What are your odds on retiring today?

[sol]

If you plug your current expenses, current savings, and required number of years it needs to last into firecalc or cfiresim, what are your retirement "success" odds? 

For example, a 40 year old worker bee couple with mmm-level expenses of $30k/year, who had saved up an mmm-level nest egg of $650k, and were expecting to live off of their pensions and social security payments after age 62 (and would thus need 22 years of expenses), have a 95% chance of success.  They should probably pull the trigger.  If they had no pensions or SS payments (though I'm not sure how you end up with neither of those) and thus needed to support themselves for more like 50 years, their odds of success drop to 63%.  They might also consider pulling the trigger.

If it's greater than 50%, then you are probably already working longer than necessary.

I think too many people get caught up on some predetermined goal number, without evaluating their current circumstances very carefully.  I've read too many stories here of people who held on to jobs they didn't enjoy for a bit longer than they needed to, because they were striving for some imaginary goal that didn't really mean anything, like "an even million dollars" even though it made no material difference to their success rates.  Like their success rate went from 91% to 94%.  Big whoop, those numbers are so high as to be indistinguishable within the confines of model uncertainty anyway.

In my case, I considered the odds after reducing my nest egg in order to clear my mortage and thus reduce my expenses.  The alternative is to try to figure it using variable annual expenses, more while you carry the mortgage and then less after it's done, but that complicates the math more than I thought was necessary.

edited to add:  you probably shouldn't vote if you're already retired, that will muck up the poll results.

[Rezdent]

Hmm.

I think my job is likely to get laid off, so I've been running numbers like crazy over the latest month.  Depending on how I tweak it, I get between 65 and 95%.
I'd prefer OMY,or even two, honestly.  Id like more than bare bones FI.  I'd prefer a bit more padding for travel, or hobbies..  it makes things so much rosier, but I'll take what I can get.

[Lnspilot]

I'm 30 years old, "planning" on pulling the trigger at the new year with a 3% WR and 1.1 mil portfolio, and I'm still scared shitless.

100% at $30k

100% at $35k

97% at $40k

...

[johnny847]

I'm at $115k NW, $19k a year in spending, at 24 years old.

So yeah, my success rate right now is zero. Give me another decade though, and I should be pretty close!

To get an idea of just how far I am:

Assuming I live until I'm 80, with my portfolio, I'd average an ending portfolio value of -$7.2M. Best case was $-2.5M, worst case was $-16.3M.

[Bracken_Joy]

0.0% chance. That's kinda what I figured.

[seattlecyclone]

We added our first child to the family this year, so spending will likely go up a bit from the past few years. Based on last year's spending we're at a 100% success rate, but without much margin to increase spending and keep the odds above 90%. We're switching to part-time roles at work to pad the stash a bit more while we get a handle on how much we'll spend with a kid vs. without. We may decide to retire in the next year or three, or we may decide that work is actually pretty great when the weekends are longer than the work weeks. Time will tell.

[LeRainDrop]

Huh, 34 years old, 61.2% success rate.  I guess that's a good thing considering the job circumstances I am experiencing right now . . . :-)

[Bateaux]

47 years old, married, debt free.


40 year retirement @ $50,000 per year 100%

40 year retirement @ $60,000 per year 84.9%

40 year retirement @ $70,000 per year 66.0%

Assuming no Social Security although both spouses have contributed over 25 years

[trashmanz]

FIRECalc looked at the 96 possible 50 year periods in the available data, starting with a portfolio of $1,040,000   and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 96 cycles. The lowest and highest portfolio balance at the end of your retirement was $-7,001,517 to $13,901,056, with an average at the end of $228,735. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 50 years. FIRECalc found that 57 cycles failed, for a success rate of 40.6%.

[Tyn]

I have a year of expenses saved, so I'm not too surprised by my 0 success chance.

[ender]

In my case, I considered the odds after reducing my nest egg in order to clear my mortage and thus reduce my expenses.  The alternative is to try to figure it using variable annual expenses, more while you carry the mortgage and then less after it's done, but that complicates the math more than I thought was necessary.

This is very easy on cfiresim, you just add your mortgage as an "other payment" that ends when the mortgage term is over (and subtract it from your annual expenses).

[Fastfwd]

I could retire today with 0 net worth and still make it. Gov would provide a barely enough to live income forever.

