I can't use cFIREsim, cause our portfolio is mostly real estate. But I'd estimate my chances are just north of 50% of not needing more paid work?
I'm surprised your estimate is that low. Didn't you say you continue to have a positive savings rate in retirement? Is it because you expect your expenses to go up (presumably it's not because you expect your rental income to go down)?
Well... it's really hard to get an accurate estimate. So I fluctuate between "we never have to work for money again!" and "we'll definitely have to go back at some point." My 50/50 estimate is approximately how much time I spend in each stage. ;)
I do expect my expenses to go up, but only to the level I projected pre-FIREing. We're way below that right now, and if we stayed at this low level forever, we'd have no problems whatsoever. But I don't necessarily expect them to rise past what I had projected (aka pulled out of nowhere).
It's more that I think my SWR is lower than my ROI. So while I think we can get along just fine on cash flow for decades(?), we could still hit ER failure. With my type of income, over time it could fall in real terms if expenses outpace inflation and/or rents underperform inflation.
So we do have a positive savings rate, for now. But that's not even enough to guarantee having "enough."
For example, i someone had 1MM and wanted to spend in line with the 4% rule, and had a higher ROI than that 4%, so they had a positive savings rate, and a flat inflation rate, but it was higher than their savings rate, they'd run out of money, even with a positive savings rate.
Hypothetical: Person has 1MM, is invested in a one-year CD that paid 5% (and had access to this investment forever, in this hypothetical), and they spent 4% (40k), and reinvest 1% of it (10k), with a 3% inflation rate, the first year they'd spend 40k, reinvest 10k. The next year, at 3% inflation, they'd spend 41200 (an extra 1.2k over the year before), but they'd have only generated an extra $500 (5% return on the extra 10k invested). Their expenses are growing faster than their reinvestments.
Eventually the amount they withdraw (the initial 40k, but adjusted up for inflation) will be higher than the interest generated, so they won't be reinvesting any anymore. This happens in year 11. They then have a negative savings rate, and start eating into principal to maintain their lifestyle. At the end of year 18, their portfolio has fallen back below it's original 1MM.
After 30 years, they'd have about half their initial starting capital (~500k), and only generating ~30k (with their expenses being ~94k annually at that point). By year 37, they're out of money.
This is someone with a guaranteed investment return of 5% and a positive savings rate of 20% (1% of their 5% return), and they ran out of money after less than 40 years!
Now, obviously they only had a real positive return of ~1.94% (5% nominal, 3% inflation) and were withdrawing 4%, so we can see disaster coming when we understand real return. But you can easily see why someone who says "
I have a withdrawal rate less than my ROI, and a 20% savings rate!" would think they're in good shape, even though they're headed for disaster.
This is the situation I'm in. My ROI on my rentals (just my cash on cash return, not counting appreciation and principal paydown) is much higher than my "WR" (aka spending amount). Due to this, I have a positive savings rate.
Yet my "WR" may still be too high, and I may still be heading for portfolio failure. I don't know. But it is an added risk, if expenses outpace inflation or rents underperform inflation. Then I could have a real return, like our doomed investor, of less than my spending rate, all while having a positive savings rate, and not even know it.
That is my bigger worry. Not my expenses increasing, or my portfolio not putting out enough cash flow to support me over the next decade or two. It's multiple decades down the line--will I have reinvested enough, along the way, to avoid that scenario?