A question about a slightly different way of looking at retirement maybe

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coffeeblack
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A question about a slightly different way of looking at retirement maybe

Post by coffeeblack »

A simple question.

If you did a firecalc calculation based on spending and asset allocation for a 50 year retirement and at the end of that retirement firecalc finding were 100% with 2 million left at 100 years old, would you retire? Please make decision only based on those findings and not such thing as "I like what I do".

Also remember it's 2 million at the bottom not average, according to firecalc.
Last edited by coffeeblack on Sun Oct 11, 2020 11:52 am, edited 1 time in total.
Mike Scott
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Re: A question about a slightly different way of looking at retirement maybe

Post by Mike Scott »

Or you think of it as having new choices whatever those may be.
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coffeeblack
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Re: A question about a slightly different way of looking at retirement maybe

Post by coffeeblack »

Mike Scott wrote: Sun Oct 11, 2020 11:49 am Or you think of it as having new choices whatever those may be.
Good point. But what if you were looking at it from a purely retirement standpoint.
KlangFool
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Re: A question about a slightly different way of looking at retirement maybe

Post by KlangFool »

OP,

1) Then, whether you choose to retire is no longer a financial decision.


2) If the firecalc calculation is true, you can verify the number via a pencil and back of the envelope. Aka, your portfolio is probably 50 times or greater than your annual expense. Is that correct?


KlangFool
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coffeeblack
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Re: A question about a slightly different way of looking at retirement maybe

Post by coffeeblack »

KlangFool wrote: Sun Oct 11, 2020 11:54 am OP,

1) Then, whether you choose to retire is no longer a financial decision.


2) If the firecalc calculation is true, you can verify the number via a pencil and back of the envelope. Aka, your portfolio is probably 50 times or greater than your annual expense. Is that correct?


KlangFool
I didn't want to get to much into the detail because it is not relevant. The number I put in were based on a 40% stock/60 % short term and it turns out its about 30X of initial expenses. I did include social sercurity.
KlangFool
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Re: A question about a slightly different way of looking at retirement maybe

Post by KlangFool »

coffeeblack wrote: Sun Oct 11, 2020 11:57 am
KlangFool wrote: Sun Oct 11, 2020 11:54 am OP,

1) Then, whether you choose to retire is no longer a financial decision.


2) If the firecalc calculation is true, you can verify the number via a pencil and back of the envelope. Aka, your portfolio is probably 50 times or greater than your annual expense. Is that correct?


KlangFool
I didn't want to get to much into the detail because it is not relevant. The number I put in were based on a 40% stock/60 % short term and it turns out its about 30X of initial expenses. I did include social sercurity.
coffeeblack,

Is the 30X before or after you collecting social security? I would assume that it is before. And, it is probably above 50X after collecting social security.


I profer a simple method to reverify the numbers.

KlangFool
Last edited by KlangFool on Sun Oct 11, 2020 12:13 pm, edited 1 time in total.
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CyclingDuo
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Re: A question about a slightly different way of looking at retirement maybe

Post by CyclingDuo »

coffeeblack wrote: Sun Oct 11, 2020 11:57 am
KlangFool wrote: Sun Oct 11, 2020 11:54 am OP,

1) Then, whether you choose to retire is no longer a financial decision.


2) If the firecalc calculation is true, you can verify the number via a pencil and back of the envelope. Aka, your portfolio is probably 50 times or greater than your annual expense. Is that correct?


KlangFool
I didn't want to get to much into the detail because it is not relevant. The number I put in were based on a 40% stock/60 % short term and it turns out its about 30X of initial expenses. I did include social sercurity.
I would want more than 30X with bonds returning nada right now if I needed to fund 50 years. :beer

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
Topic Author
coffeeblack
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Re: A question about a slightly different way of looking at retirement maybe

Post by coffeeblack »

CyclingDuo wrote: Sun Oct 11, 2020 12:02 pm
coffeeblack wrote: Sun Oct 11, 2020 11:57 am
KlangFool wrote: Sun Oct 11, 2020 11:54 am OP,

1) Then, whether you choose to retire is no longer a financial decision.


2) If the firecalc calculation is true, you can verify the number via a pencil and back of the envelope. Aka, your portfolio is probably 50 times or greater than your annual expense. Is that correct?


