frankly, that one thing--that one blog post--completely transformed the way I look at retirement.  Before that it was "just save as much as you think you reasonably can and keep doing that and then... something will happen that I guess will indicate it's time to quit working".  It was an entirely nebulous concept.  "4%" gave me goals and understanding and clarity, even though I knew instantly that it would likely never be *exactly* 4%.  So I very much need the specific, exact math, to give me that.

But if FIREcalc tells me that the math gets me to 90%, I have tremendous faith in myself to get that other 10%.  I'm resourceful, sensible, aware, thoughtful, and intelligent.  That's more than enough to make of for a ten percent gap in the math.  IOW, my dollars get me to 90%, and if that's not enough, myself will get me to 100%.

Yes, 4% is a FANTASTIC basic starting point.

It's knowing your personal risks, which the calculator can't account for, that's really important. My personal risk factors are highly complicated and absolutely impossible to account for with a FIRE calculator. It's taken me years to formulate a tentative plan that I think works for me.
Title: Re: Firecalc success rate comfort level
Post by: chevy1956 on December 15, 2020, 07:55:53 PM
I feel like I'm saying the same thing over and over again and never managing to say it clearly.

Personally I think your advice is spot on. I have the same perspective so I get it.

Given the same inputs, it can't tell the difference between an unrealistic person and an overly cautious person.

This is part of the issue. The next part is that the future won't turn out exactly as you plan. So some years you may spend some more cash whereas other years you won't. It's really hard to be completely 100% clear on your expenses. I'm currently at a 5% WR but I am spending 5k on my oldest son this year. That cost will start to drop from next year on. I have a younger son who I don't spend anywhere near that amount on but I may at some point. We have a car that is great at the moment but at some point I have to upgrade it. I may have to paint the house. I may do that myself or I may pay someone. It's impossible for me to be 100% accurate with my future expenses.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 15, 2020, 08:21:16 PM
I feel like I'm saying the same thing over and over again and never managing to say it clearly.

Personally I think your advice is spot on. I have the same perspective so I get it.

Given the same inputs, it can't tell the difference between an unrealistic person and an overly cautious person.

This is part of the issue. The next part is that the future won't turn out exactly as you plan. So some years you may spend some more cash whereas other years you won't. It's really hard to be completely 100% clear on your expenses. I'm currently at a 5% WR but I am spending 5k on my oldest son this year. That cost will start to drop from next year on. I have a younger son who I don't spend anywhere near that amount on but I may at some point. We have a car that is great at the moment but at some point I have to upgrade it. I may have to paint the house. I may do that myself or I may pay someone. It's impossible for me to be 100% accurate with my future expenses.

Yes, the lumpiness of year over year spending is another drum I bang on incessantly. I said it already earlier that the calculator makes the assumption of exactly X% WR +estimated inflation spent year over year, which no one does, which makes its own assumptions fundamentally inaccurate.
Title: Re: Firecalc success rate comfort level
Post by: lutorm on December 15, 2020, 11:56:42 PM
For exactly the reasons Malcat outline, I think it's a lot more instructive to pick one of the dynamic withdrawal scenarios that never run out of money, like the "withdraw the lower of 4% of the initial stash, inflation adjusted, or 4% or the current stash", which sort of mimic how a real person would behave. Then look at what the minimum withdrawal rate was across the scenarios and see if you'd be OK with that number.

Instead of "you ran out of money in 5% of the realizations", it's a lot more instructive to know whether your $200k spend had to be reduced to $190k or $10k. If the "failure" is the former, you'd probably be OK with it. Not so much with the latter.

My argument isn't even to pick a variable WR, my argument is that most people will naturally vary their withdrawal rate given ongoing market conditions that threaten to erode their principle.

I don't recommend putting faith in any output from a FIRE calculator. Although, it is very helpful to compare fixed WR to variable to understand the magnitude of difference.

I don't really recommend anything beyond being realistic about what any of the math actually means.
I mean, there's some balance point between "f it, I'm sure it'll be fine" to "the calculator shows 0.64% risk of failure so it won't work". You need some tool to help tell you what the outcome would have been in different situations to give you an idea of whether you need to worry about a 2008-level recession or a 1930-level depression, or whatever. If you don't have that tool you're just as likely to react to minor market swings by excessively cutting spending as you are to thinking everything is fine until you've eroded your principal to an unhealthy point.

I feel like I'm saying the same thing over and over again and never managing to say it clearly.
Sorry, that was not my intent.

I think we are in agreement. It's essentially "the map is not the territory" argument (https://en.wikipedia.org/wiki/Map%E2%80%93territory_relation) in that the scenarios in the calculator is not the same as ones travel through retirement but, like a map, it's useful for plotting a path. Having a made a path on a map, though, is not the same as traveling though the terrain, both because the map is only a facsimile of the terrain but also because you might not be as good at traveling as you thought you would be...

My day job is in modeling and simulation, so I'm quite familiar with the risk of thinking that the simulator is reality. The entire trick is figuring out what you should and should not rely on it for.
Title: Re: Firecalc success rate comfort level
Post by: chevy1956 on December 16, 2020, 12:10:12 AM
I think we are in agreement. It's essentially "the map is not the territory" argument (https://en.wikipedia.org/wiki/Map%E2%80%93territory_relation) in that the scenarios in the calculator is not the same as ones travel through retirement but, like a map, it's useful for plotting a path. Having a made a path on a map, though, is not the same as traveling though the terrain, both because the map is only a facsimile of the terrain but also because you might not be as good at traveling as you thought you would be...