I could retire today and live frugally forever but my aim is to retire in 10 years at a middle class expense level which may actually be more since it seems that most of middle class is actually spending on credit.

[onlykelsey]

0% assuming 50K a year a spending (in Manhattan) and based only on investments (no equity), no social security.  I'm assuming I continue to pay my condo mortgage, which is unlikely. I'd probably sell or rent it out.  I don't have a clear idea on my expenses as I got married and had a 65K house expense the only year I tracked.

Boo.

[MandyM]

I was a little bummed to see 38% since I plan to quit June 2017. Then I put in my projected numbers for next year and it jumped to ~75%, not bad. I agree with Sol that people seem to over-focus on a percentage point here and there without considering what that really means. One percent difference on a WR is probably a pretty big difference; one percent difference on firecalc is meaningless.

[dude]

The last few times I've run it over the past couple years, I get 100%.  But that number depends very heavily on my seeing this career through another 3 years to my full retirement pension benefit.  I suppose I could stop saving so much and live larger, but I don't really feel the need to do that -- by MMM standards, my life is an exploding volcano of wastefulness (though largely on account of travel, which I don't find particularly wasteful).  So I'll gladly put in the remaining three years even though I would love to not have to, but life is nothing if not a series of trade-offs.

[Cycling Stache]

I'm a little ashamed to admit that I don't know how to run those calculators.

But they don't really help me much.  If my worker bee wife continues to work until 60 or so as she swears she's going to do, we've made it.  100%.  She claims early retirement has no appeal to her, and her salary covers our expenses and then some, plus we have a healthy nest egg after that.

But what if she changes her mind?  :)  We can't make it yet on just what we have, although I'm pretty certain I could make money in the future if I had to.  Just not anywhere near as easily as I do now.

So I'm conflicted, and posted about it a couple weeks ago, but haven't had time to follow up becuase . . . wait for it . . . work has been really busy!

[kendallf]

Thanks for starting this thread, Sol.  I hadn't run the numbers before based on "Fuck it, I quit today!"  Regardless of whether I plan on continuing a few more years to reach various goals, it's comforting to know that I'd be OK if I just started hitting the snooze button until they fired me.

If I cut my spending to $30k/yr now, and bumped it back up at 62 when my pension hits, I get 98% success.  I say "cut" even though that's approximately what I spend now, plus the mortgage on my second house, which I hope to sell later this year.   

There are various reasons why I'm unlikely to quit immediately, but it's a good thing to visualize.  It's a beautiful day outside; maybe I should go get in my car and drive away somewhere.  Or better yet, go get on the bike!

[dude]

So this is what FireCalc tells me (using my projected 401k balance, pension, and SS at 70) for an $80k initial spend adjusted for CPI each year:

FIRECalc looked at the 116 possible 30 year periods in the available data, starting with a portfolio of $800,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 116 cycles. The lowest and highest portfolio balance at the end of your retirement was $800,000 to $6,464,840, with an average at the end of $3,305,189. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.


But it's a little trickier than that, because my wife and I will have staggered retirements (likely by 5-7 years). So calculating both gets a little complicated.  I suppose I could just do her separately based on her spend, but her spending is a little murkier to me, though I think it's around $40k/yr.  She's on pace to have @$550k in investments, plus she has a house currently valued at $325k (her parents live there). So assuming the house gets liquidated in the future, she'd have close to $900k (and we should have an additional $100-$125k I'm not really taking into account).  So I'm reasonably certain her success rate is close to 100% as well.

Pretty gaudy numbers as far as I'm concerned (frankly, I'm still amazed we've come this far from where we started, which was in decidedly negative territory for me). Our combined $120k spend includes a mortgage, btw.  We don't plan on being mortgage-free; it's not necessary, but if we were to get rid of the mortgage, for example, downsizing and paying cash for a new place, the numbers would look even gaudier.

So now I'm just waiting for the Mack truck hit-and-run, or cancer, or lightning strike, etc. to make a mockery of my plans; like the old Jewish saying goes, "If you want to hear God laugh, just tell him your plans."

[tipster350]

51%. Having a roughly 50/50 chance is better than I thought. I'm encouraged. Since my job is on shaky ground it is a relief to know that I could do okay with finding just some additional income if it came to that.

[GuitarStv]

74% if we retire on 30k per year, which is doable . . . but a little tight.
36% if we retire on 40k per year, which would be quite extravagant retired living.

