Advanced FIRECalc

Advanced FIRECalc lets you select numerous options and schedule numerous changes in your retirement plan. Visit each of the tabs below to see the choices and enter your information. To make it easier to experiment with various settings, you can submit your entries from any tab. Results open in a separate window.

(If you prefer the format of questions in the previous version of FIRECalc, use the classic version.)

How much do you need?

Annual Spending: How much do you need (or want) to live on each year? FIRECalc will take this amount from your portfolio at the start of each year, unless your spending needs are changed by modifications you enter below. A lot of people have trouble with this, and there's no substitute for keeping track of your spending over time. But until then, we have some spending averages from the Statistical Abstract of the United States.

By default, future withdrawals are adjusted for inflation, so your spending power is unchanged during the term of your retirement (except for adjustments you enter below).

Optional: You can base withdrawals on your portfolio value each year, rather than using an inflation-adjusted amount. This is the "95% Rule" from Work Less, Live More. Minimum withdrawal will be percent of the previous year's withdrawal. [Description]
The 95% rule applies to the Annual Spending (but not other adjustments). According to the rule, each year's withdrawal is the greater of 95% of last year's withdrawal or 4% of the current portfolio as you started with. FIRECalc uses whatever percentage withdrawal you start with, and allows you to set a different value than 95%. Note that "success" using the 95% rule means your portfolio retains the same value at the end of the term as you started with, rather than merely remaining "in the black".

      

When will the plan end? (You can enter either the calendar year or the number of years from now.)

    

Show/hide special spending options

     

Scheduled modifications to spending/withdrawals from portfolio

Social Security: If you want FIRECalc to automatically reduce the withdrawals from your portfolio once your Social Security starts (or your retirement year, whichever is later), to keep your income constant, then supply your estimates here.

Your Social Security: Enter the annual payments you expect to receive. Use the statements you may have received from the Social Security Administration, if available.

starting in     

Spouse's Social Security: If you don't have a statement, the Social Security Administration will send you one, or you can use one of their calculators.

starting in     

Pensions, Spending Changes, etc.

If you expect a pension in the future, and want to decrease your withdrawals when it starts, enter the information here. You can also use this section to enter, for example, a decrease in your withdrawals once your mortgage is paid off, or a future increase in your withdrawals to cover increased spending. The change will begin in the year you indicate (or your retirement year, whichever is later).

Increase Decrease your withdrawals by

starting in Inflation adj?     

Increase Decrease your withdrawals by

starting in Inflation adj?     

Increase Decrease your withdrawals by

starting in Inflation adj?     

Use Bernicke "Reality Retirement Plan" (phased decreases in spending after age 55). Current age:  [Description]
Ty Bernicke's Reality Retirement Planning: A New Paradigm for an Old Science describes extensive research showing that most people see significant reductions in spending with age (not related to reduced assets or income). If selected, this option will reduce your current dollar withdrawals from your nest egg (based on your initial Annual Spending setting, but not other adjustments) by 2-3% per year starting at age 56, and then stabilizing at age 76 to keep up with inflation. You should read his article for details if you plan to use this option.

How much do you have?

Current value of your retirement portfolio:

      

Show/hideChanges to your withdrawals and portfolio: Social Security, pension or other withdrawal changes, and one-time changes to your portfolio.

One-time changes to your portfolio such as proceeds of a home sale, etc. (Enter in today's dollars; the actual amount will be adjusted for inflation.)

Chances are, you'll move out of that big house in the expensive area, and get a tidy lump sum to add to your portfolio. Later, you'll perhaps take out cash to buy your retirement home. Enter one-time changes here.

Add Subtract a lump sum to/from your portfolio What year

Add Subtract a lump sum to/from your portfolio What year

Add Subtract a lump sum to/from your portfolio What year

Percentage of your portfolio that is in stocks and stock funds, versus fixed income or similar funds?

 %     

How much are you paying in investing fees (expense ratio)? The cheapest index funds charge around 0.18%. Some charge 3%, or more. (Typically 0.18 to 2) 

 %     

Show/hide selections Use Total Market, Mixed Portfolio, Monte Carlo, or User-defined Market Performance Data

FIRECalc's calculations should be based on a portfolio invested in...

Total market, split between equities and fixed income. Include performance since (must be after 1870 and early enough to show a full cycle and preferably many cycles).

Fixed Income [?]: Commercial Paper, Long Interest Rate, 30 Year Treasury, or 5 Year Treasury.

Percentage of your portfolio that is in equities, versus fixed income? Research seems to suggest about 50% for a 10 year term, almost 70% for a 20 year term, and around 85% for a 60 year term. %

A mixed portfolio consisting of the following assets (based on performance since 1927):

(You may enter actual dollar amounts in each class, or relative amounts. Whatever you enter will be converted to a percentage of the total, and performance will be calculated on each asset proportionally.)
US Micro Cap US Small US Small Value S&P 500
US Large Value US LT Treasury LT Corporate Bond 1 Month Treasury

A portfolio with consistent annual market growth of %, fixed income returns of %, and an inflation rate of %

A portfolio with variable ("monte carlo") performance, with a mean total portfolio return of % and variability (standard deviation) of %. Assume an inflation rate of %.

Not yet retired? Display/hide retirement date and contributions until then.

What year will you retire?: (Or how many years before you retire?) We'll assume NO withdrawals until then.

       

How much will you add to your portfolio until then, per year?

   

Terminal Value: There should be a minimum of $ left in the portfolio at all times, including at the end.

Inflation Rate: Use PPI, CPI, or % for inflation adjustments to the historical data.

Use the year as the starting retirement year for the sample cycle display (must be on or after the first year data were available, and early enough to show a full cycle).

What do you want to know?

Based on the input you provided above, FIRECalc can tell you...

The success rate of your portfolio and withdrawal plans

     and also show:
      Graphic timeline of annual withdrawals
      End-of-year portfolio balances (text)
      Provide data and formulas in a spreadsheet format
Note: Spreadsheets are not formatted; they are for verifying numbers and calculations only. For 30 year terms only, a spreadsheet showing the data as well as formulas for the cycle beginning the sample year identified above may be displayed or downloaded.

How will changing your allocation -- putting more or less into stocks -- affect the results?

What is the impact of the expense ratio of the mutual fund or fees you pay to your financial advisor?

or FIRECalc will search for settings that will get a success rate of as close to % as possible (usually within 1%) by changing...
how much you spend each year, or
how much you start with (portfolio value)

What happens if you retire in any of several years between now and years from now?

Make charts smaller as necessary to fit on printed pages