Post by: MoneyStacher on January 27, 2017, 06:50:40 PM
Any other calculators I should try? What options should I try on them?
Post by: Metric Mouse on January 27, 2017, 07:37:17 PM
I've been using firecalc for a while, but recently tried cfiresim and I have to say I like the options on cfiresim like putting in a minimum and a maximum annual payout. I can tweak it so that my % goes to 100. How much faith should I put in it? I like it better than the 4% rule.
Any other calculators I should try? What options should I try on them?
You should only put as much faith in it as you have faith that markets in the past are representative of markets going forward.
Post by: davisgang90 on January 28, 2017, 05:30:18 AM
https://financialmentor.com/calculator/best-retirement-calculator
Post by: spokey doke on January 28, 2017, 08:27:33 AM
Post by: Spork on January 28, 2017, 08:34:49 AM
I used daily automated runs of both cfiresim and firecalc based on current balances/expenses. I did several runs with each with varying scenarios and graphed the output to track it over time.
Cfiresim changed their web page a while back to be all javascript, making automated scrapes pretty much impossible for me. For a while there was a usable backup of the previous web page... but that, too went away recently, so I no longer use cfiresim since it won't mesh with my automation. (I'm FIRE now... so any runs now are mostly back checking and are not as important as they once were.)
Post by: MoneyStacher on January 28, 2017, 06:53:51 PM
cfiresim has been my main tool...and I generally work to see what it takes to NOT get 100% success (and I like all the ways it allows you to do that), but it keeps insisting that I'm OK...still seems too good to be trueYeah, too good to be true is something that hits home with me. Can we really do this? Rely on our accounts not forever?
Post by: rob/d on January 29, 2017, 01:01:10 AM
It's more of a quick guess tool but it works well enough.
http://www.dinkytown.net/java/RetirementPlan4.html
Post by: mathjak107 on January 29, 2017, 02:56:58 AM
I've been using firecalc for a while, but recently tried cfiresim and I have to say I like the options on cfiresim like putting in a minimum and a maximum annual payout. I can tweak it so that my % goes to 100. How much faith should I put in it? I like it better than the 4% rule.
Any other calculators I should try? What options should I try on them?
You should only put as much faith in it as you have faith that markets in the past are representative of markets going forward.
it is actually the faith in the "worst scenario's " of the past . it is the worst case scenario's these calculators are based on not markets . in fact some worst case had very good markets over 30 years . but it is inflation and the sequence of those returns that crushed retirees .
so far we have not seen worse outcomes for retirees since 1966 . that is one of the benchmarks the calculators stress test against .
Post by: mathjak107 on January 29, 2017, 03:03:27 AM
I like this one from dinkytown .
It's more of a quick guess tool but it works well enough.
http://www.dinkytown.net/java/RetirementPlan4.html
this one uses average returns which do not work when spending down . the exact same average return like this figures can run out of money 15 years earlier or later just based on the order the gains and losses come in . this kind of calculator never has a losing year while spending down . every year assumes the same average return .
a terrible way to guesstimate things in the real world where every year is different and sometimes with extended losing years .
you want to plan around the worst case's . not the average . it is no different than building a house to weather a storm . if i was building a home here in nyc i would construct to at least withstand sandy . then at least i am starting out with the best possible odds on my side . .
that is what real retirement claculators do . they stress test you against withstanding the likes of the person who retired in 1907,1929,1937 1965/1966 .
what they don't do is take an average return and apply it to every year with no down years in the mix . as i said above some worst case outcomes had very good markets over 30 years . but it is inflation and the sequence of those returns that crushed retirees .
the danger of using a calculator like the one above is that it is hardly ever the average returns that have killed off a failing time period . what killed every single worst case scenario has been this :
the portfolio's failed to return at least a 2% real return average over the first 15 years of a 30 year period .
everyone pretty much had decent 30 year market average returns . but the fact was inflation and the sequences of the gains and losses killed the retirement .
even the worst group ever , the 1966 retire was part of the greatest bull market in history . very good average return . but there just was not enough money left by the time the bull market arrived to grow , so they failed and did it with an average return over 30 years of 10.23% .
but what killed them was the first 15 years saw :
1966-stocks minus .13%--bonds 1.08%--rebalanced .64%-- inflation 5.38%
Post by: arebelspy on January 29, 2017, 03:46:27 AM
So none of them "made me FIRE" as asked in the title--we pulled the plug earlier than were planning based on our models/projections--but they sure were fun to play with in the years leading up to FIRE! :)
I've been using firecalc for a while, but recently tried cfiresim and I have to say I like the options on cfiresim like putting in a minimum and a maximum annual payout. I can tweak it so that my % goes to 100. How much faith should I put in it? I like it better than the 4% rule.
Any other calculators I should try? What options should I try on them?
You should only put as much faith in it as you have faith that markets in the past are representative of markets going forward.
Well said.
mathjak's tweak is good, too. Maybe combining them to something like "You should put as much faith in it as you have faith that the worst markets of the future will be no worse than the worst markets of the past."
And then add the usual tweak about flexibilty--reducing spending or making more.
"You should put as much faith in it as you have faith that the worst markets of the future will be no worse than the worst markets of the past, or the faith you have in your ability to reduce spending or earn income in the case that the market is worse than the worst case scenario history."
Post by: mathjak107 on January 29, 2017, 03:59:05 AM
the more discretionary spending you have the more you can adjust spending .
i agree with bernstein , if everything is a need and you have no wants do not invest in equity's since you have no where to cut back . in a down market that is extended you can find yourself in worst shape .
if you use equity's you need flexibility in the budget just in case you are the poster child for poor sequencing .
Post by: arebelspy on January 29, 2017, 04:01:44 AM
i
agree with bernstein , if everything is a need and you have no wants do not invest in equity's since you have no where to cut back . in a down market that is extended you can find yourself in worst shape .
Can't agree with that.
It implies the only flexibility is in lowering spending.
What if everything is a need, and I have no where to cut back, but I'm willing to make more money?
What if my WR is super low, say, 1%, so that even if everything is a need, I'm fine?
In many cases equities can be fine, even if everything is a need, and you're unwilling to cut back.
There are other ways to be flexible besides cutting spending.
Post by: mathjak107 on January 29, 2017, 04:12:02 AM
yeah , we stretch the term to include working part time today which many retiree's do but the basic concept of retirement is figured around not really working .
i think of my buddy who retired early from nyc ems . he took his pension or should i say part pension . now he needs a part time job . so while he had his stress's at ems he now has these lower end crappy part time jobs with crappy hours , low pay , few benefits, and crappy days to work wherever he goes . to make things worse , while he was off the radar at ems after so many years , now he works under these grunt supervisors who have him under a microscope .
so he now has new stress's and new misery and for all purposes is "working "
Post by: arebelspy on January 29, 2017, 04:18:20 AM
yeah , we stretch the term to include working part time today which many retiree's do but the basic concept of retirement is figured around not really working .
And?
I fail to see why that matters.