My day job is in modeling and simulation, so I'm quite familiar with the risk of thinking that the simulator is reality. The entire trick is figuring out what you should and should not rely on it for.

This is in my opinion the right way to view these calculators. Use them to get some confidence in your numbers. Understand what those numbers mean. I mean if you really need to get to a 3% WR you are costing yourself a lot of extra time at work. Those expenses are going to change in retirement and it's impossible to get the exact number worked out in advance. Do you really need to budget for that once in a lifetime trip to Paris that you may or may not even care about in 20 years time.

To answer the OP I'm pretty cool with an 80% success rate but I have back-up options available to me. I also don't believe I am taking the path of deluding myself via thinking that these models are cast in stone and going forward I have to act perfectly in sync with my plan. My plan is a very rough guide but I'm fine with it.
Title: Re: Firecalc success rate comfort level
Post by: MasterStache on December 16, 2020, 05:26:02 AM
I feel like I'm saying the same thing over and over again and never managing to say it clearly.

Personally I think your advice is spot on. I have the same perspective so I get it.

Given the same inputs, it can't tell the difference between an unrealistic person and an overly cautious person.

This is part of the issue. The next part is that the future won't turn out exactly as you plan. So some years you may spend some more cash whereas other years you won't. It's really hard to be completely 100% clear on your expenses. I'm currently at a 5% WR but I am spending 5k on my oldest son this year. That cost will start to drop from next year on. I have a younger son who I don't spend anywhere near that amount on but I may at some point. We have a car that is great at the moment but at some point I have to upgrade it. I may have to paint the house. I may do that myself or I may pay someone. It's impossible for me to be 100% accurate with my future expenses.

Yes, the lumpiness of year over year spending is another drum I bang on incessantly. I said it already earlier that the calculator makes the assumption of exactly X% WR +estimated inflation spent year over year, which no one does, which makes its own assumptions fundamentally inaccurate.

Absolutely. Although my spouse has yet to join me in early retirement we've been monitoring expenses for years. We've seen swings of over 10K from year to year. This year is looking low on expenses. Last year we dealt with a car replacement (car wreck) and a trip to the ICU for our dog. Obviously neither were predictable. But it helps us understand the variability and flexibility needed in retirement.
Title: Re: Firecalc success rate comfort level
Post by: norajean on December 16, 2020, 06:18:25 AM
Estimating what amount you need saved to quit working is fundamentally different from an actual withdrawal strategy.  Calculators are intended to help with the former, but not the latter.
Title: Re: Firecalc success rate comfort level
Post by: chevy1956 on December 16, 2020, 07:50:11 PM
Estimating what amount you need saved to quit working is fundamentally different from an actual withdrawal strategy.  Calculators are intended to help with the former, but not the latter.

The problem is that it's pretty hard to follow a withdrawal strategy perfectly to the letter. The same as it is pretty hard to have your expenses remain stable year on year. When I say pretty hard I really mean it's probably impossible.

This means that your inputs are not perfectly accurate and therefore all the modelling isn't perfectly accurate which means that the whole argument over getting to 3.5% or a 4% or whatever withdrawal rate isn't really going to be completely accurate. Then when you add it's just historical data that is being modeled it throws a lot of potential variability into the mix.

I get that we like to use these models and they are great but the point is that you can fool yourself by what you use as your expenses or your timeline or your withdrawal strategy. They don't really offer the certainiy that people think they do. So people are arguing about a 4% WR when their inputs are built on quicksand.

I think you get to a figure you think is good enough but the more you know yourself and your blind spots the better your plan will be. It won't be the 3.5% WR versus the 5% WR that is the reason for your failure. It's going to your expenses and options going forward.

I know a couple of things that have stood out to me. You can work for a long time trying to gain some safety level that is really a psychological issue and at some point you have to make a leap of faith if you want to retire.
Title: Re: Firecalc success rate comfort level
Post by: reeshau on December 16, 2020, 11:35:37 PM
I feel like I'm saying the same thing over and over again and never managing to say it clearly.

Personally I think your advice is spot on. I have the same perspective so I get it.

Given the same inputs, it can't tell the difference between an unrealistic person and an overly cautious person.

This is part of the issue. The next part is that the future won't turn out exactly as you plan. So some years you may spend some more cash whereas other years you won't. It's really hard to be completely 100% clear on your expenses. I'm currently at a 5% WR but I am spending 5k on my oldest son this year. That cost will start to drop from next year on. I have a younger son who I don't spend anywhere near that amount on but I may at some point. We have a car that is great at the moment but at some point I have to upgrade it. I may have to paint the house. I may do that myself or I may pay someone. It's impossible for me to be 100% accurate with my future expenses.

Yes, the lumpiness of year over year spending is another drum I bang on incessantly. I said it already earlier that the calculator makes the assumption of exactly X% WR +estimated inflation spent year over year, which no one does, which makes its own assumptions fundamentally inaccurate.