KlangFool
I didn't want to get to much into the detail because it is not relevant. The number I put in were based on a 40% stock/60 % short term and it turns out its about 30X of initial expenses. I did include social sercurity.
I would want more than 30X with bonds returning nada right now if I needed to fund 50 years. :beer

CyclingDuo
Bonds have returned nothing in the past. Remember that firecalc calculates based on the worst of times.
is50xenough
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Re: A question about a slightly different way of looking at retirement maybe

Post by is50xenough »

I would run through the gamut of online calculators, but if all yield similar results, for sure. BUT caveats are what changes might happen in life?

1) relationship changes
2) kid changes
3) lifestyle changes
4) etc

Key Question if looking at 50 years.
runner3081
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Re: A question about a slightly different way of looking at retirement maybe

Post by runner3081 »

To be... hitting my "target" just means I can do whatever I want. Stay working, tell them to pound sand and never work again, go volunteer, work on projects at home, take 2 years off and come back to work, etc.

Flexibility :)

Seems to be freeing!
delamer
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Re: A question about a slightly different way of looking at retirement maybe

Post by delamer »

“Spending” is too loosely defined for me to make a decision.

My survival budget is different than my living-life-on-my-terms budget.

But probably I’d retire.
lakpr
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Re: A question about a slightly different way of looking at retirement maybe

Post by lakpr »

I would absolutely call it quits with the scenario described in the first post. Life is too short to be working for someone else and living on one's own wishes and terms.
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CyclingDuo
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Re: A question about a slightly different way of looking at retirement maybe

Post by CyclingDuo »

coffeeblack wrote: Sun Oct 11, 2020 12:04 pm
CyclingDuo wrote: Sun Oct 11, 2020 12:02 pm
coffeeblack wrote: Sun Oct 11, 2020 11:57 am
KlangFool wrote: Sun Oct 11, 2020 11:54 am OP,

1) Then, whether you choose to retire is no longer a financial decision.


2) If the firecalc calculation is true, you can verify the number via a pencil and back of the envelope. Aka, your portfolio is probably 50 times or greater than your annual expense. Is that correct?


KlangFool
I didn't want to get to much into the detail because it is not relevant. The number I put in were based on a 40% stock/60 % short term and it turns out its about 30X of initial expenses. I did include social sercurity.
I would want more than 30X with bonds returning nada right now if I needed to fund 50 years. :beer

CyclingDuo
Bonds have returned nothing in the past. Remember that firecalc calculates based on the worst of times.
I don't know your particulars and therefore jumped to thinking "if I was personally retiring and intending to fund 50 years of retirement, that would put me in my mid to late 30's right now". If I were in that position, I would personally want to have more of a cushion than 30X initial expenses. That probably comes from reading so many posts here that may mention 33X or 35X, etc... .

Since I'm not in my mid to late 30's, I'm not worrying about a 50 year retirement as I doubt I will be living at age 109 since I am now 59 - nor will I make it to age 100 with what my body has been through over the prior decades. And I have no idea your age outside of you mentioning the 50 years would take you to 100 so have to guess you are 50, so ignore my jumping in without more details.

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
tibbitts
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Re: A question about a slightly different way of looking at retirement maybe

Post by tibbitts »

lakpr wrote: Sun Oct 11, 2020 1:09 pm I would absolutely call it quits with the scenario described in the first post. Life is too short to be working for someone else and living on one's own wishes and terms.
Well, while people are technically working for someone else, some fortunate people may be doing essentially what they want when they want, so that might in fact already be their own "wishes and terms." In fact some people have access to employer resources that they can use to do what they want that might not be available to them outside of their job.
rich126
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Re: A question about a slightly different way of looking at retirement maybe

Post by rich126 »

coffeeblack wrote: Sun Oct 11, 2020 11:47 am A simple question.

If you did a firecalc calculation based on spending and asset allocation for a 50 year retirement and at the end of that retirement firecalc finding were 100% with 2 million left at 100 years old, would you retire? Please make decision only based on those findings and not such thing as "I like what I do".

Also remember it's 2 million at the bottom not average, according to firecalc.
That sounds good.