If the market is bad, and you need to be flexible, who cares if you "work" for a short period?
Say I'm spending 30k/yr, and need to cut spending by 15k--a 50%(!) drop in spending, pretty huge at that level--for two years in a row.
I'd rather work for 3-4 months and earn 30k (an extra 15k per year) and spend like normal for two years than take a 50% pay cut for two years. Two years of 50% living, or 3-4 months earning? I'll take the latter.
If someone else would rather cut expenses, cool, they can do that too. In either case, who cares what the concept of retirement is "figured" around?
The bottom line to not running out of money is being flexible in making more, spending less or some combination of those (or, I suppose, working way longer than needed, up front, so your WR is stupid low).
Post by: mathjak107 on January 29, 2017, 04:26:27 AM
you need to find a job during the worst part of the cycle , and you need to physically be able to work .
nothing wrong with that but my opinion is like icing on the cake keep it out of the plan . i have been working 1 day a week since i retired because i enjoy doing technical training . in fact i had been asked to fill in for the last 2-1/2 months and help on a big project for 4 days a week which i completed on thursday .
but that money is not part of the "plan " it is extra money for now and it goes towards our health and long term care insurance but the retirement plan is not based on working by the fact i will or can do this . i may not have a job nor be able to carry this on .
cutting expenses can be a dangerous game too if you have to keep cutting to make the plan work . cutting expenses always has a bottom after which it is not the same as increasing income or savings . that is why company's are judged on profits and revenue . profits can come from cost cutting but cost cutting eventually hits a bottom .
Post by: arebelspy on January 29, 2017, 04:31:07 AM
the danger when planning a retirement based on working when markets are down is :
you need to find a job during the worst part of the cycle , you need to physically be able to work .
1) You don't need to go for a conventional job that is dependent on the economy.
2) You don't need a job that requires anything more physical than not being completely invalid/in the hospital. For most people retiring able-bodied, that's not a stretch, especially given the below.
Quote
but that money is not part of the "plan " it is extra money for now
Right. It would be what is referred to around here as a "safety margin."
And that's the important part. 95% of the time, this won't even come to pass (needing to be flexible in any way whatsoever). The other 5% of the time, you can have a dozen safety margins/backup plans.
You're already working extra, meaning (assuming you were at a 4% WR) your WR is extra low right now, so your stache is compounding more than normal, meaning your WR will continue to get lower, and the likelihood you have to do anything in a down market is approaching zero.
In other words, you're already doing unnecessary extra work, and preempting the need for any safety margins. Something like that is always an option, too.
Either way, the hand-wringing isn't necessary.
Post by: mathjak107 on January 29, 2017, 04:33:34 AM
once you start introducing more variables in to the plan ,that are not based on worst case scenario's then you open the door for more issues and points of failure ..
remember , we tend to plan retirement around the worst case scenario's and that gives us the slack for the awe craps in life . worst case can also mean you may not find a job to work that pays enough to fill the gap or be able to work . isn't that a worst case too ?
if your plan works as is and you decide to work great , it can only make things better . but trying to base it on things that are less than worst case in order to sustain the plan may cause you to fail or be miserable at the least .
Post by: arebelspy on January 29, 2017, 04:43:28 AM
my opinion is your retirement plan should work as is .
What does it mean for a retirement plan to work "as is"?
Does it need a 100% success rate? More? ;)
Are you saying you are against people having backup plans in the tiny percent of the time they might need to utilize it?
What does working "as is" mean?
Post by: mathjak107 on January 29, 2017, 04:47:07 AM
we all have different ideas and values as to what that means .
to me it means working because i can and i want to , not because i have to work in order to sustain my level of income at times . plan b in my life is one i rather not have to fall back on and that is working because i have to ..
we could be living a better lifestyle on a bigger budget but we won't do that .that would be putting us in the position of maybe needing that plan b .
but with me working because i want to we do spend more because that money is going to trips we would not have taken if i didn't work . but that money is not part of the plan . if it is there great we spend it , if not we don't need it and should be fine just planning around worst case scenario's .
Post by: mathjak107 on January 29, 2017, 04:59:13 AM
it is up to you to plan what your own worst case's are . for some it may be including caring for aging parents , or cuts in social security , etc .
what is a plan that works can be almost like asking how long should a rope be ? enough to do the job you are asking it to do .
Post by: arebelspy on January 29, 2017, 05:13:29 AM
the bottom line is just be careful taking a slightly underfunded plan
Sure. I'd just define "slightly underfunded" as maybe a 6 to 6.5% WR or higher.
A 4% WR is a "slightly overfunded" plan, IMO. :)
Post by: mathjak107 on January 29, 2017, 05:17:09 AM
life expectancy plays a big roll in success rates . most planning goes out to 90 or 95 ,especially for our wives . odds are though they will not live that long statistically speaking so that improves success rate . once you combine the odds of the portfolio lasting with the odds of life expectancy even 90% can be 100% success rate .
but healthcare costs can eat up any gain from life expectancy being shorter . (there is that worst case stuff again cropping up , like long term care expenses )
it is really only under battlefield conditions as time goes on that you know if you are really underfunded or not . driving and looking in the rear view mirror tells us where we were but does nothing to know about where we are headed .
our plan really only pertains to us . in our case we are delaying social security . that cuts our draw rate and market sequence risk drastically . we fall from 3.50% now to 2-1/2% once our delayed ss kicks in . we also have a long term care plan in place . so we have quite a lot of worst case scenario mitigating in place .
your mileage will differ of course and what you want to allow for vs ruling it out . you just have to think beyond markets and see what your own worst case scenario's are that you want to build in to the planning . retiring young and health insurance costs are a big wild card . they can range from medicaid to insane numbers if you are not that healthy .
Post by: boarder42 on January 29, 2017, 05:36:03 AM
It seems the most conservative people are the people who are older. I don't know if it's a generational thing or maybe us yunguns are just naive. But if you look at all back tested data and follow the logic you've tried to preach you will end up working way longer and dieing with millions more than is necessary
Post by: mathjak107 on January 29, 2017, 05:39:22 AM
Mathjak you're notoriously over conservative in this area. More often than not the 4% rule grows money indefinitely. In very rare cases do you need more money. Also using a variable withdrawal method and a mortgage makes 4%+ even safer.
