Recalculating FIRE Odds

I’ve been late in ‘closing the books’ for our finances in 2018. With tax preparation season on us, I’ve spent a few hours this week trying to figure out exactly where things ended last year so that I can effectively pull together our tax statements.

I also taken opportunity to recalculate the historical probabilities of our overall FIRE plan. The financial markets ended 2018 badly and I wanted to see how much of an impact it had on our nest egg, since we are counting on it for the next 35-40 years.

I ran some different FIREcalc scenarios and compared them to scenarios that I ran four years ago – before I had even made my formal resignation announcement at MegaCorp. (If you haven’t used FIREcalc before, check out this POST about the handy online tool).

The two biggest changes since then are: 1) the stock options I have from the MegaCorp I officially retired from have tanked (-50%); and, 2) I am 4 years older than the original FIREcalc models I saved in my file. Our annual spending, pension plan, and portfolio investment mix have stayed relatively constant.

The good news is that according to FIREcalc, the ‘historical probability’ of our plan working hasn’t really changed too much. We went from a 98% probability of succeeding over our lifetimes to a 95% probability. That’s down a little bit, but still a very high level of confidence.

Of course, history is only as good as the past can inform us. It can’t predict crazy changes in the future – for the good or bad. Still, I’m happy that things seem to be ‘on track’ within the range of historical trends and we don’t need (at this time) to make adjustments to our spending plan / withdrawal rate.

Image Credit: Pixabay

3 thoughts on “Recalculating FIRE Odds

  1. Do you know if the FIREcalc factors in taxes or if you need to add that on to your spending? I’m trying to convert and save as much in ROTH status as I can to try and reduce that risk.

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