Things to consider:
1. How was your spending selected? Higher, lower, mid range (i.e., how much wiggle room do you have)
2. You'll very likely be dead long before you reach 100.
3. I don't think anyone can predict the next 50 yrs and to think it will be similar to the last 50 years in investing is foolish. So be prepared to adapt and adjust your investments.
TheNightsToCome
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Re: A question about a slightly different way of looking at retirement maybe

Post by TheNightsToCome »

[/quote]
Remember that firecalc calculates based on the worst of times.
[/quote]

If $2M is the bottom of the range of outcomes, then you probably have a fairly large safety margin, but the fact that firecalc includes the worst of the historical record should provide little comfort.

Why is that?

Because long-term returns depend on starting valuations, and the current combination of high stock and bond valuations is unprecedented, or nearly so. The historical record does not contain 100 years of data conditional on current valuations. Past results don't guarantee future results in any case, but in our current circumstance past results are of some value, but not much.
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Kenkat
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Re: A question about a slightly different way of looking at retirement maybe

Post by Kenkat »

So you are saying you plugged in your numbers and firecalc says you have a 100% chance of success for 50 years with a minimum projected ending value of $2,000,000?

This is an absolute yes; I am honestly a little baffled that you would even need to ask but perhaps I have misunderstood the question.
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coffeeblack
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Re: A question about a slightly different way of looking at retirement maybe

Post by coffeeblack »

Kenkat wrote: Sun Oct 11, 2020 1:51 pm So you are saying you plugged in your numbers and firecalc says you have a 100% chance of success for 50 years with a minimum projected ending value of $2,000,000?

This is an absolute yes; I am honestly a little baffled that you would even need to ask but perhaps I have misunderstood the question.
Thank you for your response. I hear what you are saying but based on some of the responses above I would say not everyone would entirely agree.
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coffeeblack
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Re: A question about a slightly different way of looking at retirement maybe

Post by coffeeblack »

CyclingDuo wrote: Sun Oct 11, 2020 1:13 pm
coffeeblack wrote: Sun Oct 11, 2020 12:04 pm
CyclingDuo wrote: Sun Oct 11, 2020 12:02 pm
coffeeblack wrote: Sun Oct 11, 2020 11:57 am
KlangFool wrote: Sun Oct 11, 2020 11:54 am OP,

1) Then, whether you choose to retire is no longer a financial decision.


2) If the firecalc calculation is true, you can verify the number via a pencil and back of the envelope. Aka, your portfolio is probably 50 times or greater than your annual expense. Is that correct?


KlangFool
I didn't want to get to much into the detail because it is not relevant. The number I put in were based on a 40% stock/60 % short term and it turns out its about 30X of initial expenses. I did include social sercurity.
I would want more than 30X with bonds returning nada right now if I needed to fund 50 years. :beer

CyclingDuo
Bonds have returned nothing in the past. Remember that firecalc calculates based on the worst of times.
I don't know your particulars and therefore jumped to thinking "if I was personally retiring and intending to fund 50 years of retirement, that would put me in my mid to late 30's right now". If I were in that position, I would personally want to have more of a cushion than 30X initial expenses. That probably comes from reading so many posts here that may mention 33X or 35X, etc... .

Since I'm not in my mid to late 30's, I'm not worrying about a 50 year retirement as I doubt I will be living at age 109 since I am now 59 - nor will I make it to age 100 with what my body has been through over the prior decades. And I have no idea your age outside of you mentioning the 50 years would take you to 100 so have to guess you are 50, so ignore my jumping in without more details.

CyclingDuo
You make excellent points. For the record I'm 53, Married, no children. My wife is retired.
KlangFool
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Re: A question about a slightly different way of looking at retirement maybe

Post by KlangFool »

Kenkat wrote: Sun Oct 11, 2020 1:51 pm So you are saying you plugged in your numbers and firecalc says you have a 100% chance of success for 50 years with a minimum projected ending value of $2,000,000?

This is an absolute yes; I am honestly a little baffled that you would even need to ask but perhaps I have misunderstood the question.

You can get a calculator to say whatever that you want basing on the numbers that you choose to put in. GIGO.


I prefer a simpler sanity check.


