I'm going to be rich! [Fidelity retirement planner]

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fizxman
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I'm going to be rich! [Fidelity retirement planner]

Post by fizxman » Wed Jun 14, 2017 8:57 am

I was playing around on my company's 401k website, Fidelity, and figured out that when my wife dies in 2080 (I'll be dead already), we'll have over $56 million (in future dollars) and this doesn't even include her 401k and IRA, just my 401k, IRA, and taxable account! We'll have to start coming up with a list of things to buy and do for when we're retired.

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jlcnuke
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Re: I'm going to be rich!

Post by jlcnuke » Wed Jun 14, 2017 8:58 am

in 2080
in 2080

2080...


I'll be long dead by then lol

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InvestorNewb
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Re: I'm going to be rich!

Post by InvestorNewb » Wed Jun 14, 2017 9:00 am

It's a depressing thought looking out that far.
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mhalley
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Re: I'm going to be rich!

Post by mhalley » Wed Jun 14, 2017 9:02 am

Wait, does the 98 mean there is a 2% failure rate with 56 million dollars? Man, I retired too soon!

Teague
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Re: I'm going to be rich!

Post by Teague » Wed Jun 14, 2017 9:11 am

The 98 means he can regularly withdraw 98% of his projected expenses, at the level of confidence of a 10% failure rate. (From last time I read the methodology for that calculator.) So 10% of the time they will run out of money before their "scheduled" death.

In other words, he/she may be "rich" by then, but not quite rich enough to cover their projected expenses.
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SimonJester
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Re: I'm going to be rich!

Post by SimonJester » Wed Jun 14, 2017 9:20 am

mhalley wrote:Wait, does the 98 mean there is a 2% failure rate with 56 million dollars? Man, I retired too soon!
Their scale is 0 to 150

Your Fidelity Retirement Score (FRS), derived from the Planning & Guidance Center, represents the percentage of your average estimated retirement expenses your plan could cover, assuming an underperforming market. It's based on information you provided the last time you used a Fidelity planning tool or updated during this planning session, including the accounts and income sources you assigned to your retirement plan, your current or modeled savings rate, your current or modeled asset mix, your retirement time horizon, and your estimated taxes and expenses.
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

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TheTimeLord
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Re: I'm going to be rich!

Post by TheTimeLord » Wed Jun 14, 2017 9:30 am

Eh, I would change the setting from "Future Dollars" to "Today's Dollars" if you want an accurate understanding of how wealthy you will actually be 63 years of inflation makes the number big but adds no purchasing power.
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Teague
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Re: I'm going to be rich!

Post by Teague » Wed Jun 14, 2017 9:33 am

I'm sure some are wondering how this calculator can indicate OP will have millions left at plan end, but he is only able to meet 98% of his expenses. There is an answer:

The retirement score - 98 in this case - always assumes an underperforming market, i.e. a 10% failure rate. This is conservative and safe, so this is what the score shows, unvaryingly.

There is also a drop-down menu on that calculator to assume other failure rates: 50% or 25%. This does not change the "score" but does change the amount of money projected to be left at plan end. This of course assumes your portfolio survives that long.

OP selected "Average", 50%, failure rate from this drop-down menu, which gives a much rosier projection. If OP selected the default from that menu, the 10% failure rate that the "score" is derived from, the projected amount left would be zero.
Last edited by Teague on Wed Jun 14, 2017 9:38 am, edited 1 time in total.
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KlingKlang
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Re: I'm going to be rich!

Post by KlingKlang » Wed Jun 14, 2017 9:38 am

Will that $56 million be able to purchase 56 Big Macs in 2080?

Gropes & Ray
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Re: I'm going to be rich!

Post by Gropes & Ray » Wed Jun 14, 2017 10:17 am

Looks like you should be borrowing $56 million today. You're good for it.

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fizxman
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Re: I'm going to be rich!

Post by fizxman » Wed Jun 14, 2017 11:14 am

Teague wrote:I'm sure some are wondering how this calculator can indicate OP will have millions left at plan end, but he is only able to meet 98% of his expenses. There is an answer:

The retirement score - 98 in this case - always assumes an underperforming market, i.e. a 10% failure rate. This is conservative and safe, so this is what the score shows, unvaryingly.