Absolutely. Although my spouse has yet to join me in early retirement we've been monitoring expenses for years. We've seen swings of over 10K from year to year. This year is looking low on expenses. Last year we dealt with a car replacement (car wreck) and a trip to the ICU for our dog. Obviously neither were predictable. But it helps us understand the variability and flexibility needed in retirement.

I actually think there are some straightforward ways to deal with your two examples.  For many replacements / repairs, you can build sinking funds to save for the eventuality--in effect, smoothing out the cost.  Foe the latter, if the variability puts a dent in your plan, you can get medical insurance for your pet.

Of course, not everyone does this.  Some would be just as happy to reduce discretionary spend for a while, or otherwise improvise an answer.  Either is OK, as a match for your personality.  But it isn't rocket science, either.  If not entirely common, It's a solved problem, easily observed in any number of case studies.
Title: Re: Firecalc success rate comfort level
Post by: jeroly on December 17, 2020, 06:00:32 AM

I actually think there are some straightforward ways to deal with your two examples.  For many replacements / repairs, you can build sinking funds to save for the eventuality--in effect, smoothing out the cost.  Foe the latter, if the variability puts a dent in your plan, you can get medical insurance for your pet.

Of course, not everyone does this.  Some would be just as happy to reduce discretionary spend for a while, or otherwise improvise an answer.  Either is OK, as a match for your personality.  But it isn't rocket science, either.  If not entirely common, It's a solved problem, easily observed in any number of case studies.

When it comes to budgeting, I use the sinking fund concept.  For example, I set up a new auto expense item that is 1/10 of the price of the car I want to buy (ten years from the last time I bought a car), and a travel expense item based on my expected travels for the year, which are not evenly distributed over the months.  However I don't specifically fund those sinking funds but rather just withdraw from my Vanguard accounts an amount each month or two that will fund what I am planning to do for that time interval. 

When I was living with my ex, we had separate finances and funded a joint expense fund from which all household expenses were withdrawn.  I would examine spending on each line item in that household budget in an annual ritual which also involved recalculating what the joint expense fund would require from each of use each month; our contributions were assessed based on a modified ratio of our incomes. We treated that joint expense fund like an escrow account at a bank, with sinking funds for things like repairs, a new roof, etc., and would adjust the total required fund deposits based on the adjustments to estimated new year expenses versus prior year.

Now that I don't have to do that annual household calculation, I don't look at year-to-year variation in line item spending closely, but overall it's pretty notable how even my spending has been over the last 20 years.  It's been in a range from $ (X),000 to $ (1.2 * X),000  more or less every year for the last 20 years, even when there have been some big lump sum outlays (car, roof, education).  I haven't necessarily consciously reduced spending in other areas when those big-ticket costs have hit, but I either have done so subconsiously or have run into a weird set of coincidences.
Title: Re: Firecalc success rate comfort level
Post by: MasterStache on December 17, 2020, 06:37:59 AM
I feel like I'm saying the same thing over and over again and never managing to say it clearly.

Personally I think your advice is spot on. I have the same perspective so I get it.

Given the same inputs, it can't tell the difference between an unrealistic person and an overly cautious person.

This is part of the issue. The next part is that the future won't turn out exactly as you plan. So some years you may spend some more cash whereas other years you won't. It's really hard to be completely 100% clear on your expenses. I'm currently at a 5% WR but I am spending 5k on my oldest son this year. That cost will start to drop from next year on. I have a younger son who I don't spend anywhere near that amount on but I may at some point. We have a car that is great at the moment but at some point I have to upgrade it. I may have to paint the house. I may do that myself or I may pay someone. It's impossible for me to be 100% accurate with my future expenses.

Yes, the lumpiness of year over year spending is another drum I bang on incessantly. I said it already earlier that the calculator makes the assumption of exactly X% WR +estimated inflation spent year over year, which no one does, which makes its own assumptions fundamentally inaccurate.

Absolutely. Although my spouse has yet to join me in early retirement we've been monitoring expenses for years. We've seen swings of over 10K from year to year. This year is looking low on expenses. Last year we dealt with a car replacement (car wreck) and a trip to the ICU for our dog. Obviously neither were predictable. But it helps us understand the variability and flexibility needed in retirement.

I actually think there are some straightforward ways to deal with your two examples.  For many replacements / repairs, you can build sinking funds to save for the eventuality--in effect, smoothing out the cost.  Foe the latter, if the variability puts a dent in your plan, you can get medical insurance for your pet.

Of course, not everyone does this.  Some would be just as happy to reduce discretionary spend for a while, or otherwise improvise an answer.  Either is OK, as a match for your personality.  But it isn't rocket science, either.  If not entirely common, It's a solved problem, easily observed in any number of case studies.
Sure. None of this really impacted us too much because technically we are still accumulating. But you can't plan for every scenario. My spouse had just purchased a the car a couple years before the accident. What if this new(er) car is wrecked as well this soon? You can make rainy day funds but there is no guarantee if, when and how often you will need them. The dog in the ICU can be prevented by not having a pet. We have also been fighting a legal battle with my son's High School in which we had to obtain a lawyer. That's thousands of more dollars. You just can't predict every scenario. My spouse and I both agree that having a lot of flexibility is the key to being good in full retirement. Some years are going to be worse than others. Maybe even a lot worse.