KlangFool
Last edited by KlangFool on Sun Oct 11, 2020 2:30 pm, edited 1 time in total.
Dottie57
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Re: A question about a slightly different way of looking at retirement maybe

Post by Dottie57 »

coffeeblack wrote: Sun Oct 11, 2020 2:07 pm
Kenkat wrote: Sun Oct 11, 2020 1:51 pm So you are saying you plugged in your numbers and firecalc says you have a 100% chance of success for 50 years with a minimum projected ending value of $2,000,000?

This is an absolute yes; I am honestly a little baffled that you would even need to ask but perhaps I have misunderstood the question.
Thank you for your response. I hear what you are saying but based on some of the responses above I would say not everyone would entirely agree.
I think you are getting some negativity because you lack details. We don’t know your portfolio Amount, inflation rate, spending anount, returns for bonds and stocks etc. Details matter.

I can tell youI I haven’t received such optimistic results from Firecalc. And I’ve run it many many times.

P.S. from portfolio tab.

“ If you leave this section alone, FIRECalc assumes your retirement portfolio is invested in a "couch potato" portfolio of 75% stock index and 25% bond funds, with a 0.18% fee to the fund.”.

75% is a higher a percent of stock than I would want. sequence of Return Risk is real.
Last edited by Dottie57 on Sun Oct 11, 2020 2:31 pm, edited 1 time in total.
Topic Author
coffeeblack
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Re: A question about a slightly different way of looking at retirement maybe

Post by coffeeblack »

Dottie57 wrote: Sun Oct 11, 2020 2:19 pm
coffeeblack wrote: Sun Oct 11, 2020 2:07 pm
Kenkat wrote: Sun Oct 11, 2020 1:51 pm So you are saying you plugged in your numbers and firecalc says you have a 100% chance of success for 50 years with a minimum projected ending value of $2,000,000?

This is an absolute yes; I am honestly a little baffled that you would even need to ask but perhaps I have misunderstood the question.
Thank you for your response. I hear what you are saying but based on some of the responses above I would say not everyone would entirely agree.
I think you are getting some negativity because you lack details. We don’t know your portfolio Amount, inflation rate, spending anount, returns for bonds and stocks etc. Details matter.

I can tell youI I haven’t received such optimistic results from Firecalc. And I’ve run it many many times.
Well, I ran it that way because I wanted to see if a basic 40/60 portfolio with those findings was well enough. So lets give some more details. My portfolio is very basic.

Investible net worth:
$4,550,000
VTSAX 40%
VBTLX 50%
Cash 10% (Actually 1/2 t bill/Cash

Real Estate $250,000 Family living in it no rent at this time.
Home worth $900,000 will downsize in few years and invest about $250,000.

Age 53 married, no children, wife retired.

Spending: 150,000 to 170,000 pretax, includes healthcare, travel, transportation etc.

I ran firecalc as 40% equities/60% short term, inflation to CPI, 47 years of retirement, included social security, and added the value of the real estate at 65 years old and 75 years old.
KlangFool
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Re: A question about a slightly different way of looking at retirement maybe

Post by KlangFool »

coffeeblack wrote: Sun Oct 11, 2020 2:26 pm
Spending: 150,000 to 170,000 pretax, includes healthcare, travel, transportation etc.
coffeeblack,

How much tax would you be paying every year?


KlangFool
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coffeeblack
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Re: A question about a slightly different way of looking at retirement maybe

Post by coffeeblack »

KlangFool wrote: Sun Oct 11, 2020 2:45 pm
coffeeblack wrote: Sun Oct 11, 2020 2:26 pm
Spending: 150,000 to 170,000 pretax, includes healthcare, travel, transportation etc.
coffeeblack,

How much tax would you be paying every year?


KlangFool
Around 12 to 15K.
MikeG62
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Re: A question about a slightly different way of looking at retirement maybe

Post by MikeG62 »

coffeeblack wrote: Sun Oct 11, 2020 2:26 pm
Dottie57 wrote: Sun Oct 11, 2020 2:19 pm
coffeeblack wrote: Sun Oct 11, 2020 2:07 pm
Kenkat wrote: Sun Oct 11, 2020 1:51 pm So you are saying you plugged in your numbers and firecalc says you have a 100% chance of success for 50 years with a minimum projected ending value of $2,000,000?