It seems the most conservative people are the people who are older. I don't know if it's a generational thing or maybe us yunguns are just naive. But if you look at all back tested data and follow the logic you've tried to preach you will end up working way longer and dieing with millions more than is necessary
your statement about me being conservative is wrong . over a 30 year period 4% swr's have left every rolling retirement with more than it started 90% of the time and 2x what you started with 2/3's of the time ,.
but it has failed to last 100% of the time when real returns have averaged less than 2% the first 15 years of a 30 year retirement time frame . so worst case scenario planning is based on the time frames that did not make it which are 1907 ,1929,1937, 1965 1966 .
if you want to just plan around averages and eliminate those dates a swr would be 6.50% , throw in the fact statistically we won't live to 90 and you can raise that draw rate likely even more .
those are mathematical facts and have zero to do with being conservative or not.
but that is not what a safe withdrawal rate is based on nor is modern retirement planning . a safe withdrawal rate is considered one that needs no pay cuts as long as conditions are not worse than the worst of the past . that means before human intervention . .
you need to monitor your own results over the early years to really know where you stand , forget the statistics . that is why in real life we plan for 4% at the gate and take raises typically when things are not worst case . but you won''t know which side of the statistic you are on until you are on your own journey and see how your time frame is unfolding .
being humans we introduce our own human spending patterns in to the equation , so these draw rates are only laboratory comparisons . they are what they are but they are not road maps for life . life is filled with emergency and un-expected expenses as well as we have the ability where we can to adjust but there is no way to have a one size fits all comparison .
Post by: arebelspy on January 29, 2017, 06:04:38 AM
In that case, you need to pick an SWR, and then be flexible in case poor returns do happen.
Post by: mathjak107 on January 29, 2017, 06:12:15 AM
heck , to me , me having to work and not because i want to is one of my worst case scenario's i planned for . my plan was designed with only the remotest chance of me having to work . which means i tried to build enough slack in our plan so even extended down turns may not require me working .
you may have aging parents that will be your responsibility . you may want to include caring for them in your plan as a worst case .
others may choose to roll the dice . they are fine if they end up working at 70 or 80 .
we are all snow flakes.
this is our 3rd year in retirement and we use a variable draw that sets our maximum goal posts i try to stay within .
our punch list of things we want to do is easily bigger than 2x our budget so we need to set goal posts to stay between each year or we could easily over spend .
it is variable so when we do well we spend more. the beauty of a plan that has a high level of discretionary spending is the flexibility , since our lifestyle is structured so our non discretionary bills represent only about 60% of the years budget .
we could have lived in a more expensive area in a bigger place but our plan intentionally called for not exceeding 60% in non discretionary stuff .
we do have things we call discretionary like food and clothes , but other things like our gym are part of non discretionary since it is a part of life for us .
Post by: arebelspy on January 29, 2017, 06:26:48 AM
heck , to me , me having to work and not because i want to is one of my worst case scenario's i planned for
And if someone is already working a job, not because they want to, but because they have to? They're already in that situation, and working longer to lower to a silly WR for the small chance they might have to work later is guaranteeing that worst case scenario of working not because they want to.
Quote
others may choose to roll the dice . they are fine if they end up working at 70 or 80 .
This is a straw man.. no one early retiring will have to work in their 70s or 80s. As you pointed out, you see it coming in the first decade, and can adjust then. No one will not adjust and literally run out of money later.
Post by: boarder42 on January 29, 2017, 07:05:58 AM
So yes in standard retirement never working or making another dollar again maybe a top priority. But for those who are Re and put everything together at a young age and accomplished a 4% swr. To think they will never make another dollar is highly unlikely. Most fire people are driven by the challenge and goal and to upset the societal view on retirement. These types of personalities are much different than some one stumbling across this site at a later age worried about how to make it thru a much more standard retirement at 50-60+.
Post by: mathjak107 on January 29, 2017, 08:31:28 AM
sure , working or cutting expenses can always fix a situation that is miscalculated but the whole theoretical idea of the term safe withdrawal rate is to avoid that .
other wise you are not talking a safe withdrawal rate , you are simply talking a withdrawal rate supplemented where needed .
the term has a very specific meaning with very specific criteria pertaining to very specific time frames ..
Post by: TomTX on January 29, 2017, 08:47:24 AM
a plan that works is one that enables you to live your life as planned without taking cuts you really don't want to take or doing things you really do not want to do .
we all have different ideas and values as to what that means .
to me it means working because i can and i want to , not because i have to work in order to sustain my level of income at times . plan b in my life is one i rather not have to fall back on and that is working because i have to ..
we could be living a better lifestyle on a bigger budget but we won't do that .that would be putting us in the position of maybe needing that plan b .
but with me working because i want to we do spend more because that money is going to trips we would not have taken if i didn't work . but that money is not part of the plan . if it is there great we spend it , if not we don't need it and should be fine just planning around worst case scenario's .
Effectively you are trading away "5-10% chance I might need to work for a year later" to get "100% chance I must work for a year now"
Post by: mathjak107 on January 29, 2017, 08:54:31 AM
i could have retired at 50 or even younger if i wanted . but that meant cutting expenses to the point we would have to leave the area we live . it did not involve working longer , it just involved lifestyle changes .
but those changes were not something i preferred to do , so since i liked my job i stayed on my own terms . what your own priority's are will be up to you . cutting spending or going part time are options if you are willing to do that . but they do come with risk . the risk being you hit bottom on the expense cutting and the fact you may not be able to work ,find work or hate what you do find ,worse than the job you left early .
retiring very young just increases all the variables even greater to a point that odds are so much higher something is not going to go as planned so plan b better be something you can live with comfortably as well as with so many years of the unknown you really can't call anything a safe withdrawal rate , over funded or anything else .
you just don't know with that many years what will be . .
Post by: TomTX on January 29, 2017, 08:59:34 AM
You are arguing that someone should work longer to guarantee a 100% chance of not working ever again.
If someone is making $500k/year like our "Baller" - well, that might make sense. Work <6 months and save an extra 4-5 years of buffer at Mustachian spending levels.
If someone is making $70k/year or less, you're basically talking about working an extra year (or two, or three) NOW instead of a 5-10% chance of having an issue with your 4% SWR and having to work for a year later. Or do some side gig stuff. Or whatever for cash.
If your 4% SWR isn't going to work out, you should notice in the first 2 years, 5 at the absolute most.
Post by: TomTX on January 29, 2017, 09:01:43 AM
the problem is making more money really imply's working while the concept of retirement imply's we are not .
yeah , we stretch the term to include working part time today which many retiree's do but the basic concept of retirement is figured around not really working .
i think of my buddy who retired early from nyc ems . he took his pension or should i say part pension . now he needs a part time job . so while he had his stress's at ems he now has these lower end crappy part time jobs with crappy hours , low pay , few benefits, and crappy days to work wherever he goes . to make things worse , while he was off the radar at ems after so many years , now he works under these grunt supervisors who have him under a microscope .
so he now has new stress's and new misery and for all purposes is "working "
This example is totally inapplicable to this discussion. He didn't have his SWR fail (his pension is still paying out what was expected at the time of retiring) - he had a lifestyle failure. He's spending more than he planned (or he just failed to plan)
Sure, if you can't stick to your planned budget - any WR will fail.