To relate this back to the topic, I don't put too much faith into any retirement calculator. My spouse will call it quits when she is ready.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 17, 2020, 01:31:07 PM
I'm rereading all of Taleb's books right now, and this excellent example came up.

If someone tosses a coin 100 times and the first 99 times it comes up heads, what are the chances is will come up heads again?

The mathematician will say 50%, applying the most basic of statistical calculations to the problem.

The person with even a fraction of common sense will say the coin is obviously weighted.

The calculation will only be accurate if the assumptions it is working on are accurate.

A calculator can only generate it's outputs based on the known risks built into the equation, but it's utterly useless for assessing actual risk.
Title: Re: Firecalc success rate comfort level
Post by: jeroly on December 17, 2020, 02:30:05 PM
I'm rereading all of Taleb's books right now, and this excellent example came up.

If someone tosses a coin 100 times and the first 99 times it comes up heads, what are the chances is will come up heads again?

The mathematician will say 50%, applying the most basic of statistical calculations to the problem.

The person with even a fraction of common sense will say the coin is obviously weighted.

The calculation will only be accurate if the assumptions it is working on are accurate.

A calculator can only generate it's outputs based on the known risks built into the equation, but it's utterly useless for assessing actual risk.
No mathematician will say that.
If the question was, ďSomeone tosses a _fair_ coin 100 timesĒ ... then yes, thatís the answer a mathematician would give.  However, using statistical inference, that same mathematician would reject an assumption that the coin was fair unless itís stated as a given.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 17, 2020, 03:14:56 PM
I'm rereading all of Taleb's books right now, and this excellent example came up.

If someone tosses a coin 100 times and the first 99 times it comes up heads, what are the chances is will come up heads again?

The mathematician will say 50%, applying the most basic of statistical calculations to the problem.

The person with even a fraction of common sense will say the coin is obviously weighted.

The calculation will only be accurate if the assumptions it is working on are accurate.

A calculator can only generate it's outputs based on the known risks built into the equation, but it's utterly useless for assessing actual risk.
No mathematician will say that.
If the question was, ďSomeone tosses a _fair_ coin 100 timesĒ ... then yes, thatís the answer a mathematician would give.  However, using statistical inference, that same mathematician would reject an assumption that the coin was fair unless itís stated as a given.

True, the example shouldn't say "mathematician", and I'm not positive Taleb specified mathematician now that I think of it. He did specify an academic of some kind. 
Title: Re: Firecalc success rate comfort level
Post by: lutorm on December 18, 2020, 12:12:51 PM
I really liked "The Black Swan" (once you get past his abrasive writing style) and the main point is along exactly these line of "don't mistake the model for reality".

I take Taleb's point to be that if someone gives you a fair coin and you toss it 100 times and the first 99 times comes up as heads, your conclusion should be "I've been given wrong information, the coin is not fair." This may sound obvious to the point of silliness, because it should be clear after 10 tosses that the model is questionable.

But in most real cases, the failure is in the wings of the distribution such that the model will be correct 999 times of a thousand, or more, but when it fails it fails by the 1000th time being an event that should not happen in a billion cases. It's precisely those events that can't be tested, because you can't gather enough evidence to find them out in the wings.

I think one of the examples he uses is the 1984 stock crash, which according to the models at the time should not have happened once in the lifetime of the universe. In our context, the black swan failure probably in the conclusion that "the worst retirement scenario that can happen is if you retired in 1972". No, that's only the worst scenario that's played out in our very limited sample (only the US, over the past century), which means we have zero evidence about anything that's had about a less than 1% chance of happening.

I personally suspect that everyone in the US over the past century have been spectacularly lucky and the fraction of scenarios in a properly averaged sample that end in war, genocide, runaway inflation, societal collapse, asteroid impact, zombie apocalypse, etc, where running out of money in retirement will be a small worry, is significant.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 18, 2020, 12:44:09 PM
What's even worse though about FIRE simulators is that they aren't just missing tail risks, they're missing extremely common individual risks that they just can't account for, like the example I gave of divorce. That's why I just don't take them seriously at all as a predictive model.

The chances of finding out that your mom has early onset Alzheimer's and needs expensive care, or your kid needs financial help so they don't go bankrupt from their divorce, or your grandkid gets into some crazy elite program or commits a crime and needs an expensive legal defense (either way works), or your LCOL plans go tits up because you can't stand the isolation or smaller town culture, or you have a small stroke in a part of your brain that makes you less responsible with your money, etc, etc.

None of the above are wildly improbable possibilities. None of them are rare enough to be considered Black Swans. I came up with all of them from examples within my patient population, which is just a few thousand of upper middle class Canadians.
Title: Re: Firecalc success rate comfort level
Post by: lutorm on December 18, 2020, 01:09:29 PM
What's even worse though about FIRE simulators is that they aren't just missing tail risks, they're missing extremely common individual risks that they just can't account for, like the example I gave of divorce. That's why I just don't take them seriously at all as a predictive model.
Well, sure, but they don't claim to cover that. If you put in that you'll use $40k/year and you use $80k, that's a straightforward case of Garbage In - Garbage Out. The failure modes of the model itself aren't so plainly visible.
Title: Re: Firecalc success rate comfort level
Post by: Villanelle on December 18, 2020, 01:13:36 PM
What's even worse though about FIRE simulators is that they aren't just missing tail risks, they're missing extremely common individual risks that they just can't account for, like the example I gave of divorce. That's why I just don't take them seriously at all as a predictive model.