This is an absolute yes; I am honestly a little baffled that you would even need to ask but perhaps I have misunderstood the question.
Thank you for your response. I hear what you are saying but based on some of the responses above I would say not everyone would entirely agree.
I think you are getting some negativity because you lack details. We don’t know your portfolio Amount, inflation rate, spending anount, returns for bonds and stocks etc. Details matter.

I can tell youI I haven’t received such optimistic results from Firecalc. And I’ve run it many many times.
Well, I ran it that way because I wanted to see if a basic 40/60 portfolio with those findings was well enough. So lets give some more details. My portfolio is very basic.

Investible net worth:
$4,550,000
VTSAX 40%
VBTLX 50%
Cash 10% (Actually 1/2 t bill/Cash

Real Estate $250,000 Family living in it no rent at this time.
Home worth $900,000 will downsize in few years and invest about $250,000.

Age 53 married, no children, wife retired.

Spending: 150,000 to 170,000 pretax, includes healthcare, travel, transportation etc.

I ran firecalc as 40% equities/60% short term, inflation to CPI, 47 years of retirement, included social security, and added the value of the real estate at 65 years old and 75 years old.
OP,

Let me start by saying I believe you are in very good shape.

Having said that, I would ask how much discretionary is included in the $150K-$170K annual spend? The larger the % of discretionary the more comfortable I would be (just in case things turned out worse than the worst case in the past, you could more easily scale back).
Real Knowledge Comes Only From Experience
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JoeRetire
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Re: A question about a slightly different way of looking at retirement maybe

Post by JoeRetire »

coffeeblack wrote: Sun Oct 11, 2020 11:47 am If you did a firecalc calculation based on spending and asset allocation for a 50 year retirement and at the end of that retirement firecalc finding were 100% with 2 million left at 100 years old, would you retire? Please make decision only based on those findings and not such thing as "I like what I do".
Yes.

But in the real world, I'd wait until I was ready. By definition, that includes more than a firecalc result, and for me would include "I like what I do" as well as "what would I retire TO". Your mileage may vary.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
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coffeeblack
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Re: A question about a slightly different way of looking at retirement maybe

Post by coffeeblack »

MikeG62 wrote: Sun Oct 11, 2020 5:10 pm
coffeeblack wrote: Sun Oct 11, 2020 2:26 pm
Dottie57 wrote: Sun Oct 11, 2020 2:19 pm
coffeeblack wrote: Sun Oct 11, 2020 2:07 pm
Kenkat wrote: Sun Oct 11, 2020 1:51 pm So you are saying you plugged in your numbers and firecalc says you have a 100% chance of success for 50 years with a minimum projected ending value of $2,000,000?

This is an absolute yes; I am honestly a little baffled that you would even need to ask but perhaps I have misunderstood the question.
Thank you for your response. I hear what you are saying but based on some of the responses above I would say not everyone would entirely agree.
I think you are getting some negativity because you lack details. We don’t know your portfolio Amount, inflation rate, spending anount, returns for bonds and stocks etc. Details matter.

I can tell youI I haven’t received such optimistic results from Firecalc. And I’ve run it many many times.
Well, I ran it that way because I wanted to see if a basic 40/60 portfolio with those findings was well enough. So lets give some more details. My portfolio is very basic.

Investible net worth:
$4,550,000
VTSAX 40%
VBTLX 50%
Cash 10% (Actually 1/2 t bill/Cash

Real Estate $250,000 Family living in it no rent at this time.
Home worth $900,000 will downsize in few years and invest about $250,000.

Age 53 married, no children, wife retired.

Spending: 150,000 to 170,000 pretax, includes healthcare, travel, transportation etc.

I ran firecalc as 40% equities/60% short term, inflation to CPI, 47 years of retirement, included social security, and added the value of the real estate at 65 years old and 75 years old.
OP,

Let me start by saying I believe you are in very good shape.

Having said that, I would ask how much discretionary is included in the $150K-$170K annual spend? The larger the % of discretionary the more comfortable I would be (just in case things turned out worse than the worst case in the past, you could more easily scale back).
My discretionary is around 30K from the 150. There is also several opportunities to do part time work that pays well. By part time I mean 4 to 16 hours per week. I will most likely take advantage of that after the covid issues start to resolve. It could yield from 30 to 100K per year.
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coffeeblack
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Re: A question about a slightly different way of looking at retirement maybe

Post by coffeeblack »

JoeRetire wrote: Sun Oct 11, 2020 5:13 pm
coffeeblack wrote: Sun Oct 11, 2020 11:47 am If you did a firecalc calculation based on spending and asset allocation for a 50 year retirement and at the end of that retirement firecalc finding were 100% with 2 million left at 100 years old, would you retire? Please make decision only based on those findings and not such thing as "I like what I do".
Yes.