Post by: mathjak107 on January 29, 2017, 09:05:07 AM
we could have adopted a lifestyle that requires me to keep working even longer , which was never going to be an option so it was off the table . , or we could have adopted a lifestyle that was 80- 90% non discretionary spending , that would have a higher risk i might end up working a bit if adjustments and cost cutting couldn't fill the gaps . or i could adopt a lifestyle that is 50-60% non discretionary spending
and cut the risks of working again because odds are we can just adjust it out .
none of those last choices involve working longer . they only involve the chances of having to go back to work by need and where you live and what your retirement expenses will be .. they have no parameter that says you have to work longer .
it trades time for lifestyle choices . if i wanted to retire in my 40's i would have just moved to cheapsville to get a lower rate of non discretionary spending not worked longer.
that way i have more of a cushion for adjusting before i had to work again .
.
Post by: TomTX on January 29, 2017, 09:26:00 AM
nope i am not saying work longer . i am saying structure your lifestyle so you have more discretionary spending room as opposed to a lifestyle that pushes the envelope .
That means "work longer"
If I need to go from a barebones "just the minimum for food/shelter/clothing" to "Hey, I have 25% travel and toys in my budget" - that means a HIGHER budget, which means WORK LONGER.
Post by: mathjak107 on January 29, 2017, 09:35:41 AM
there is enough differences in places we can choose to live that we can easily ramp our lifestyle up or down and none of these place would be somewhere you wouldn't want to live .
it is all a question of where your priority's are . i can rattle off dozens of nice places here in even nyc where you can live for a lot less then a dozen other places and all the difference may be is proximity to manhattan .
would i work longer to actually live in manhattan ? not on your life but there are some that will . i would even call our area of queens which is bay terrace nicer than parts of manhattan . we are just 20 minutes from manhattan and far cheaper .
so nooooooo , making changes in discretionary spending vs non discretionary does not equate to working longer or mean living in some hobble .
Post by: TomTX on January 29, 2017, 10:10:55 AM
we are not talking barebone lifestyles . at least i hope no one is retiring and living just above a shelter . we are talking living in nice places where there are differences from say zip to zip or even just in the size of what you buy or rent .
there is enough differences in places we can choose to live that we can easily ramp our lifestyle up or down and none of these place would be somewhere you wouldn't want to live .
it is all a question of where your priority's are . i can rattle off dozens of nice places here in even nyc where you can live for a lot less then a dozen other places and all the difference may be is proximity to manhattan .
would i work longer to actually live in manhattan ? not on your life but there are some that will . i would even call our area of queens which is bay terrace nicer than parts of manhattan . we are just 20 minutes from manhattan and far cheaper .
so nooooooo , making changes in discretionary spending vs non discretionary does not equate to working longer or mean living in some hobble .
Nope, you're still shucking and jiving.
If your minimum acceptable is Bay Terrace, it's Bay Terrace. Throwing Manhattan in there is a distraction. Irrelevant.
The scenario is retire today at 4% SWR in Bay Terrace (or wherever you want) - or somehow make it "safer" - the only way to make it "safer" is to add to the stash and use a lower WR.
Since you ruled out any other method of getting cash, the only way to do so is work.
Work now, 100% chance, or retire now with a 5-10% chance of needing to work for a year sometime in the next 5 years (probably you know by 2 years)
Post by: Metric Mouse on January 29, 2017, 07:37:43 PM
There are always trade offs. Some people have a minimum lifestyle that involves living in NYC. Many find they can have an even better lifestyle for much cheaper away from NYC, and thus have to work fewer years. Nothing wrong with either.
it trades time for lifestyle choices . if i wanted to retire in my 40's i would have just moved to cheapsville to get a lower rate of non discretionary spending not worked longer.
that way i have more of a cushion for adjusting before i had to work again .
Post by: spokey doke on January 30, 2017, 12:50:57 PM
so how about those calculators?
Post by: steveo on January 30, 2017, 01:57:35 PM
wow...rather than argue over lots of points that may or may not be relevant, depending on what happens, I'll just see what the future actually brings with a good stache, an informed plan, flexibility, and an open mind.
so how about those calculators?
I use those calculators to get a good idea and to give myself a chance of having a WR greater than 4% but this is correct.
Post by: Ozstache on January 30, 2017, 05:44:08 PM
Post by: MMMdude on January 30, 2017, 07:31:58 PM
Remember success is defined as dying with 1 cent or more as well.
For myself am far more comfortable at around 3.1% which is essentially my dividend yield on capital - ie spend the dividends approach which yes I realize has its flaws.
Post by: tarheeldan on January 30, 2017, 07:48:47 PM
Post by: arebelspy on January 31, 2017, 12:08:18 AM
I am still baffled as ever that people think a 4% SWR is safe for 45+ years of retirement - especially as we float at market highs.
It was safe for 30-year ERs 95% of the time. And yes, safe meant any money left, sure, but the vast majority left you with well more than you started.
In the majority of the cases, your ER should get lower and lower as your inflation-adjusted withdrawals are outpaced by market gains. I see no reason why "it's different this time," despite the market being high. It's been high before, and will be again.
Post by: boarder42 on January 31, 2017, 04:18:39 AM
I am still baffled as ever that people think a 4% SWR is safe for 45+ years of retirement - especially as we float at market highs.
Remember success is defined as dying with 1 cent or more as well.
For myself am far more comfortable at around 3.1% which is essentially my dividend yield on capital - ie spend the dividends approach which yes I realize has its flaws.
Going to that withdrawal rate has to cost you multiple years of extra work. In addition to the fact that 3.5 has never failed.
Post by: SuperMex on January 31, 2017, 06:38:04 AM
I make X in retirement now.
I wish to make X plus 35K before I retire again.
When I collect SS I will make an extra 36K +/-
meaning once I reach SS age I should never need to make any extra money as my pension and SS is enough.
Let's just say I retired at 50 and drew SS at 62 then that is 12 year x 35k = 420k. Even if I never made any interest when I hit 420k I could retire.
For some reason no calculator other than my brain has ever give me real numbers.
Mind you I currently spend less than X per year. The 35K more is just party like it is 99 money.
Post by: Livewell on January 31, 2017, 07:27:23 AM
I generally am looking at a 4% with flexible spending via cfiresim. I also like Todd Tressidors calculator on financialmentor. I'm likely to overshoot because I am fortunate enough to have a high paying job, so an extra year is very valuable. As I've considered fire more, I'm ok with working a little longer to gain that extra padding because it means piece of mind. I also like the idea of a glide path to equity to insure against early sequence of return risk.
Post by: AdrianC on January 31, 2017, 07:43:18 AM
I've been using firecalc for a while, but recently tried cfiresim and I have to say I like the options on cfiresim like putting in a minimum and a maximum annual payout. I can tweak it so that my % goes to 100. How much faith should I put in it? I like it better than the 4% rule.
Any other calculators I should try? What options should I try on them?
Putting your own unique situation into cfiresim and firecalc is better than the 4% rule. Why argue about Bengen and Trinity studies when you can do your own in a few minutes? Including social security can make a big difference.
I also did a calculator on Fidelity's website and the one in Quicken. Vanguard has a Monte Carlo simulator you can try also:
https://retirementplans.vanguard.com/VGApp/pe/pubeducation/calculators/RetirementNestEggCalc.jsf
As other's have pointed out, though, these are all based on the same set of data. We are all betting on the future being no worse than the past. A reasonable bet, I think.