The chances of finding out that your mom has early onset Alzheimer's and needs expensive care, or your kid needs financial help so they don't go bankrupt from their divorce, or your grandkid gets into some crazy elite program or commits a crime and needs an expensive legal defense (either way works), or your LCOL plans go tits up because you can't stand the isolation or smaller town culture, or you have a small stroke in a part of your brain that makes you less responsible with your money, etc, etc.

None of the above are wildly improbable possibilities. None of them are rare enough to be considered Black Swans. I came up with all of them from examples within my patient population, which is just a few thousand of upper middle class Canadians.

Yes.  During the "how much E fund do I need conversations", my answer is always that you need to look at your life.  And I think the answer is the same for "what is my safe WR?".  While your list isn't comprehensive (and I know you didn't intend it to be), I look at those things and since I don't have kids or grandkids, I can cross of many of the possibilities.  I don't plan to FIRE to a small town, or a town significantly different than ones I've lived in, so that probability is lower.  My parent's have, frankly, gobs of money and excellent health care, so those possibilities are small.  My relationship seems rock solid (and "empty nest" seems to be a major driver in divorces that would come around this stage of life; also not an issue for us). 

To be very clear, I'm not saying my life is crisis-proof.  I could be sued.  My seemingly rock-solid relationship could turn out to be water-liquid instead.   I could be a victim of a financial crime.  Shit can always happen.  But as I evaluate my life in an individual level, rather than a broad demographically based perspective, I can decide whether my odds seem better or worse than average, and I can adjust accordingly.  That's the step that needs to be taken, after understanding the 4% rule.  Great, now that I understand what 4% means, I need to honestly evaluate MY life to see what puts me at higher or lower risk than average.  I have a special-needs kid who will never be self-supporting and parents barely getting by on social security but whom I'd gladly assist?  Maybe I need to be more conservative.  I'm a contended loaner, with no living family?  I'm probably on the lower scale of risk.

It's not as definitive, or as Shockingly Simple as "4%", but it's still well worthwhile. 
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 18, 2020, 01:14:04 PM
What's even worse though about FIRE simulators is that they aren't just missing tail risks, they're missing extremely common individual risks that they just can't account for, like the example I gave of divorce. That's why I just don't take them seriously at all as a predictive model.
Well, sure, but they don't claim to cover that. If you put in that you'll use $40k/year and you use $80k, that's a straightforward case of Garbage In - Garbage Out. The failure modes of the model itself aren't so plainly visible.

Entirely my point.

I don't fault the calculator. I'm a huge fan actually. I criticize the thinking that allows someone to angst over 90% vs 100% as if they actually represent a 10% or 0% chance of portfolio failure.

I've made that very very clear in my extensive ranting in this thread.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 18, 2020, 01:18:04 PM
What's even worse though about FIRE simulators is that they aren't just missing tail risks, they're missing extremely common individual risks that they just can't account for, like the example I gave of divorce. That's why I just don't take them seriously at all as a predictive model.

The chances of finding out that your mom has early onset Alzheimer's and needs expensive care, or your kid needs financial help so they don't go bankrupt from their divorce, or your grandkid gets into some crazy elite program or commits a crime and needs an expensive legal defense (either way works), or your LCOL plans go tits up because you can't stand the isolation or smaller town culture, or you have a small stroke in a part of your brain that makes you less responsible with your money, etc, etc.

None of the above are wildly improbable possibilities. None of them are rare enough to be considered Black Swans. I came up with all of them from examples within my patient population, which is just a few thousand of upper middle class Canadians.

Yes.  During the "how much E fund do I need conversations", my answer is always that you need to look at your life.  And I think the answer is the same for "what is my safe WR?".  While your list isn't comprehensive (and I know you didn't intend it to be), I look at those things and since I don't have kids or grandkids, I can cross of many of the possibilities.  I don't plan to FIRE to a small town, or a town significantly different than ones I've lived in, so that probability is lower.  My parent's have, frankly, gobs of money and excellent health care, so those possibilities are small.  My relationship seems rock solid (and "empty nest" seems to be a major driver in divorces that would come around this stage of life; also not an issue for us). 

To be very clear, I'm not saying my life is crisis-proof.  I could be sued.  My seemingly rock-solid relationship could turn out to be water-liquid instead.   I could be a victim of a financial crime.  Shit can always happen.  But as I evaluate my life in an individual level, rather than a broad demographically based perspective, I can decide whether my odds seem better or worse than average, and I can adjust accordingly.  That's the step that needs to be taken, after understanding the 4% rule.  Great, now that I understand what 4% means, I need to honestly evaluate MY life to see what puts me at higher or lower risk than average.  I have a special-needs kid who will never be self-supporting and parents barely getting by on social security but whom I'd gladly assist?  Maybe I need to be more conservative.  I'm a contended loaner, with no living family?  I'm probably on the lower scale of risk.

It's not as definitive, or as Shockingly Simple as "4%", but it's still well worthwhile.

Of course!