But in the real world, I'd wait until I was ready. By definition, that includes more than a firecalc result, and for me would include "I like what I do" as well as "what would I retire TO". Your mileage may vary.
I agree, in the real world there are other variables. My purpose for this exercise was to isolate the finance part. I'm mostly comfortable with the other issues.
MikeG62
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Re: A question about a slightly different way of looking at retirement maybe

Post by MikeG62 »

coffeeblack wrote: Mon Oct 12, 2020 8:23 am
MikeG62 wrote: Sun Oct 11, 2020 5:10 pm
coffeeblack wrote: Sun Oct 11, 2020 2:26 pm
Dottie57 wrote: Sun Oct 11, 2020 2:19 pm
coffeeblack wrote: Sun Oct 11, 2020 2:07 pm

Thank you for your response. I hear what you are saying but based on some of the responses above I would say not everyone would entirely agree.
I think you are getting some negativity because you lack details. We don’t know your portfolio Amount, inflation rate, spending anount, returns for bonds and stocks etc. Details matter.

I can tell youI I haven’t received such optimistic results from Firecalc. And I’ve run it many many times.
Well, I ran it that way because I wanted to see if a basic 40/60 portfolio with those findings was well enough. So lets give some more details. My portfolio is very basic.

Investible net worth:
$4,550,000
VTSAX 40%
VBTLX 50%
Cash 10% (Actually 1/2 t bill/Cash

Real Estate $250,000 Family living in it no rent at this time.
Home worth $900,000 will downsize in few years and invest about $250,000.

Age 53 married, no children, wife retired.

Spending: 150,000 to 170,000 pretax, includes healthcare, travel, transportation etc.

I ran firecalc as 40% equities/60% short term, inflation to CPI, 47 years of retirement, included social security, and added the value of the real estate at 65 years old and 75 years old.
OP,

Let me start by saying I believe you are in very good shape.

Having said that, I would ask how much discretionary is included in the $150K-$170K annual spend? The larger the % of discretionary the more comfortable I would be (just in case things turned out worse than the worst case in the past, you could more easily scale back).
My discretionary is around 30K from the 150. There is also several opportunities to do part time work that pays well. By part time I mean 4 to 16 hours per week. I will most likely take advantage of that after the covid issues start to resolve. It could yield from 30 to 100K per year.
OK, so your $150K includes $30K discretionary and your $170K includes $50K discretionary. That's quite helpful.

Your initial WD rate would be between 3.3% ($150/$4,550) and 3.7% ($170K/$4,550). You do not appear to be assuming any SS in your modeling so lot's of added cushion there. In addition, you have further upsides from (1) part time work, (2) rental income from the investment property and (3) additional investable assets coming from your downsizing.

Although you don't provide the split of the $4,550K between taxable and tax deferred (or free), I assume you have fully covered the taxes that would result from your annual taxable income in your $150k-$170K.

I truly don't see a problem here solely from a financial perspective.
Real Knowledge Comes Only From Experience
Topic Author
coffeeblack
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Re: A question about a slightly different way of looking at retirement maybe

Post by coffeeblack »

MikeG62 wrote: Mon Oct 12, 2020 9:23 am
coffeeblack wrote: Mon Oct 12, 2020 8:23 am
MikeG62 wrote: Sun Oct 11, 2020 5:10 pm
coffeeblack wrote: Sun Oct 11, 2020 2:26 pm
Dottie57 wrote: Sun Oct 11, 2020 2:19 pm

I think you are getting some negativity because you lack details. We don’t know your portfolio Amount, inflation rate, spending anount, returns for bonds and stocks etc. Details matter.

I can tell youI I haven’t received such optimistic results from Firecalc. And I’ve run it many many times.
Well, I ran it that way because I wanted to see if a basic 40/60 portfolio with those findings was well enough. So lets give some more details. My portfolio is very basic.

