Fidelity retirement planner accurate ?

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skor99
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Fidelity retirement planner accurate ?

Post by skor99 » Sat Jun 09, 2018 9:31 pm

I am trying the fidelity planner for early semi retirement scenarios for a 49/46 couple with $2.06MM of retirement assets and post retirement earnings of $2500 pm up to age 66 and SS of $2550 starting at age 67. I am trying the planner up to age 94 for significant below average return for expense of $6500 per month. I thought it might be close or even not feasible with the pessimistic return forecast, but it shows success with a leftover balance of $900K at age 94. Does this look right ? What is fidelity assuming the returns/volatility to be in significantly below average ?

livesoft
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Re: Fidelity retirement planner accurate ?

Post by livesoft » Sat Jun 09, 2018 9:33 pm

I haven't run this software in a while, but it has a very nice complete report with all the fine print --- as long as you save it and read it.

Did you see the fine print?
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skor99
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Re: Fidelity retirement planner accurate ?

Post by skor99 » Sat Jun 09, 2018 9:41 pm

Fine print meaning the usual ‘this is an estimate only’ and ‘individual results might be different’ ?

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FiveK
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Re: Fidelity retirement planner accurate ?

Post by FiveK » Sat Jun 09, 2018 9:57 pm

Note that the average (as in CAGR) return needed to support a 30 year 4% withdrawal rate is only ~1.25%.

Once you hit age 67 you need only ~$1500/mo. What withdrawal rate is that, based on your projected balance at that time?

Ron
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Re: Fidelity retirement planner accurate ?

Post by Ron » Sat Jun 09, 2018 10:08 pm

After logging on to FIDO, go to:

https://myguidance.fidelity.com/ftgw/gu ... o?route=HM

to see the methodology, FAQ's, etc.

- Ron

2015
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Re: Fidelity retirement planner accurate ?

Post by 2015 » Sun Jun 10, 2018 7:24 pm

I've lost track of how many calculators and planners I ran pre-retirement. After retirement, this is the only planner I use, considering only the significantly below average market returns output. FWIW, my results for the past four years have been closer to the average returns output. Further, after this year, I am engaging in LMP (maybe coupled with longinvest's VPW, although that probably won't be necessary) through end of PF life so will be using Fidelity's output more as a series of guideposts more than anything else.

JoeRetire
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Re: Fidelity retirement planner accurate ?

Post by JoeRetire » Sun Jun 10, 2018 7:33 pm

skor99 wrote:
Sat Jun 09, 2018 9:31 pm
Does this look right ?
The only real way to gauge accuracy is at the end of your life.

Better to hope for "realistic" than "accurate".

Jack FFR1846
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Re: Fidelity retirement planner accurate ?

Post by Jack FFR1846 » Sun Jun 10, 2018 8:05 pm

Right about the time you plan to take SS is right about the time where SS is expected to drop to about 75% benefits. I'd put those number in rather than what any current projections ignoring that might say.
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2015
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Re: Fidelity retirement planner accurate ?

Post by 2015 » Mon Jun 11, 2018 2:56 pm

Jack FFR1846 wrote:
Sun Jun 10, 2018 8:05 pm
Right about the time you plan to take SS is right about the time where SS is expected to drop to about 75% benefits. I'd put those number in rather than what any current projections ignoring that might say.
What I did using Fidelity's Miscellaneous Expenses field. Even though I have been eligible for SS long before the approx. 75% cut. I considered it just another form of padding, even though my use of LMP makes it all a mute point for me.

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Ozonewanderer
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Re: Fidelity retirement planner accurate ?

Post by Ozonewanderer » Mon Jun 11, 2018 9:37 pm

I think this planner is very complete and sophisticated. I was surprised that it was free when it came out. Many financial companies were using similar proprietary calculator on a fee basis only through their advisers.

It is basically a Monte Carlo analysis that uses all of the data that you put into it (a lot more than most free retirement calculators) and uses the 20th percentile as its minimum safe return so it is quite conservative.

I probably rely on it more than I should, but I have been maintaining my personal data in this planner for many years now. When I started I had many questions so my Fidelity account executive set up a conference call with one of the programmer's of this calculator. I found out that it even uses different inflation rates for different expense categories such as medical.

I am satisfied with it as a model. Of course that does not mean it will be right...

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Ozonewanderer
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Re: Fidelity retirement planner accurate ?

Post by Ozonewanderer » Mon Jun 11, 2018 9:41 pm

Jack FFR1846 wrote:
Sun Jun 10, 2018 8:05 pm
Right about the time you plan to take SS is right about the time where SS is expected to drop to about 75% benefits. I'd put those number in rather than what any current projections ignoring that might say.
If you are referring to what I think you are, it might be more accurate to say that at current funding levels the SS pool is expected to be at 75% of full funding. I think Congress will be forced to repair this problem before then.

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Portfolio7
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Re: Fidelity retirement planner accurate ?

Post by Portfolio7 » Tue Jun 12, 2018 7:42 pm

I like this planner. One shouldn't trust any planner to be "right", but this one seems pretty in line with my own calculations, as well as those of our fee-only planner. I like the options to analyze for historical market returns, below historical, and well below historical.
An investment in knowledge pays the best interest.

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Reb Tevye
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Re: Fidelity retirement planner accurate ?

Post by Reb Tevye » Tue Jun 12, 2018 8:23 pm

skor99 wrote:
Sat Jun 09, 2018 9:31 pm
I am trying the fidelity planner for early semi retirement scenarios for a 49/46 couple with $2.06MM of retirement assets and post retirement earnings of $2500 pm up to age 66 and SS of $2550 starting at age 67. I am trying the planner up to age 94 for significant below average return for expense of $6500 per month.
Makes sense to me.

You seem to need about $4000/month from the $2M. $50,000 per year.
50k/2M is about 2.5% spending rate.
Factor in a 25% aggregate tax rate and you are still below 4% total annual drawdown.
Given that and that the tool uses a worst 10th percentile outcome, not the couple(?) return sequences that drive the 4% SWR, it makes sense there will be some left over.
Assuming of course a typical asset allocation.
"So, what would have been so terrible if I had a small fortune?"

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