All estimates of future personal risk are by definition going to be very hand-wavy and kind of pulled out of our asses in terms of what they might cost.

That would be the entire point of what I've been trying to say.

I'm not saying the calculator should be better, I'm saying that it CAN'T be better and we shouldn't expect it to be.

The weather Channel is very valuable to me even if it can't reasonably predict the actual weather very well.

ETA: I *just* got a weather Channel alert on my phone as I was typing that
Title: Re: Firecalc success rate comfort level
Post by: lutorm on December 18, 2020, 01:19:27 PM
What's even worse though about FIRE simulators is that they aren't just missing tail risks, they're missing extremely common individual risks that they just can't account for, like the example I gave of divorce. That's why I just don't take them seriously at all as a predictive model.
Well, sure, but they don't claim to cover that. If you put in that you'll use $40k/year and you use $80k, that's a straightforward case of Garbage In - Garbage Out. The failure modes of the model itself aren't so plainly visible.

Entirely my point.

I don't fault the calculator. I'm a huge fan actually. I criticize the thinking that allows someone to angst over 90% vs 100% as if they actually represent a 10% or 0% chance of portfolio failure.

I've made that very very clear in my extensive ranting in this thread.
Yeah, but saying "What's even worse though about FIRE simulators ..." makes it sound like you are faulting the calculators, when what you mean is "what's even worse is how people use FIRE simulators". ;-)
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 18, 2020, 01:23:59 PM
What's even worse though about FIRE simulators is that they aren't just missing tail risks, they're missing extremely common individual risks that they just can't account for, like the example I gave of divorce. That's why I just don't take them seriously at all as a predictive model.
Well, sure, but they don't claim to cover that. If you put in that you'll use $40k/year and you use $80k, that's a straightforward case of Garbage In - Garbage Out. The failure modes of the model itself aren't so plainly visible.

Entirely my point.

I don't fault the calculator. I'm a huge fan actually. I criticize the thinking that allows someone to angst over 90% vs 100% as if they actually represent a 10% or 0% chance of portfolio failure.

I've made that very very clear in my extensive ranting in this thread.
Yeah, but saying "What's even worse though about FIRE simulators ..." makes it sound like you are faulting the calculators, when what you mean is "what's even worse is how people use FIRE simulators". ;-)

Sure, you could interpret it that way if taken completely out of context of everything else I've written in this thread...

;)
Title: Re: Firecalc success rate comfort level
Post by: Villanelle on December 18, 2020, 03:54:47 PM
What's even worse though about FIRE simulators is that they aren't just missing tail risks, they're missing extremely common individual risks that they just can't account for, like the example I gave of divorce. That's why I just don't take them seriously at all as a predictive model.

The chances of finding out that your mom has early onset Alzheimer's and needs expensive care, or your kid needs financial help so they don't go bankrupt from their divorce, or your grandkid gets into some crazy elite program or commits a crime and needs an expensive legal defense (either way works), or your LCOL plans go tits up because you can't stand the isolation or smaller town culture, or you have a small stroke in a part of your brain that makes you less responsible with your money, etc, etc.

None of the above are wildly improbable possibilities. None of them are rare enough to be considered Black Swans. I came up with all of them from examples within my patient population, which is just a few thousand of upper middle class Canadians.

Yes.  During the "how much E fund do I need conversations", my answer is always that you need to look at your life.  And I think the answer is the same for "what is my safe WR?".  While your list isn't comprehensive (and I know you didn't intend it to be), I look at those things and since I don't have kids or grandkids, I can cross of many of the possibilities.  I don't plan to FIRE to a small town, or a town significantly different than ones I've lived in, so that probability is lower.  My parent's have, frankly, gobs of money and excellent health care, so those possibilities are small.  My relationship seems rock solid (and "empty nest" seems to be a major driver in divorces that would come around this stage of life; also not an issue for us). 

To be very clear, I'm not saying my life is crisis-proof.  I could be sued.  My seemingly rock-solid relationship could turn out to be water-liquid instead.   I could be a victim of a financial crime.  Shit can always happen.  But as I evaluate my life in an individual level, rather than a broad demographically based perspective, I can decide whether my odds seem better or worse than average, and I can adjust accordingly.  That's the step that needs to be taken, after understanding the 4% rule.  Great, now that I understand what 4% means, I need to honestly evaluate MY life to see what puts me at higher or lower risk than average.  I have a special-needs kid who will never be self-supporting and parents barely getting by on social security but whom I'd gladly assist?  Maybe I need to be more conservative.  I'm a contended loaner, with no living family?  I'm probably on the lower scale of risk.

It's not as definitive, or as Shockingly Simple as "4%", but it's still well worthwhile.

Of course!

All estimates of future personal risk are by definition going to be very hand-wavy and kind of pulled out of our asses in terms of what they might cost.

That would be the entire point of what I've been trying to say.

I'm not saying the calculator should be better, I'm saying that it CAN'T be better and we shouldn't expect it to be.

The weather Channel is very valuable to me even if it can't reasonably predict the actual weather very well.

ETA: I *just* got a weather Channel alert on my phone as I was typing that

We are in violent agreement.

