I read through a good online discussion of retirement spending/investment probabilities this weekend. Someone was asking early retirees in a forum if they felt a 90% probability of out-living your retirement nest egg was enough, based on a online calculator like FIREcalc.
I’ve written about FIREcalc probabilities before and using Monte Carlo analysis to help pressure test your FIRE plan. It is a great tool. For our own planning, we aimed for a 100% probability against our ‘base’ FIRE plan and 85% of our ‘high spend’ plan.
Related: Calculating FIRE
I expected that most Early-Retirement.org respondents would advise against a 90% probability. Readers of that forum tend to be a pretty conservative bunch and indeed, some were fixated on getting to >100%. Since no one can tell the future, they argue, it is better to be safe than sorry.
Still, when I rallied up the responses on the forum, the great majority of people recommended to “go for it” and retire at 90% probability. Like us, most felt they were underspending their FIRE plan or had gotten better investment returns than they had conservatively planned for. Here’s the way the responses broke:
⁃ 64% – Retire Now @ 90% probability
⁃ 21% – Not Sure / Need More Info
⁃ 18% – Save More / Need Higher Probability %
Since past performance is no predictor of future performance, I would say you have to use FIREcalc-type calculators as a blunt instrument. I’m not sure there is any real difference between 85%-90%-95% results. Being willing to pick up an occasional side gig or trim a little discretionary spending can easily make up 5%-10% if you need to.
Like many respondents to the question, I would say that early retirement is about so much more than the money and the chance to accelerate your FIRE escape by a year or two by accepting a 90% probability would be well worth it in my eyes.
MrFireStation 
“May the odds be ever in your favor.” — Hunger Games. Monte Carlos help, to the extent that the suppositions built into the model are correct, and the data complete. Better than a guess; less than hindsight. To make the leap, first one must know the ground on which one stands: “What matters most? What will matter most? Who am I? Who will I be?” Answering these vital life questions is a necessary precursor to any satisfaction the future, regardless of money. You, or course, know this well, Chief. But it always bears repeating and reassessing.
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Yes – you need to examine who you are and what your goals are. That said, I’m not sure anyone can know “who will I be” too far in the future. As long as you are willing to accept a less speedy version of yourself, you should do fine. Financial ruin is a tough thing to correct for after a certain age.
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I was targeting above 90% as an ER goal, but was and am still running 100% on firecalc. I think there are extremes, with folks who live on 30K/year versus those who budget 200K. We are soundly in the middle of the spending pack, and have our calculations running to the age of 90 (and few if any family members have lived that long). I suspect that we will find our spending is lower than my calculated number, but also think we will spend more on travel when things open up again. Overall, I would be comfortable with a 90% probability. We could always cut back on spending (although thats not as easy on 30K/year).
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It sounds like you are well-planned. There are so many ways to put buffer into your FIRE plan – age is one, inflation rate another, investment returns, leaving some assets/social security out of the equation. We built a little cushion in almost every assumption.
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Shooting for 100% is human nature, and I’d waged that almost all FIRE walkers shoot for it. But the hind sight of many near end of life retirees would suggest missing out on a life well lived is the bigger risk. I can’t imagine looking back some day and having missed the last 3.5 years of early retirement. I say, weigh both risks, be flexible, and go for it! Life is short.
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Well put.
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