We do need to be mindful that we don't place too much emphasis on the investment part of this and too little on the expense part. Estimating expenses out 30 or 40 years is just a WAG. For example, we had enough at the end of 2007 that we could have FIRE'd at a 4% WR. Mrs. C did take a lay off package and become a SAHM. I started a new consulting gig and carried on working, albeit very flexibly. If I had FIRE'd it would have been gut wrenching through 08/09. Could we have held on, I wonder? But, by the end of 2013 capital would be back above the starting number. So, all good, right?
No. We failed to control our expenses. Our comfortable margin on expenses would have completely gone and we'd be looking at cutting expenses. Our expenses rose faster than inflation. Who would have guessed that our basic medical costs would more than triple? This is an unknown going forward, of course.
I'm glad that I did work longer than I might have needed to based on the conventional wisdom. Each to his/her own.
Post by: JohnGalt on January 31, 2017, 10:30:43 PM
The variable spending option lets me set a floor at my bare bones spending level (3% WR equivalent), initial spending at my target level (6% WR equivalent), and set an extravagant maximum spending level (8% WR equivalent). With high sensitivity to varying the withdrawals (z=1), the result is 100% success at an average of 6% withdrawal rate. Sure that means spending has to vary significantly as the market moves but, even though the "variable spending" option sounds like changing spending is the part that's variable, the reality is that spending less == withdrawing less == earning more. If the model suggests I should lower my withdrawal amount based on market performance, I can do that in any mixture of lowered spending / gaining additional income.
I'm leaving full time employment in my early 30's but fully expect to be find interesting and rewarding activities that earn me income in some form at some point over the following 30 years.
All that said - the calculators/models should all be taken for what they are - models of what might happen. There is no way to guarantee any withdrawal rate will work 100% of the time when applied to an unknowable future. My real plan is to see what happens and constantly adapt.
Post by: BTDretire on February 01, 2017, 03:09:36 PM
I used firecalc many times and was comfortable I could retire. But I really hadn't thought much about it.
It was reading the forum that put the idea in my mind. I have more than what many here say is their number.
Plus SS is only 1, 5 or 9 years away, depending on when I take it.
So, really not so much a calculator, just reading about all you people retiring early on your stache.
THANK YOU VERY MUCH
Post by: moof on February 04, 2017, 07:53:13 PM
what it takes mathematically to have 4% swr be considered over funded does not change . it only means you need better than that 2% real return and for a longer period of time than 15 years if you are going out longer . that may not be "over funded " as much as you think . in fact since 2000 we barely saw a 2% real return on the s&p 500 on any existing money .VFINX growth is up 2.18x over the last 17 years. Works out to 4.7% rate of return on average. Not sure where your numbers are coming from.
sure , working or cutting expenses can always fix a situation that is miscalculated but the whole theoretical idea of the term safe withdrawal rate is to avoid that .
other wise you are not talking a safe withdrawal rate , you are simply talking a withdrawal rate supplemented where needed .
the term has a very specific meaning with very specific criteria pertaining to very specific time frames ..
Post by: mathjak107 on February 05, 2017, 05:08:30 AM
"real returns are needed of 2% over the first 15 years as an average to maintain a 4% safe withdrawal rate . not nominal .
every single worst case failure has been quantified as the real return average over the first 15 years has fallen below a 2% real return average while spending 4% inflation adjusted .
the worst time frame for a retiree was 1965/1966 . that time frame included the greatest bull market ever in its time frame . but once the 15 year mark was past there just was not enough left to grow .
really good average return by the way for that group . over 30 years markets averaged over 10% . but none of that matters when spending down . the die was cast for that 1966 group by the 15th year as inflation did them in .
here are the nominal returns for the 30 years for the 1965/1966 group , they look pretty good .
1966 stocks 10.23 - -bonds 7.85 -- rebalanced portfolio 9.56- - inflation 5.38
but the first 15 years were terrible and caused way excessive spending down .
1966-stocks minus .13%--bonds 1.08%--rebalanced .64%-- inflation 5.38%
all the worst case time frames show similar results . all were killed off in the first 15 years when the real return average for the 15 years fell below 2% .
Post by: Financial.Velociraptor on February 05, 2017, 07:28:22 AM
I ended up over saving in hindsight. I now produce about double my budget in distributions and options premiums.
Post by: boarder42 on February 05, 2017, 08:18:27 AM
I went FIRE before I knew it was a 'thing'. I didn't have a community like this one to share ideas and had to find my own way. I didn't know early retirement calculators existed (my 401k at work had a calculator but it assumed conventional American spending patterns and conventional retirement age). I mapped things out in MS Excel. When I was confident I could cover my budget between distributions, dividends, interest, and options premiums, plus some wiggle room to stay ahead of inflation; I pulled the plug. That was 5OCT2012 so I'm coming up on five years and couldn't be happier.
I ended up over saving in hindsight. I now produce about double my budget in distributions and options premiums.
I think this is a common among most I've heard from. More people end up with more than they need. Multiple reasons probably exist for this but for me it will be retire now or wait 1 more year. And have an extra 250-300k in the bank.
Post by: mathjak107 on February 05, 2017, 08:50:44 AM
unfortunately we don't know whether we are a poster child for the best case scenario , average or going to do worse than the worst case . hind site is always great here .
so the safest is plan for the worst . if not the worst then at least below average and adjust along the way . if things are better you got some raises coming .
depending how much discretionary spending is in your budget you may not be able to cut back much if mostly everything is a need and not a want .
Post by: Spork on February 05, 2017, 10:20:06 AM
I went FIRE before I knew it was a 'thing'. I didn't have a community like this one to share ideas and had to find my own way. I didn't know early retirement calculators existed (my 401k at work had a calculator but it assumed conventional American spending patterns and conventional retirement age). I mapped things out in MS Excel. When I was confident I could cover my budget between distributions, dividends, interest, and options premiums, plus some wiggle room to stay ahead of inflation; I pulled the plug. That was 5OCT2012 so I'm coming up on five years and couldn't be happier.
I ended up over saving in hindsight. I now produce about double my budget in distributions and options premiums.
I think this is a common among most I've heard from. More people end up with more than they need. Multiple reasons probably exist for this but for me it will be retire now or wait 1 more year. And have an extra 250-300k in the bank.
Barring Mad Max catastrophe where we eat our neighbor's children cooked over an open fire -- yeah, I'm there too. I'm trying to force myself to spend more -- not a lot more -- just a little. They sell wine in glass bottles! Dammit, I buy one every now and then.
Post by: steveo on February 05, 2017, 02:10:35 PM
so the safest is plan for the worst . if not the worst then at least below average and adjust along the way . if things are better you got some raises coming .
The safest plan as you define it is not running out of money but some people might state the safest plan is to work as little as possible. There are trade-offs.