Perhaps these planning tools need to at least offer up a link to something reminding people of these things--that they are tools (the planning devices, not the people who are planning!) and have value, but that their calculations need to be viewed in the context of real life and real people, and one needs to consider one's own circumstance along side the cold, hard math. 

And I hope you stay dry/warm/moderately weathered. 
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 18, 2020, 04:01:45 PM
What's even worse though about FIRE simulators is that they aren't just missing tail risks, they're missing extremely common individual risks that they just can't account for, like the example I gave of divorce. That's why I just don't take them seriously at all as a predictive model.

The chances of finding out that your mom has early onset Alzheimer's and needs expensive care, or your kid needs financial help so they don't go bankrupt from their divorce, or your grandkid gets into some crazy elite program or commits a crime and needs an expensive legal defense (either way works), or your LCOL plans go tits up because you can't stand the isolation or smaller town culture, or you have a small stroke in a part of your brain that makes you less responsible with your money, etc, etc.

None of the above are wildly improbable possibilities. None of them are rare enough to be considered Black Swans. I came up with all of them from examples within my patient population, which is just a few thousand of upper middle class Canadians.

Yes.  During the "how much E fund do I need conversations", my answer is always that you need to look at your life.  And I think the answer is the same for "what is my safe WR?".  While your list isn't comprehensive (and I know you didn't intend it to be), I look at those things and since I don't have kids or grandkids, I can cross of many of the possibilities.  I don't plan to FIRE to a small town, or a town significantly different than ones I've lived in, so that probability is lower.  My parent's have, frankly, gobs of money and excellent health care, so those possibilities are small.  My relationship seems rock solid (and "empty nest" seems to be a major driver in divorces that would come around this stage of life; also not an issue for us). 

To be very clear, I'm not saying my life is crisis-proof.  I could be sued.  My seemingly rock-solid relationship could turn out to be water-liquid instead.   I could be a victim of a financial crime.  Shit can always happen.  But as I evaluate my life in an individual level, rather than a broad demographically based perspective, I can decide whether my odds seem better or worse than average, and I can adjust accordingly.  That's the step that needs to be taken, after understanding the 4% rule.  Great, now that I understand what 4% means, I need to honestly evaluate MY life to see what puts me at higher or lower risk than average.  I have a special-needs kid who will never be self-supporting and parents barely getting by on social security but whom I'd gladly assist?  Maybe I need to be more conservative.  I'm a contended loaner, with no living family?  I'm probably on the lower scale of risk.

It's not as definitive, or as Shockingly Simple as "4%", but it's still well worthwhile.

Of course!

All estimates of future personal risk are by definition going to be very hand-wavy and kind of pulled out of our asses in terms of what they might cost.

That would be the entire point of what I've been trying to say.

I'm not saying the calculator should be better, I'm saying that it CAN'T be better and we shouldn't expect it to be.

The weather Channel is very valuable to me even if it can't reasonably predict the actual weather very well.

ETA: I *just* got a weather Channel alert on my phone as I was typing that

We are in violent agreement.

Perhaps these planning tools need to at least offer up a link to something reminding people of these things--that they are tools (the planning devices, not the people who are planning!) and have value, but that their calculations need to be viewed in the context of real life and real people, and one needs to consider one's own circumstance along side the cold, hard math. 

And I hope you stay dry/warm/moderately weathered.

Or I can just keep ranting like a crazed woman...either way I'm cool with it.
Title: Re: Firecalc success rate comfort level
Post by: secondcor521 on December 18, 2020, 05:44:45 PM
I wondered if FIREcalc's data screens addressed the point that Malcat is raising.

Not sure if the language at the bottom applies, but it seems like it might:

"How can FIRECalc predict future returns from past performance?

It can't. And it doesn't try. In fact, it tries to predict what will not happen. This might sound confusing, but it's really simple.

Consider an analogy: Suppose you are building a house in Honolulu. No one could predict the temperature for any given future date during the decades the house will be used. But if you know that it has never been under 52į in that location in all of recorded history, you could make an intelligent judgment about how much heating capacity is enough.

Planning for an Anchorage-style winter would be a true waste of money that could be better used elsewhere.

FIREcalc works the same way, using stock market history and your portfolio and spending plan instead of weather history and furnace capacity, to give you the information to judge if your savings, combined with your Social Security, pensions, and other resources, are sufficient to handle the winter."

I think it's a fair criticism that the UI for FIREcalc, especially that first page, is pretty wordy and lots of people wouldn't read all the way to the bottom.  So maybe the disclaimer should be made more prominent, but at least it is there.
Title: Re: Firecalc success rate comfort level
Post by: sparkytheop on December 18, 2020, 06:08:07 PM
A wrench is pretty good at turning bolts, but makes a really shitty hammer.  Calculators are useful tools, when used for the proper purpose.  Anytime a tool is used by an idiot, or by a non-idiot, but in a way not intended, the results could be pretty shitty.  Or they may still work with some luck.  I've been in the trades a long time though, and can tell you you'll never get people to quit misusing tools.
Title: Re: Firecalc success rate comfort level
Post by: UnleashHell on December 19, 2020, 03:34:32 AM
yeah - these things are nothing more than a guide. not a single one of them predicted that my wife would want a divorce as soon as I was ready to fire.

