Quote:
Originally Posted by bizaro86
He said $40k income with $15k per person of other income. So the $200k only needs to throw off $10k/year. If you're fine to spend down the principal I think that would almost certainly be fine for a normal length retirement.
Edited to add: it looks like firecalc is a monte Carlo using actual past US stock market returns.
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Yeah and I'm definitely jaded because I think that the entire fire movement is questionable. For instance, $2500/month after tax (which is essentially what this is), for two people s fine if you don't actually plan to do much of anything. If you want to pursue any hobbies or travel though, it's not much money. And the bigger concern is that relying on CPP/OAS is all well and good, until one of those two people die. Suddenly that $2500/month gets reduced further.
And as far as that calculator itself goes, there are a number of assumptions made there. One is that the equity exposure is 100% throughout retirement. That said, there is a darker issue lurking for a lot of these types of models. Bonds and Fixed Income was a good contributor to retirement plans for the past thirty years; you could get a good yield, stability in price and everyone was thrilled. Interest rates also declined from say %6-7 down to under 1% though, so you had a nice longer term tailwind for the retiree to ride down. How does that look going forward with rising rates and less of a contribution from that FI sleeve? Suddenly those 60/40 balanced mandates that gave you a nice even 7-9% a year and made that projection work on a historical basis are giving you more like 3-5% a year (say 7-8% from the equities and 1-2% from the FI). And make no mistake when people retire they're not super interested in seeing the markets decline 13% (which is the longer term average that we see on the S&P 500 each year). It's quite a conundrum.
Anyway...tl;dr: I personally wouldn't prepare for retirement based on $200k in savings and $40k/year pre-tax income, but YMMV.