[neophyte]

1.2%  :(

[AnEDO]

This is a good tool.  Thanks for sharing.  83.5% btw.

[brooklynguy]

In my case, I considered the odds after reducing my nest egg in order to clear my mortage and thus reduce my expenses.  The alternative is to try to figure it using variable annual expenses, more while you carry the mortgage and then less after it's done, but that complicates the math more than I thought was necessary.

This is very easy on cfiresim, you just add your mortgage as an "other payment" that ends when the mortgage term is over (and subtract it from your annual expenses).

And make sure to set the mortgage payment (which should include only principal + interest) to "not inflation adjusted."

It's a useful exercise to run your own personal numbers using both this method and the method sol used (which simulates paying off your mortgage) to see the precise impact mortgage-payoff vs. mortgage-retention has on your own history-based retirement success odds, which could be drastic.

[CheapskateWife]

Wow Sol, thank you for this. 

Had a bit of a freak out this morning because we are putting so much into savings through paycheck allotments that it almost always feels like there isn't enough left at the end of the month to save anything extra.  I keep forgetting that we are maxing out our TSP's and that our annual expenses are high because of child support and elder care expenses.  Both of these things will end "soon-ish" 

That being said, don't facepunch me for our expense needs...

at 90K in expenses, our immediate retirement success rate is 68%
at 85K in expenses, our immediate retirement success rate is 95%
at 80K in expenses, our immediate retirement success rate is 100%

[meerkat]

I hadn't come across cfiresim before, thanks for sharing! The level of tweaking it allows is helpful.

Going off the numbers I can recall/guestimate: currently 0% chance, even with some adjusting I'd like to do later this year. No surprise there.

Just for kicks I ran the numbers with an additional $100k saved up and distributed appropriately in the portfolio and .... 78%. Holy crap. That's a lot better than I expected. I'll have to revisit it sometime when I have all the accurate numbers handy.

[forummm]

In my case, I considered the odds after reducing my nest egg in order to clear my mortage and thus reduce my expenses.  The alternative is to try to figure it using variable annual expenses, more while you carry the mortgage and then less after it's done, but that complicates the math more than I thought was necessary.

This is very easy on cfiresim, you just add your mortgage as an "other payment" that ends when the mortgage term is over (and subtract it from your annual expenses).

It's more complicated if you have an ARM.

If they had no pensions or SS payments (though I'm not sure how you end up with neither of those)

If you were super mustachian and retire before hitting 40 SS credits. Not that hard to do if you have a DINK household with reasonably high incomes and no/low student debt. Although, I would imagine it would be more than worth it to get a PT job here and there after RE just to hit the 40 credits, especially getting 40 MC credits to avoid the premiums.

[nereo]

Hmm... 0.0% (and that doesn't surprise me).  Under all scenarios we run out of money in about 12 years at our current spending.
however, if we doubled our 'stache we'd be above 50%.  Factor a paid-off mortgage in 17 years (and subsequent reduction in spending) and we're at 72%.

Guessing 8-10 years before FI-hood (depending on market conditions).

[Northwestie]

100% - but I knew that already.  I guess things like this can be another way of checking your assumptions

[forummm]

I like the idea of this thread. A lot of people are too caught up on a particular number for perceived safety (like 3% WR). But getting your number requires making a lot of assumptions. And I get significantly different results depending on what assumptions I make. For example, if the ACA goes away or is significantly changed in certain ways, my success rate goes down by 25%. We also just had a baby and I'm not sure what he'll end up costing us as the years go on. And we probably will have another kid or two, so double or triple that unknown amount of money. And I'm not sure whether SS will continue to pay out 100% of today's benefits or be trimmed to pay out 75% of today's benefits to match the projected SS tax receipts once the reserve fund gets depleted.

I have a semi-complicated model that I've been working on. It's nice that cFIREsim lets you save your scenarios so you don't have to start from scratch each time. It lets me tweak some of the assumptions I'm making and see how much that changes things.

I saw that there were a lot of people here with over 90% success rates and wondered why people haven't already retired yet. So I created a companion thread asking "What percentage of portfolio success using firecalc or cfiresim do you need to hit before you pull the plug?"

[MandyM]

Realizing that its a small sample size, I'm pretty surprised at the poll results - the vast majority of people are either 0% or 90+%. Will it start to even out? Or perhaps it means that people in the middle are on cruise control and not as active on the forum.