There is also a drop-down menu on that calculator to assume other failure rates: 50% or 25%. This does not change the "score" but does change the amount of money projected to be left at plan end. This of course assumes your portfolio survives that long.

OP selected "Average", 50%, failure rate from this drop-down menu, which gives a much rosier projection. If OP selected the default from that menu, the 10% failure rate that the "score" is derived from, the projected amount left would be zero.
Correct on all counts.

As to your last point, when I picked the "Significantly Below Average Market" option, I'm left with $0 by 2077. When I choose "Below Average Market", I'm left with $14.3 million ($2.9 million in today's dollars). And when I choose "Average" I'm left with $56.6 million ($11.6 million in today's dollars). Below are what is meant by "Significantly Below", "Below", and "Average".

I was just playing around and found this information to be interesting. Since I still have a way to go before I retire, I'll take it all with a grain of salt.

Significantly Below Average Market
A significantly below average market is defined as the 90% confidence level of estimated future balances and/or estimated future income. The 90% confidence level represents "significantly below average market conditions" with 10% of all hypothetical scenarios tested performing worse. This means that in 90 out of 100 market scenarios tested a hypothetical portfolio similar to yours performed at least as well as the results shown and 10 out of 100 performed worse than the results shown.

Below Average Market
A below average market is defined as the 75% confidence level of estimated future balances and/or estimated future income. The 75% confidence level represents "below average market conditions" with 25% of all hypothetical scenarios tested performing worse. This means that in 75 out of 100 market scenarios tested a hypothetical portfolio similar to yours performed at least as well as the results shown and 25 out of 100 performed worse than the results shown.

Average Market
An average market is defined as the 50% confidence level of estimated future balances and/or estimated future income. The 50% confidence level represents "average market conditions" with 50% of all hypothetical scenarios tested performing worse. This means that in 50 out of 100 market scenarios tested a hypothetical portfolio similar to yours performed at least as well as the results shown and 50 out of 100 performed worse than the results shown.

randomguy
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Re: I'm going to be rich!

Post by randomguy » Wed Jun 14, 2017 11:36 am

TheTimeLord wrote:Eh, I would change the setting from "Future Dollars" to "Today's Dollars" if you want an accurate understanding of how wealthy you will actually be 63 years of inflation makes the number big but adds no purchasing power.
Why would you want to look at smaller numbers when you can look at big ones? What is really impressive is retiring with 4.5 million (in assume like 20-30 years) and then watching it grow to 56 million over the next 30-40 years. It seems crazy. But it more or less happens. 1 million dollars invested 60/40 in 1977 with a 4% SWR is worth ~17 million today. Even if you used the unfun real returns, you would still be looking at having 4 million. It is the problem of having to do conservative spending early to avoid risk of ruin. Sure you could ramp up spending when your 80 and know that you aren't on a bad path, but I doubt many people do that.

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macchiato
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Re: I'm going to be rich!

Post by macchiato » Wed Jun 14, 2017 11:37 am

I have some hypothetical assets here if you'd like to buy them!

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EATaxGuy
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Re: I'm going to be rich!

Post by EATaxGuy » Wed Jun 14, 2017 12:12 pm

Look, Kids! Big Ben! Parliament!
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celia
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Re: I'm going to be rich!

Post by celia » Wed Jun 14, 2017 12:25 pm

Unfortunately, you forgot to take Required Minimum Distributions into account starting at age 70.5 unless you are still working for the same company at that time. But you said you'd be dead by then so your account will be split among your heirs who will have had to take RMDs starting in the year after you died. If you tell us the year you turn 70.5 and the year you will die, we can re-calculate this for you.

Oh wait, the account balance will be 0 in 2080. Sorry to hear you will not be as rich as you think.

Now if you had started 63 years ago with your current assets, that is what you could have had now! Why didn't you do that? :wink:
Last edited by celia on Wed Jun 14, 2017 12:30 pm, edited 1 time in total.

an_asker
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Re: I'm going to be rich!

Post by an_asker » Wed Jun 14, 2017 12:26 pm

jlcnuke wrote:
in 2080
in 2080

2080...