Investible net worth:
$4,550,000
VTSAX 40%
VBTLX 50%
Cash 10% (Actually 1/2 t bill/Cash

Real Estate $250,000 Family living in it no rent at this time.
Home worth $900,000 will downsize in few years and invest about $250,000.

Age 53 married, no children, wife retired.

Spending: 150,000 to 170,000 pretax, includes healthcare, travel, transportation etc.

I ran firecalc as 40% equities/60% short term, inflation to CPI, 47 years of retirement, included social security, and added the value of the real estate at 65 years old and 75 years old.
OP,

Let me start by saying I believe you are in very good shape.

Having said that, I would ask how much discretionary is included in the $150K-$170K annual spend? The larger the % of discretionary the more comfortable I would be (just in case things turned out worse than the worst case in the past, you could more easily scale back).
My discretionary is around 30K from the 150. There is also several opportunities to do part time work that pays well. By part time I mean 4 to 16 hours per week. I will most likely take advantage of that after the covid issues start to resolve. It could yield from 30 to 100K per year.
OK, so your $150K includes $30K discretionary and your $170K includes $50K discretionary. That's quite helpful.

Your initial WD rate would be between 3.3% ($150/$4,550) and 3.7% ($170K/$4,550). You do not appear to be assuming any SS in your modeling so lot's of added cushion there. In addition, you have further upsides from (1) part time work, (2) rental income from the investment property and (3) additional investable assets coming from your downsizing.

Although you don't provide the split of the $4,550K between taxable and tax deferred (or free), I assume you have fully covered the taxes that would result from your annual taxable income in your $150k-$170K.

I truly don't see a problem here solely from a financial perspective.
Thank you for the feedback. The majority is in taxable. Only about480K is in tax deferred and about 100K tax free. I am figuring social security.
J295
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Re: A question about a slightly different way of looking at retirement maybe

Post by J295 »

I transitioned away from full-time eight years ago at age 53. Looked at a lot of factors from the financial end of things.

Lots of good discussion here. But to answer only your original question: yes
JBTX
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Re: A question about a slightly different way of looking at retirement maybe

Post by JBTX »

coffeeblack wrote: Sun Oct 11, 2020 11:47 am A simple question.

If you did a firecalc calculation based on spending and asset allocation for a 50 year retirement and at the end of that retirement firecalc finding were 100% with 2 million left at 100 years old, would you retire? Please make decision only based on those findings and not such thing as "I like what I do".

Also remember it's 2 million at the bottom not average, according to firecalc.
Firecalc is based on US history. Not the future. The situation we are in now is unique and I doubt there are any comparable historical data points in firecalc.

Such calculations assume fixed go forward assumptions such as spending, etc.

Based on your subsequent posts, you should be fine to retire, as long as you are willing to be flexible with withdrawal rates, such that if the market tanks perhaps you modestly cut back on discretionary spending if necessary.
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coffeeblack
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Re: A question about a slightly different way of looking at retirement maybe

Post by coffeeblack »

JBTX wrote: Mon Oct 12, 2020 10:51 am
coffeeblack wrote: Sun Oct 11, 2020 11:47 am A simple question.

If you did a firecalc calculation based on spending and asset allocation for a 50 year retirement and at the end of that retirement firecalc finding were 100% with 2 million left at 100 years old, would you retire? Please make decision only based on those findings and not such thing as "I like what I do".

Also remember it's 2 million at the bottom not average, according to firecalc.
Firecalc is based on US history. Not the future. The situation we are in now is unique and I doubt there are any comparable historical data points in firecalc.

Such calculations assume fixed go forward assumptions such as spending, etc.

Based on your subsequent posts, you should be fine to retire, as long as you are willing to be flexible with withdrawal rates, such that if the market tanks perhaps you modestly cut back on discretionary spending if necessary.
Thank you. I think that and the minimal part time work will complete the equation.
KlangFool
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Re: A question about a slightly different way of looking at retirement maybe

Post by KlangFool »

coffeeblack wrote: Mon Oct 12, 2020 10:34 am
MikeG62 wrote: Mon Oct 12, 2020 9:23 am
coffeeblack wrote: Mon Oct 12, 2020 8:23 am
MikeG62 wrote: Sun Oct 11, 2020 5:10 pm
coffeeblack wrote: Sun Oct 11, 2020 2:26 pm

Well, I ran it that way because I wanted to see if a basic 40/60 portfolio with those findings was well enough. So lets give some more details. My portfolio is very basic.