Post by: mathjak107 on February 05, 2017, 03:50:50 PM
Post by: Lake161 on February 05, 2017, 05:41:46 PM
Of course we actually spend more than that based on our portfolio performance, but it was building confidence in how low we could go that let me pull the plug.
Post by: Reynold on February 06, 2017, 10:06:56 AM
Who would have guessed that our basic medical costs would more than triple? This is an unknown going forward, of course.
That was pretty easy to predict, actually, much like college tuition, medical care costs have increased FAR faster than inflation for decades now. We are already projecting it to be the single largest ongoing expense we'll have in FIRE, at $25-30k/year for premiums plus copays on a high deductible plan. How much higher can it go? Well, how much might you be willing to pay for a custom tailored gene editing to remove that high breast cancer or Alzheimers risk you have, or repair it after the fact? Will insurance, government or private, cover it?
Going to that withdrawal rate has to cost you multiple years of extra work. In addition to the fact that 3.5 has never failed.
In the U.S. That rate has failed fairly often in a lot of other developed countries. Will the U.S. revert to the mean, and join the rest of the low growth developed world? Tune in in 30 years and see!
Post by: moof on February 06, 2017, 01:10:51 PM
you are looking at something else .
"real returns are needed of 2% over the first 15 years as an average to maintain a 4% safe withdrawal rate . not nominal .
every single worst case failure has been quantified as the real return average over the first 15 years has fallen below a 2% real return average while spending 4% inflation adjusted .
the worst time frame for a retiree was 1965/1966 . that time frame included the greatest bull market ever in its time frame . but once the 15 year mark was past there just was not enough left to grow .
really good average return by the way for that group . over 30 years markets averaged over 10% . but none of that matters when spending down . the die was cast for that 1966 group by the 15th year as inflation did them in .
here are the nominal returns for the 30 years for the 1965/1966 group , they look pretty good .
1966 stocks 10.23 - -bonds 7.85 -- rebalanced portfolio 9.56- - inflation 5.38
but the first 15 years were terrible and caused way excessive spending down .
1966-stocks minus .13%--bonds 1.08%--rebalanced .64%-- inflation 5.38%
all the worst case time frames show similar results . all were killed off in the first 15 years when the real return average for the 15 years fell below 2% .
Inflation from 2001 to 2016 (latest government data) average 1.8% per year. Works out to 2.8% per year real returns. Please show your work if you disagree. You are being quite the doom and gloom fellow and cherry picking a previous peak. Most folks invest over a long period, and will draw down over a long period. I will agree that if you are trying to retire with almost no margin in your budget and no prospect of being re-employable you might want to rethink retiring the DAY you hit 25.000x spending, but as has been mentioned that is not a real scenario.
Post by: mathjak107 on February 06, 2017, 01:34:19 PM
every worst case time frame had very good returns over it 's 30 year time frame , but it was inflation and the fact that they fell below a 2% real return over the first 15 years .
suppose you were so unlucky to retire in one of those worst time frames ,what would your 30 year results look like :
1907 stocks returned 7.77% -- bonds 4.250-- rebalanced portfolio 7.02- - inflation 1.64--
1929 stocks 8.19% - - bonds 1.74%-- rebalanced portfolio 6.28-- inflation 1.69--
1937 stocks 10.12 - - bonds 2.13 - rebalanced portfolio -- 7.24 inflation-- 2.82
1966 stocks 10.23 - -bonds 7.85 -- rebalanced portfolio 9.56- - inflation 5.38
for comparison the 140 year average's were:
stocks 8.39--bonds 2.85%--rebalanced portfolio 6.17% inflation 2.23%
so what made those time frames the worst ? what made them the worst is the fact in every single retirement time frame the outcome of that 30 year period was determined not by what happened over the 30 years but the entire outcome was decided in the first 15 years.
so lets look at the first 15 years in those time frames determined to be the worst we ever had.
1907--- stocks minus 1.47%---- bonds minus .39%-- rebalanced minus .70% ---inflation 1.64%
1929---stocks 1.07%---bonds 1.79%---rebalanced 2.29%--inflation 1.69%
1937---stocks -- 3.45%---bonds minus 3.07%-- rebalanced 1.23%--inflation 2.82%
1966-stocks minus .13%--bonds 1.08%--rebalanced .64%-- inflation 5.38%
Post by: boarder42 on February 06, 2017, 04:53:51 PM
Post by: AdrianC on February 07, 2017, 06:57:29 AM
Who would have guessed that our basic medical costs would more than triple? This is an unknown going forward, of course.
That was pretty easy to predict, actually, much like college tuition, medical care costs have increased FAR faster than inflation for decades now. We are already projecting it to be the single largest ongoing expense we'll have in FIRE, at $25-30k/year for premiums plus copays on a high deductible plan.
I don't see how a triple was easy to predict. Why not a double or a quadruple? If you mean a substantial increase was easy to predict then I agree.
We have to build in a substantial margin of safety, especially when we have people dependent on us. Easy for me to say since I already have.
I have $20K budgeted for healthcare costs this year. I currently have no idea what to budget for next year.
Post by: boarder42 on February 07, 2017, 08:00:20 AM
Who would have guessed that our basic medical costs would more than triple? This is an unknown going forward, of course.
That was pretty easy to predict, actually, much like college tuition, medical care costs have increased FAR faster than inflation for decades now. We are already projecting it to be the single largest ongoing expense we'll have in FIRE, at $25-30k/year for premiums plus copays on a high deductible plan.
I don't see how a triple was easy to predict. Why not a double or a quadruple? If you mean a substantial increase was easy to predict then I agree.
We have to build in a substantial margin of safety, especially when we have people dependent on us. Easy for me to say since I already have.
I have $20K budgeted for healthcare costs this year. I currently have no idea what to budget for next year.
bolded above are very subjective. and most here would argue the 4% rule is already and incredibly large margin of safety.
Post by: mathjak107 on February 07, 2017, 11:04:29 AM
Post by: AdrianC on February 08, 2017, 06:49:04 AM
bolded above are very subjective. and most here would argue the 4% rule is already and incredibly large margin of safety.
The margin of safety in the 4% rule is eroded if our expenses rise faster than inflation.
What do you have in your budget for health care costs in FIRE?
Post by: boarder42 on February 08, 2017, 07:13:59 AM
bolded above are very subjective. and most here would argue the 4% rule is already and incredibly large margin of safety.
The margin of safety in the 4% rule is eroded if our expenses rise faster than inflation.
What do you have in your budget for health care costs in FIRE?
Plan to use healthshare so around 6k per year.
Post by: mathjak107 on February 08, 2017, 03:55:15 PM
Post by: arebelspy on February 08, 2017, 04:58:57 PM
The safest plan as you define it is not running out of money but some people might state the safest plan is to work as little as possible. There are trade-offs.
Definitely! I subscribe to this idea: working too long is a failure to maximize life potential, which is more important to me than maximizing money potential.