That'd fuck with your numbers....it did mine.
Title: Re: Firecalc success rate comfort level
Post by: Malcat on December 19, 2020, 07:57:57 AM
yeah - these things are nothing more than a guide. not a single one of them predicted that my wife would want a divorce as soon as I was ready to fire.

That'd fuck with your numbers....it did mine.

Ugh, that's brutal. I hear you on this. Sudden unexpected life circumstances fuckered my financial projections as well.
Title: Re: Firecalc success rate comfort level
Post by: DK on December 19, 2020, 09:28:27 AM
So with talking about some of the limitations of firecalc, does anyone know some better models/simulation to use that allow more input? Eg, my tentative plan is to be all in stocks minus a 12 month cash backdrop, and checking where the market is at to decide to pull from stocks or cash. With that indicator being if the market is >20% off its high. So in bad cases I won't be locking in losses but also not keeping so much in cash it will be a drag on returns. In looking I haven't found flexible model/simulation to input something like this though.
Title: Re: Firecalc success rate comfort level
Post by: park10 on December 20, 2020, 07:37:14 AM
So with talking about some of the limitations of firecalc, does anyone know some better models/simulation to use that allow more input? Eg, my tentative plan is to be all in stocks minus a 12 month cash backdrop, and checking where the market is at to decide to pull from stocks or cash. With that indicator being if the market is >20% off its high. So in bad cases I won't be locking in losses but also not keeping so much in cash it will be a drag on returns. In looking I haven't found flexible model/simulation to input something like this though.
The real problem is with the inputs that user puts in the model. In Engineering, there is a very common saying "Garbage in Garbage Out". User has absolutely no idea what their expenses are going to be next year or in 10 years or 20 years and what life will throw at them, but model wants you to put in a static number. What is worse is some models then perform real sophisticated regression based on historical market performance etc, but results of whether you can retire or not are still based on bad inputs. So, the question - is there a better model, -No, but thats not the Biggest problem, the problem is the inputs, and there really is no real solution for that. All you can do is put in a massive range of inputs to see a range of solutions, but, even then, the range can get so wide, that it essentially has very little actionable value. This does not even include the inherent problems with model itself i.e past performance is indicative of future returns.
Title: Re: Firecalc success rate comfort level
Post by: chevy1956 on December 20, 2020, 03:59:01 PM
yeah - these things are nothing more than a guide. not a single one of them predicted that my wife would want a divorce as soon as I was ready to fire.

That'd fuck with your numbers....it did mine.

This is something I think about. So far the marriage is pretty strong but you can't predict the future. This is the classic example of why debating about WR's misses the point.
Title: Re: Firecalc success rate comfort level
Post by: chevy1956 on December 20, 2020, 04:11:29 PM
So, the question - is there a better model, -No, but thats not the Biggest problem, the problem is the inputs, and there really is no real solution for that.

Exactly. I don't know why some people think that you can micromanage your FIRE situation via getting to the ideal pre-retirement model success rate.

I should add that it's also nowhere near as simple as being conservative in your guesstimated future expenses as well. It's going to be a guesstimate no matter what because you cannot predict the future. If you though choose to be highly conservative in your estimates then you have failed FIRE because you've worked too long. This can have unintended consequences as well.

Do the work. Try and get as accurate a picture or your financial situation as possible. At some point though you just have to make a leap of faith because you are talking about the future. I hope in the future my kids don't become drug addicts and I need to raise their kids. I haven't planned for this situation. I haven't planned for a divorce. I haven't planned for future medial advancements that mean I can live forever. I don't know if any of these things will happen. I've just reached a level that appears okay to me and I'll see what happens from here on in.

What is interesting to me is that I never realized that the decompression stage would occur but I'm going through that now. I feel I'm starting to come out of it but it's only been a couple of months.

I should add that prior to retirement I went through all sorts of modelling scenarios as well as tracked my expenses accurately and in detail and that is why I felt confident enough to retire.
Title: Re: Firecalc success rate comfort level
Post by: ardrum on December 31, 2020, 10:44:23 AM
I like looking at Firecalc from the perspective of two "stages" of independence.  The first is a LeanFI, bare-bones budget that wouldn't really be very exciting/interesting but "livable" too.  The second is a wish list, desirable spending included, kind of Fat FIRE dream spending amount. 

For the lean annual spending amount, I target at least the 100% success rate (I agree with all the criticisms of Firecalc, so this is just a way for me to set a general goal though).  Then, for the "wish list" higher annual spending goal that is nice but not necessary, I aim for a 90% success rate amount as my final goal.

I figure this is a generally flexible approach though since I can definitely cut way back from the higher spending amount if real life outcomes are disproportionately unfavorable over time.
Title: Re: Firecalc success rate comfort level
Post by: BlueHouse on December 31, 2020, 10:55:41 AM
We have a mentally handicapped daughter and we're not young folks like some of you are.   So we had a need for a very high chance of success and with gobs of fallback positions that would protect us.    So I over-engineered our FI process.   Bigly.

The cost in extra years vs. the chance of leaving our daughter at the not-so-tender mercies and care of the government made that trade off really important to us.    We didn't want our mentally handicapped daughter to be a financial burden on our son, we wanted her to be a financial blessing instead.

I would have been happy to take higher risks without that.

@SwordGuy I love you for doing this and saying this.  Happy new year!