[onlykelsey]

Realizing that its a small sample size, I'm pretty surprised at the poll results - the vast majority of people are either 0% or 90+%. Will it start to even out? Or perhaps it means that people in the middle are on cruise control and not as active on the forum.

Could the generally high income of folks on this forum be part of it?  If my spending stays the same, I expect to jump from 0 to ~50% in ~4-5 years, because my income allows me to.

[Luck12]

Ranges from 91% to100% (assuming $0 SS) depending on spending level.   It's complicated for those of us who are not yet married, but would like to in the future.  Plus my job is very easy and stress free 95% of the time so I keep working to build up more buffer. 

The other thing is I expect future returns to be lower than in the past and I'm definitely not alone in thinking this. 

[nereo]

Realizing that its a small sample size, I'm pretty surprised at the poll results - the vast majority of people are either 0% or 90+%. Will it start to even out? Or perhaps it means that people in the middle are on cruise control and not as active on the forum.

Well, herein lies the rub.  There's a huge range where a 30yr retirement scenario will yield a 0% success rate: basically anything where the WR is >~11%.  Then it rapidly goes to 90% at ~5%WR.  From there it takes a while to hit 100%.
Practically speaking, if we assume a spending rate of $25000 (on the low side)
any portfolio <~$225k will be 0%
any portfolio >~$500k will be >90%

It is a very small window between 0-90%.  So no, I don't think a higher sample size will shift that very much.

[RWD]

0% here as well. 5% if we only look at the next 30 years. In the best case scenario I could just make it to social security age, but of course that alone wouldn't be adequate.

[Clean Shaven]

I didn't vote on the poll, because our annual spending in retirement is still up for debate between me and my wife.  Based on what I project we need, we could pull the plug right now, and be at 100.  Based on her anticipated spending, we need to keep working a couple more years.  We clearly have some more discussions ahead, but this may be a case of "happy wife, happy life," and just suck it up for another 2-3 years, with the result being way more $ than we need.  Which I guess is OK.

[Mr. Green]

90.11% success spending 35k per year on an initial portfolio value of 800k over 55 years with SS thrown in at the end. Of course the longer period means fewer cycles.

[Mmm_Donuts]

With cfiresim we're at 90% or so, provided we sell our house in ~20 years. If the house doesn't appreciate beyond inflation rates, then we would need to rent at that point, and if it does appreciate then we would downsize to a cheaper property in a LCOLA.

I consider us semi-FIREd at this point. I work part time, and DH would take a contract job if one came up, but isn't really sweating it if it doesn't happen. I'm a little uncomfortable at 90% plus the uncertainty of having to sell the house - this is why we're not fully FIREd yet.

[zephyr911]

Heehee! I used 24K and 300K over 50 years, for a probability of 3.1%.
But I'm quitting FT work next year with part-time jobs netting roughly $18K and $10K, that I plan to keep for 6 and 20+ years, respectively. Plus, the actively managed real estate portfolio is crushing the stock market average, and DW just reiterated her plan to work for many years (she is at $40k and rising, and typically spends less than half of it).

[ender]

Realizing that its a small sample size, I'm pretty surprised at the poll results - the vast majority of people are either 0% or 90+%. Will it start to even out? Or perhaps it means that people in the middle are on cruise control and not as active on the forum.

That's not too surprising though is it?

If someone was at 50% in 2012, market increases in the last 4 years would have made a significant impact on their portfolio. The SP500 has almost doubled in that timeframe. It would make them much closer to 100% now. Especially as for many, their spending has also reduced during this timeframe. Especially for folks who were on the higher side than 50%.

But someone closer to 0% in that timeframe they probably have not accumulated enough to really push them into a high percentage yet. Nearly doubling minimal retirement accounts is not super meaningful from a percentage of success. So people with the midrange percentages 3-4 years ago are now closer to the 90% mark but those without them are still working.

I suspect anecdotally most people in the midrange amounts now are there because of very large savings rates in the past few years (probably combined with large incomes).

[dougules]

37%.  I'm actually kind of surprised it's that high.   I'm not quite sure how not having employer subsidized medical insurance will change that though.   I have more medical issues than MMM. 

Also, what age are we going to?