I'll be long dead by then lol
By then, FL would be underwater (literally) ... and so I would need to remove our real estate from the equation :oops:

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DaftInvestor
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Re: I'm going to be rich!

Post by DaftInvestor » Wed Jun 14, 2017 12:31 pm

SimonJester wrote:
mhalley wrote:Wait, does the 98 mean there is a 2% failure rate with 56 million dollars? Man, I retired too soon!
Their scale is 0 to 150

Your Fidelity Retirement Score (FRS), derived from the Planning & Guidance Center, represents the percentage of your average estimated retirement expenses your plan could cover, assuming an underperforming market. It's based on information you provided the last time you used a Fidelity planning tool or updated during this planning session, including the accounts and income sources you assigned to your retirement plan, your current or modeled savings rate, your current or modeled asset mix, your retirement time horizon, and your estimated taxes and expenses.
One minor correction SimonJester - it may default to "underperforming market" but you can change this. Note that the OP has changed it to "Average" market (you can see that the pulldown at the the top right of his graphic shows the Market set to "Average"). Perhaps the way the OP entered the tool from his 401K it chose this default - I know for me - it started with "underperforming".

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Re: I'm going to be rich!

Post by BeerTooth » Wed Jun 14, 2017 12:35 pm

I'm curious about the squiggles in the lines. Is Fidelity telling me there will be a significant run-up in asset prices in 2065, followed by 5-years of "flat" growth? Then again in 2075? Remarkably prescient this far out...

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Re: I'm going to be rich!

Post by MrNewEngland » Wed Jun 14, 2017 12:42 pm

Spend it all.

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knpstr
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Re: I'm going to be rich!

Post by knpstr » Wed Jun 14, 2017 12:45 pm

Instead of "F=ma" shouldn't your avatar just be "ma" since that is force?
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

SimonJester
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Re: I'm going to be rich!

Post by SimonJester » Wed Jun 14, 2017 1:09 pm

DaftInvestor wrote:
SimonJester wrote:
mhalley wrote:Wait, does the 98 mean there is a 2% failure rate with 56 million dollars? Man, I retired too soon!
Their scale is 0 to 150

Your Fidelity Retirement Score (FRS), derived from the Planning & Guidance Center, represents the percentage of your average estimated retirement expenses your plan could cover, assuming an underperforming market. It's based on information you provided the last time you used a Fidelity planning tool or updated during this planning session, including the accounts and income sources you assigned to your retirement plan, your current or modeled savings rate, your current or modeled asset mix, your retirement time horizon, and your estimated taxes and expenses.
One minor correction SimonJester - it may default to "underperforming market" but you can change this. Note that the OP has changed it to "Average" market (you can see that the pulldown at the the top right of his graphic shows the Market set to "Average"). Perhaps the way the OP entered the tool from his 401K it chose this default - I know for me - it started with "underperforming".
This was a copy / paste from Fidelity's web site, so its their wording re the FRS... I think mine was defaulted to Average as well but not 100% certain.
The choices in the drop down are Average, Below Average, and Significantly Below Average...
The Fidelity Retirement Score does not change depending on your choice in the drop down box, only the numbers displayed in the graph.
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

SimonJester
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Re: I'm going to be rich!

Post by SimonJester » Wed Jun 14, 2017 1:12 pm

TylerDavis wrote:I'm curious about the squiggles in the lines. Is Fidelity telling me there will be a significant run-up in asset prices in 2065, followed by 5-years of "flat" growth? Then again in 2075? Remarkably prescient this far out...
Its probably something baked into their planning algorithm, unless someone at Fido has a time machine hidden in the back room....
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

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Will do good
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Re: I'm going to be rich!

Post by Will do good » Wed Jun 14, 2017 1:16 pm

Can I borrow some of that today?

Teague
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Re: I'm going to be rich!

Post by Teague » Wed Jun 14, 2017 1:29 pm

celia wrote:Unfortunately, you forgot to take Required Minimum Distributions into account starting at age 70.5 unless you are still working for the same company at that time. But you said you'd be dead by then so your account will be split among your heirs who will have had to take RMDs starting in the year after you died. If you tell us the year you turn 70.5 and the year you will die, we can re-calculate this for you.