Investible net worth:
$4,550,000
VTSAX 40%
VBTLX 50%
Cash 10% (Actually 1/2 t bill/Cash

Real Estate $250,000 Family living in it no rent at this time.
Home worth $900,000 will downsize in few years and invest about $250,000.

Age 53 married, no children, wife retired.

Spending: 150,000 to 170,000 pretax, includes healthcare, travel, transportation etc.

I ran firecalc as 40% equities/60% short term, inflation to CPI, 47 years of retirement, included social security, and added the value of the real estate at 65 years old and 75 years old.
OP,

Let me start by saying I believe you are in very good shape.

Having said that, I would ask how much discretionary is included in the $150K-$170K annual spend? The larger the % of discretionary the more comfortable I would be (just in case things turned out worse than the worst case in the past, you could more easily scale back).
My discretionary is around 30K from the 150. There is also several opportunities to do part time work that pays well. By part time I mean 4 to 16 hours per week. I will most likely take advantage of that after the covid issues start to resolve. It could yield from 30 to 100K per year.
OK, so your $150K includes $30K discretionary and your $170K includes $50K discretionary. That's quite helpful.

Your initial WD rate would be between 3.3% ($150/$4,550) and 3.7% ($170K/$4,550). You do not appear to be assuming any SS in your modeling so lot's of added cushion there. In addition, you have further upsides from (1) part time work, (2) rental income from the investment property and (3) additional investable assets coming from your downsizing.

Although you don't provide the split of the $4,550K between taxable and tax deferred (or free), I assume you have fully covered the taxes that would result from your annual taxable income in your $150k-$170K.

I truly don't see a problem here solely from a financial perspective.
Thank you for the feedback. The majority is in taxable. Only about480K is in tax deferred and about 100K tax free. I am figuring social security.
coffeeblack,


Your numbers look okay for me too.


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MathWizard
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Re: A question about a slightly different way of looking at retirement maybe

Post by MathWizard »

I would.

I am considering retirement where I have done the analysis and I (or my wife) would end up with
about $1 million, almost all ROTH, at age 100, which would be almost 40 years of retirement. The WR allows for
a disposable income after tax&Health insurance spending of $4K more per year than we had been living on,
and almost double what our current spending is (during the pandemic).

I am being conservative, with a WR of about 3% , assuming on 75% of SS benefits, and figuring medical costs
at 2% above regular inflation. I also plan on ROTH conversions in the first years so that I pay little to no income tax in
later years. I chose this because it is optimal for my case with current income tax laws, but also insulates me from
changes in RMD requirements and income tax laws. Tax law changes could be positive or negative for me, but I don't
have to consider that variable from my planning.

Firecalc estimates that we would have over $900K left in the worst case, with the average being over 3x what we started with.
This also does not include our house and some real estate of combined worth of $360K, so we have a fall-back.
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Watty
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Re: A question about a slightly different way of looking at retirement maybe

Post by Watty »

coffeeblack wrote: Sun Oct 11, 2020 11:47 am If you did a firecalc calculation based on spending and asset allocation for a 50 year retirement......
One problem with using firecalc for a 50 year time period is that(assuming it is up to date) is that that last 50 year period that it could use would have started in 1969. A lot may have changed since then so I would be cautious about depending on it. It does not really have a lot of useful 50 year datasets to backtest with.

When I was getting ready to retire one of the things I did was to run maybe a half dozen retirement calculators like that to see if they all said I would be likely be OK. I was not so much interested in the numbers they produced, instead I was just looking to see if they said I would go broke.

I also did incremental tests and made a graph of how the success rate changed with my spending. For example if my budget was $50K a year then I also ran it with 55,60,70, etc to see how close I was to having a high failure rate.

One other thing to consider is just what "failure" means with something like Firecalc. It does not mean that you would mindlessly spend until you are broke and homeless, it means that at some point you might need to cut your spending by 10 to 20 percent if your investments are declining more than planned on. That could be a problem if you are planning a bare bone retirement but it could be very doable is you were planning for an ample retirement.
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