Though I'd used a couple of calculators (Personal Capital and cFiresim) it was actually my budget spreadsheet that helped me pull the plug. I found a really detailed budget spreadsheet that helped me map out the big irregular expenses (home repairs, new car, health care, etc) and that build my comfort level that we could manage on the minimum level that the worst case scenarios on all the calculators predicted.
Of course we actually spend more than that based on our portfolio performance, but it was building confidence in how low we could go that let me pull the plug.
Nice! Do you have a link to where you found the spreadsheet?
Post by: steveo on February 09, 2017, 12:36:38 AM
The safest plan as you define it is not running out of money but some people might state the safest plan is to work as little as possible. There are trade-offs.
Definitely! I subscribe to this idea: working too long is a failure to maximize life potential, which is more important to me than maximizing money potential.
Unfortunately though I'm still working while you're galavanting around somewhere. Not that I'm jealous at all though. It doesn't preoccupy my thinking or anything like that.
Post by: arebelspy on February 09, 2017, 02:33:25 AM
The safest plan as you define it is not running out of money but some people might state the safest plan is to work as little as possible. There are trade-offs.
Definitely! I subscribe to this idea: working too long is a failure to maximize life potential, which is more important to me than maximizing money potential.
Unfortunately though I'm still working while you're galavanting around somewhere. Not that I'm jealous at all though. It doesn't preoccupy my thinking or anything like that.
Hah, this made me laugh.
The awesome thing is basically how sure FIRE is. Like sure, something terrible could happen (knock on wood and all that), but that's quite unlikely (and could happen anyways, having nothing to do with FIRE), so in the vast, vast majority of cases, spend less than you earn for year after year, and you'll hit FI/ER.
That makes me happy, knowing that you will get there.
Post by: mathjak107 on February 09, 2017, 02:41:25 AM
Post by: jim555 on February 09, 2017, 04:06:56 AM
A simple amortization table set with a reasonable rate of interest for the return. The stashe total is put in the sheet and the number of years between FIRE and pension/SS calculated. Very simple. I need to get to pension/SS (70 old for max benefit) age from the FIRE age. The pension/SS is enough to survive on indefinitely.
Post by: steveo on February 09, 2017, 04:23:59 AM
The safest plan as you define it is not running out of money but some people might state the safest plan is to work as little as possible. There are trade-offs.
Definitely! I subscribe to this idea: working too long is a failure to maximize life potential, which is more important to me than maximizing money potential.
Unfortunately though I'm still working while you're galavanting around somewhere. Not that I'm jealous at all though. It doesn't preoccupy my thinking or anything like that.
Hah, this made me laugh.
The awesome thing is basically how sure FIRE is. Like sure, something terrible could happen (knock on wood and all that), but that's quite unlikely (and could happen anyways, having nothing to do with FIRE), so in the vast, vast majority of cases, spend less than you earn for year after year, and you'll hit FI/ER.
That makes me happy, knowing that you will get there.
I was only joking but I completely agree with your comments. FIRE to me is robust. It's basically going to work in most cases in the western world.
Post by: steveo on February 09, 2017, 04:27:57 AM
it can also be thought of as the goal is working as little as possible . a good financial plan helps you get and stay there .
I think so but trying to be 100% safe goes against this goal. You can't have meet both goals. Personally I'm prepared to take more of a risk or adjust a little earlier. I'm comfortable with a 5% WR to FIRE but I may choose to work part-time or do OMY at that point if work seems fine. I don't want to be blindly working towards a 4% or lower WR.
As per the thread topic I use cfiresim and I'm pretty comfortable with a probability of success greater than 70%. Once I get to that level I will be reassessing work on a year by year basis.
Post by: boarder42 on February 09, 2017, 05:26:01 AM
it can also be thought of as the goal is working as little as possible . a good financial plan helps you get and stay there .
I think so but trying to be 100% safe goes against this goal. You can't have meet both goals. Personally I'm prepared to take more of a risk or adjust a little earlier. I'm comfortable with a 5% WR to FIRE but I may choose to work part-time or do OMY at that point if work seems fine. I don't want to be blindly working towards a 4% or lower WR.
As per the thread topic I use cfiresim and I'm pretty comfortable with a probability of success greater than 70%. Once I get to that level I will be reassessing work on a year by year basis.
i'm pretty similar to this. My old largest concern of healthcare is now not much of a concern since i've found healthshare. So what the politicians decide to do now doesnt really affect me in the largest used to be variable cost arena. Depending on my side gig income and my current status/position/happiness at my current job a may FIRE up to 2 years before hitting our 4% SWR level.
Post by: mathjak107 on February 09, 2017, 05:35:53 AM
What calculator?
A simple amortization table set with a reasonable rate of interest for the return. The stashe total is put in the sheet and the number of years between FIRE and pension/SS calculated. Very simple. I need to get to pension/SS (70 old for max benefit) age from the FIRE age. The pension/SS is enough to survive on indefinitely.
unless you are getting that interest rate every year ,with never spending down in a down year like with markets and or inflation that has negative return years your simple calculator can run out of money up to 15 years to soon depending on the sequence of those gains and losses . the exact same average return varies by up to 15 years in how long the money will last .
sequence risk is the biggest factor once you are spending .
Post by: boarder42 on February 09, 2017, 05:39:48 AM
What calculator?
A simple amortization table set with a reasonable rate of interest for the return. The stashe total is put in the sheet and the number of years between FIRE and pension/SS calculated. Very simple. I need to get to pension/SS (70 old for max benefit) age from the FIRE age. The pension/SS is enough to survive on indefinitely.
unless you are getting that interest rate every year ,with never spending down in a down year like with markets and inflation that has negative return years your simple calculator can run out of money up to 15 years to soon depending on the sequence of those gains and losses . the exact same average return varies by up to 15 years in the money lasting .
so what's your recommendation. i mean you keep spouting doom and gloom and basically you're saying oversave ... whats your SWR number that people should be shooting for in your opinion and how many years of work should the sacrafice to get it. Yes when you're retiring at 55 or 60+ its gonna be a lot harder to make an extra buck and you likely have already lived a life full of extra luxuries and built up a large lifestyle and likely a large paycheck to match so your risk has been increased when leaving. but a 20 something saving 60%+ that was dedicated and driven at an early age to learn about this and accomplish it ... I mean i guess just lay out what your number is b/c you keep saying oh but dont for get about what if this what if that. you can what if yourself down to 100% expected hyperinflation adjusted cash and never retire at all. so where do you draw your line.
Post by: mathjak107 on February 09, 2017, 05:45:02 AM
if you are not trying to rule out working than go with any amount you like .
i don't spout doom and gloom . . i don't want to work out of need , ever again if i can help it so i like high odds of success . but i would not work longer to get those odds . i would make lifestyle changes to raise the odds based on what i did have at the point i wanted to pull the plug . . .