[johnny847]

37%.  I'm actually kind of surprised it's that high.   I'm not quite sure how not having employer subsidized medical insurance will change that though.   I have more medical issues than MMM. 

Also, what age are we going to?

I propose using this calculator to figure out which age to go to.

You can't simply use the average life expectancy, because that is the average for all people currently alive today [edited to fix: people born today (brain fart)]. Once I say that I've already reached 24 years of age, my expected lifespan is already better than the total average.
The easiest way to see this is the national average life expectancy, depending on who you ask, is about 78.8 years. But clearly an 80 year old doesn't have a life expectancy of 78.8 years!

Incidentally I forgot about the calculator and just guessed 80 when I did it. Not that it really matters for me because my success rate was 0% anyways.

[CowboyAndIndian]

100% if I consider SS. Without SS, it drops to 78.3%.

I already have about 80 quarters for SS.

Not happy with my OMY syndrome :-(

[Eric]

I put 70%, which includes a semi-educated guess on our post retirement expenses.  We're going to perpetual travel, so it's hard to nail down the expense aspect, but of course will allow us more flexibility.  Won't be long now!

[FrugalZony]

Over 90... but I knew that already.
I am two weeks away from handing in my resignation ;)

That said, my current expenses are very low and are likely to go up by quite a bit, once our first stage of FIRE is over.
Still, I'll take my 96% and see where my flexibility leads me.

It's still scary to turn off the income that allowed a high savings rate, knowing that there will be an increase in lifestyle cost after a couple of years.

[kendallf]

I saw that there were a lot of people here with over 90% success rates and wondered why people haven't already retired yet. So I created a companion thread asking "What percentage of portfolio success using firecalc or cfiresim do you need to hit before you pull the plug?"

I will answer you here, as I think my reasons don't relate to a calculator much if at all.  As I posted above, as long as our house sells this year, I could quit immediately and have a great likelihood of being OK financially -- if things stay roughly as they are. 

I'm working right now for the (substantial) carrot at the end of six more years, and because it isn't onerous, and because that substantial increase in money will open up many options that I couldn't consider if I quit immediately.  I suspect most people who are still working with high "success" percentages in CFiresim as-is are doing the same.

In my case, I'm six years out from an immediate pension, a supplemental FERS pension, and continued health care coverage with premium contribution by the gov't.  Those are probably reason enough to stay, but I can also save heavily over these years, which will open up many possibilities for me and my children.

If I quit immediately, my CFiresim median ending portfolio is ~$5M.  If I stay and save very conservatively (i.e., no 80% savings rates, just maxing the TSP plus match) it is ~$15M.  That's enough to start thinking about a family trust, substantial life changing charity contributions, that sort of thing.

[golden1]

Right now it's at about 40% but projecting ahead 10 years with a paid off home plus increases in my portfolio, I am looking at around 99.1%.  I can live with waiting 10 more years.  That also is not counting potential increases in salary,  some stock options that may or may not pan out and social security still being around.  If we add those things to our retirement fund, we will be living pretty large if we want to. 

[forummm]

37%.  I'm actually kind of surprised it's that high.   I'm not quite sure how not having employer subsidized medical insurance will change that though.   I have more medical issues than MMM. 

Also, what age are we going to?

You can't simply use the average life expectancy, because that is the average for all people currently alive today.

Actually, that's usually the life expectancy for someone who's born today--not everyone alive today. As you state in your response, life expectancy gets higher each additional year of age the person has attained.

100% if I consider SS. Without SS, it drops to 78.3%.

I already have about 80 quarters for SS.

Not happy with my OMY syndrome :-(

Quit if you want to. SS isn't going away entirely. What's the % if you do 75% SS (fully funded with current law) or 50% SS (just to be uber conservative)?

[dandarc]

0%

Guess I'm still working for a while.  Of course I knew that - around 20% is not a safe withdrawal rate.

[johnny847]

37%.  I'm actually kind of surprised it's that high.   I'm not quite sure how not having employer subsidized medical insurance will change that though.   I have more medical issues than MMM. 

Also, what age are we going to?

You can't simply use the average life expectancy, because that is the average for all people currently alive today.

Actually, that's usually the life expectancy for someone who's born today--not everyone alive today. As you state in your response, life expectancy gets higher each additional year of age the person has attained.

Er, oops. Yeah you're right.

[GuitarStv]

I always figure on living to 95.