Oh wait, the account balance will be 0 in 2080. Sorry to hear you will not be as rich as you think.

Now if you had started 63 years ago with your current assets, that is what you could have had now! Why didn't you do that? :wink:
Actually, this calculator does take RMD's into account.* Taxes too - you can pick the rates for Federal and state or let it make a rough guess based on your income. And, if you tell it to calculate the most conservative way (significantly below average market performance) it will throw in a hefty dose of sequence-of-returns risk. It's pretty full-featured.

*For you, not for your heirs.
Last edited by Teague on Wed Jun 14, 2017 1:33 pm, edited 1 time in total.
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DaftInvestor
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Re: I'm going to be rich!

Post by DaftInvestor » Wed Jun 14, 2017 1:30 pm

SimonJester wrote: This was a copy / paste from Fidelity's web site, so its their wording re the FRS... I think mine was defaulted to Average as well but not 100% certain.
The choices in the drop down are Average, Below Average, and Significantly Below Average...
The Fidelity Retirement Score does not change depending on your choice in the drop down box, only the numbers displayed in the graph.
Ah - yes - I see that now (just revisited the site). Last time I was in there I thought the score was changing based upon my changing the market conditions - I must have been making other adjustments to see the needle moving up and down (retirement year, asset increase amounts, etc.). Interestingly my score is 98 like the OPs.

Apologies for the bad post.

Gadget
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Re: I'm going to be rich!

Post by Gadget » Wed Jun 14, 2017 1:35 pm

Is this tool better than personal capitals retirement planner? Or just different?

sco
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Re: I'm going to be rich! [Fidelity retirement planner]

Post by sco » Wed Jun 14, 2017 11:34 pm

This Tool has some quirks. Personally, If I get over a 90 score and have picked below average, I am happy...

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whodidntante
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Re: I'm going to be rich! [Fidelity retirement planner]

Post by whodidntante » Thu Jun 15, 2017 12:00 am

If I were you, I'd go on record in support of the tax paying robots. Just in case.

2015
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Re: I'm going to be rich! [Fidelity retirement planner]

Post by 2015 » Thu Jun 15, 2017 3:25 pm

I use only worst case scenarios (in Fidelity's case, "significantly below" option) as a result of reading The Most Important Thing in Investing (as well as the many statements by Buffet/Munger/others regarding the true nature of risk) by Charles Murray.

https://www.amazon.com/Most-Important-T ... 151138347X

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Re: I'm going to be rich! [Fidelity retirement planner]

Post by Grt2bOutdoors » Thu Jun 15, 2017 4:56 pm

fizxman wrote:I was playing around on my company's 401k website, Fidelity, and figured out that when my wife dies in 2080 (I'll be dead already), we'll have over $56 million (in future dollars) and this doesn't even include her 401k and IRA, just my 401k, IRA, and taxable account! We'll have to start coming up with a list of things to buy and do for when we're retired.

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98? Why is the score so low? :twisted:
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Re: I'm going to be rich! [Fidelity retirement planner]

Post by frugalecon » Thu Jun 15, 2017 5:17 pm

I never quite know what to make of these calculators. They generally show the central tendency of my portfolio growing without bound, with a decent shot of ending up with multiples of where I started from, in real terms. If that seems to be the direction things are heading, will we really loosen the purse strings in our seventies and eighties? Or should we be spending a bit more now and taking the chance that we will live a bit more modestly in retirement. I am doing full catch up contributions now, but I'm not really catching up for any period of low savings. If only the future were predictable!

frugalecon
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Re: I'm going to be rich! [Fidelity retirement planner]

Post by frugalecon » Thu Jun 15, 2017 5:17 pm

I never quite know what to make of these calculators. They generally show the central tendency of my portfolio growing without bound, with a decent shot of ending up with multiples of where I started from, in real terms. If that seems to be the direction things are heading, will we really loosen the purse strings in our seventies and eighties? Or should we be spending a bit more now and taking the chance that we will live a bit more modestly in retirement. I am doing full catch up contributions now, but I'm not really catching up for any period of low savings. If only the future were predictable!

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