Post by: boarder42 on February 09, 2017, 05:55:17 AM
90% is where the 4% SWR comes in at when i run Cfiresim with a 90.10 split for 40 years - b/c much longer and you start to miss some bad years. if you take 2MM and 80k in spending which is greatly non mustachian . and you allow yourself to work (or spend 5k less) on a variable spending plan this goes to 100% and your actual spending climbs thru the roof if you want it to.
just further proof that the 4% rule is 100% fine and if anyone FIREs based on this rule knowing they need slight flexibility to earn a bit or spend a bit less then there is no reason to be spouting doom and gloom you say you dont but you do ... i dont have time to go back and find posts of i had a friend who ran out of money etc. posts.
Post by: mathjak107 on February 09, 2017, 06:05:22 AM
i tried explaining that to you guys earlier .
if you are planning on cutting back if things do not go well market wise before considering working you need things to be able to cut back .
there is little to cut back when you planned a lifestyle around an amount that has much if not all the budget a need and not a want.
so the ratio of non discretionary spending vs discretionary has to be planned when you set up that retirement life style .
the more discretionary spending in the budget the more flexibility you have for the awe craps in life .
for the 2nd year in retirement we are getting hammered again with dental expenses that are 5 digits for us . luckily we can adjust spending elsewhere easy enough .
not everyone is going to plan around the same level of discretionary spending . some will have planned around more expensive basic lifestyles that are a lot more non discretionary .
then the recourse is work ,like it or not .
my example is we own investment co-op's in manhattan over looking central park . i would love to live there in retirement . but the cost of living is so high our non discretionary expenses would be insane . so instead we are staying here in queens in a nice area which costs a fraction of what manhattan cost . if we had to cut back we would have little flexibility living in manhattan . so we balanced out the lifestyle to the point that we felt comfortable with the ratio .
Post by: boarder42 on February 09, 2017, 06:15:01 AM
increasing discresionary just increases years to FIRE. you dont have to magically come up with the extra the market lost or the extra you need to spend in any given year.
and 'work' is not the correct term. finding a stream of income is the correct term. when you say work you're acting like you must re enter the market place. there are many ways to find streams of income thru hobbies or other things than the job you left. or going to mcdonalds.
its not a 1 for 1 replacement. the market dropped 40% in 2008 you dont have make up 40% of your spending level that year b/c the market dropped. a simple calculation based on historic models says you could just drop your withdrawal based on the variable spending patterns to no more than 6.25% less of your starting SWR and still be fine forever at 100%.
i make probably close to 30k a year in mostly passive income thru buying and selling tickets and tradelines. this isnt really "work"
Post by: mathjak107 on February 09, 2017, 06:17:24 AM
we have had a few but with some flexibility in the budget even that could likely be adjusted out unless it was severe .
the problem with trying to earn "extra income " is extra income becomes harder to find in the times you may need it the most . downturns can be not the best time to try to find a source of extra income whether hobby , working or other wise .
but these are issues you will have to work through on a case by case .
Post by: boarder42 on February 09, 2017, 06:19:28 AM
2008 was a short v-shaped drop , it really was not a factor as far as retirement planning . recovery was fast . what is a problem is moderate drops that are extended and u-shaped and burning up excessive assets trying to pay the bills if they occur .
we have had a few but with some flexibility in the budget even that could likely be adjusted out unless it was severe .
that statistic is not based on 2008 but based on back testing against 40 years of all the bad times in the markets. and 2008 you wouldnt have had to adjusted at all based on where we are at now.
Post by: mathjak107 on February 09, 2017, 06:22:14 AM
as kitces said
Ultimately, the key point here is simply to recognize that the 2000 retiree is merely ‘in line’ with the 1929 retiree, and doing better than the rest. And the 2008 retiree – even having started with the global financial crisis out of the gate – is already doing far better than any of these historical scenarios!
https://www.kitces.com/blog/how-has-the-4-rule-held-up-since-the-tech-bubble-and-the-2008-financial-crisis/#more-7856
Post by: boarder42 on February 09, 2017, 06:24:56 AM
Post by: mathjak107 on February 09, 2017, 06:27:52 AM
Post by: jim555 on February 09, 2017, 07:42:02 AM
The calculation is run every year. If I am under budget the amount will increase as time shortens by one less year and the under amount is "backed up". The investments are very conservative and are a lot less volatile than an ordinary portfolio. A lot less risk and less reward than a normal person would take.What calculator?
A simple amortization table set with a reasonable rate of interest for the return. The stashe total is put in the sheet and the number of years between FIRE and pension/SS calculated. Very simple. I need to get to pension/SS (70 old for max benefit) age from the FIRE age. The pension/SS is enough to survive on indefinitely.
unless you are getting that interest rate every year ,with never spending down in a down year like with markets and or inflation that has negative return years your simple calculator can run out of money up to 15 years to soon depending on the sequence of those gains and losses . the exact same average return varies by up to 15 years in how long the money will last .
sequence risk is the biggest factor once you are spending .
This approach works for me. YMMV.
Post by: tonysemail on February 09, 2017, 01:40:39 PM
I also like the drawdown tables made by www.i-orp.com
Recently, I really like the SWR toolbox on ERN (https://earlyretirementnow.com/2017/01/25/the-ultimate-guide-to-safe-withdrawal-rates-part-7-toolbox/).
Post by: steveo on February 09, 2017, 01:42:14 PM
correct thanks for repeating what i said. above you i said it was just an example of a down year. you can use the 60s or the 30s etc. they all show in cfiresim and show the strategy i mentioned above works.
mathjak107 makes some reasonable points however I think most people on here get that. I agree that if you are aiming for a bare bones spending level and you just get there and if something goes wrong you may need to adjust. Personally I have plenty of backup options in my plan and I assume most people do.
In reality the statement should be don't have no room to move and if you meet a 4% and possibly higher WR you should be fine.
Post by: human on February 15, 2017, 06:38:40 PM
Post by: Metric Mouse on February 16, 2017, 12:18:18 AM
I think I'm blind. I can't figure out how to include yearly additions to my portfolio between now and retirement in cfire. Where does this go?Which calculator are you using?
Post by: Mmm_Donuts on February 16, 2017, 03:17:23 AM
I think I'm blind. I can't figure out how to include yearly additions to my portfolio between now and retirement in cfire. Where does this go?
I put this in "other income." Put in your yearly amount and the years you'll be adding to your portfolio. It doesn't matter if it's before or after your RE date.
Post by: human on February 16, 2017, 07:10:22 PM
Post by: Metric Mouse on February 17, 2017, 01:48:11 AM
Thanks mmmdonuts. Metro mouse I was talking about cfiresim.*facepalm* You clearly stated that. Not sure how I could have missed that; sorry!
Post by: arebelspy on February 17, 2017, 02:51:58 AM
I missed it too, and had the same question. Apparently we both glossed over it.Thanks mmmdonuts. Metro mouse I was talking about cfiresim.*facepalm* You clearly stated that. Not sure how I could have missed that; sorry!
Post by: Salim on February 18, 2017, 10:02:42 PM
I like Mathjak's cautious and sensible approach. I am reminded of friends and family who are struggling to get by because they failed to save enough money. My heart goes out to them, whatever caused the situation.