Contemplating early retirement

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
enso
Posts: 14
Joined: Thu Feb 07, 2019 6:43 pm

Contemplating early retirement

Post by enso » Fri Nov 15, 2019 10:58 am

We met with a financial planner, who gathered a bunch of info and ran it through his program. We used conservative estimates and still the calculations showed high confidence that we'd have enough money to last us.

We would like to have as much confidence personally as this black box does. Is there something out there that would let us plug numbers in and get a more detailed display of projected year-to-year progression of remaining assets?


Kagord
Posts: 110
Joined: Fri Nov 23, 2018 1:28 pm

Re: Contemplating early retirement

Post by Kagord » Fri Nov 15, 2019 11:13 am

These two I have found the most useful for myself.

Boglehead's Forum Retirement Portfolio Model Spreadsheet: viewtopic.php?t=97352
Very Comprehensive, year by year analysis of everything, expect to spend many,many hours with this figuring the setup values to put in and scenario planning

Firecalc: https://www.firecalc.com/
Comprehensive modeling, minutes to see results, but simplistic in the input values compared to the spreadsheet above

dbr
Posts: 30798
Joined: Sun Mar 04, 2007 9:50 am

Re: Contemplating early retirement

Post by dbr » Fri Nov 15, 2019 11:18 am

Kagord wrote:
Fri Nov 15, 2019 11:13 am
These two I have found the most useful for myself.

Boglehead's Forum Retirement Portfolio Model Spreadsheet: viewtopic.php?t=97352
Very Comprehensive, year by year analysis of everything, expect to spend many,many hours with this figuring the setup values to put in and scenario planning

Firecalc: https://www.firecalc.com/
Comprehensive modeling, minutes to see results, but simplistic in the input values compared to the spreadsheet above
Actually I find FireCalc to be the first and most straightforward go-to on this as well. This is a problem that can be way over-modeled.

flyingaway
Posts: 2534
Joined: Fri Jan 17, 2014 10:19 am

Re: Contemplating early retirement

Post by flyingaway » Fri Nov 15, 2019 11:31 am

enso wrote:
Fri Nov 15, 2019 10:58 am
We met with a financial planner, who gathered a bunch of info and ran it through his program. We used conservative estimates and still the calculations showed high confidence that we'd have enough money to last us.

We would like to have as much confidence personally as this black box does. Is there something out there that would let us plug numbers in and get a more detailed display of projected year-to-year progression of remaining assets?
If your portfolio is 25 times of your expected annual expenses, i.e., the 4% rule, then you can relax and plan for your retirement.
Then, if your portfolio is 33 times of your expected annual expenses (3%) and you don't like your job, you can retire.

User avatar
quisp65
Posts: 60
Joined: Wed Apr 10, 2019 7:44 am

Re: Contemplating early retirement

Post by quisp65 » Fri Nov 15, 2019 11:34 am

Personally I like the Ultimate Retirement Calculator. https://financialmentor.com/calculator/ ... calculator
You can put all the numbers and see how you do. It's only downside is that it doesn't account for the volatility of the market. It takes just a static % gain that you enter. For instance I put inflation at 2% and my portfolio gaining only 3%.

I figure the tool works best if you put what you think would be the most conservative realistic 30-40 year environment. I figured AT WORST, I would only get returns 1% above inflation and I put my Social Security Colas growing at 0.5% under inflation. Now you might figure something worse but I don't think it will get worse than that.

I determined I could safely pull $50k a year in the most conservative "realistic" environment.

User avatar
Watty
Posts: 17624
Joined: Wed Oct 10, 2007 3:55 pm

Re: Contemplating early retirement

Post by Watty » Fri Nov 15, 2019 11:48 am

There is a wiki with a list of retirement calculators.

https://www.bogleheads.org/wiki/Retirem ... d_spending

I would caution that there are so many unknowns with things like your expenses, investment returns, inflations, life expectancy, etc a very complex model may not be any better than a very simple one.

Some common mistakes are;

1) To assume that you will have constant expenses during different phases of retirement. I have seen relatives naturally slow down when they got to be in their mid-70s even though they were in relatively good health. At that point they did not want to do things like travel much even though they could have afforded to. Even evenings out were rare. They were more interested in downsizing than buying more stuff. They had a paid off house which helped but there were often months when they did not even spend all of their above average Social Security checks.

2) Misunderstanding what "failure" means when you run a model. Having a 10% chance of "failure" sounds grim like you will keep spend according to plan and end up broke and homeless. Realistically it does not mean that since if you are doing worse than expected "failure" might mean that you need to cut your spending some. Unless you are planning a bare bones retirement cutting your spending by 10 or even 20 percent may not be a dire situation since you might be able to do things like cut back on travel or buying less expensive cars.

3) Ignoring your home equity if you have a paid off house. You do not want count home equity as part of your investments but having a paid off house or a lot of home equity is a great safety net especially for things like for paying for long term care when you would be moving out of the house anyway.

You may want to make a "Can I retire?" post using this suggested format to get feedback about how your retirement plans look.

viewtopic.php?f=1&t=6212

User avatar
Cyclesafe
Posts: 972
Joined: Wed Dec 31, 2014 1:03 pm

Re: Contemplating early retirement

Post by Cyclesafe » Fri Nov 15, 2019 11:58 am

No matter what assuring number you derive from whatever source, uncertainty nevertheless abounds. The longer the proposed retirement, the more uncertainty. Look at a number of derivations and trust none individually. But if virtually all of them, with conservative, but realistic assumptions show you're OK, then retiring early can be considered.

Equally important though, is to "contemplate" what your world will be like in "retirement". Working probably provides many non-monetary benefits too. Some of them cannot be matched when retired, so take your time before pulling the trigger.
"Plans are useless; planning is indispensable.” - Dwight Eisenhower

Post Reply