Thinking of chucking it all and retiring early, long before you start getting a pension or Social Security, and before you have ready access to your 401k and IRA?

The big question:

"With what you have today, and what it costs you to live, can you retire and maintain the same lifestyle?"

Averages don't tell you much at all. Retire in the early 1970s, starting with $750,000 and taking out $35,000 each year, and on average you'll do just fine. But that average is meaningless.

Shown here are the year-end balances of three identical portfolios. One starts in 1973 (red), another in 1974 (blue), and the third in 1975 (green). So much for relying on averages!

FIRECalc can tell you how much you would have needed to insure that you wouldn't have depleted your portfolio if things are as bad as 1973. Or 1929. Or any of the past years for which we have data.

Instead of the results of three different starting points as shown here, FIRECalc shows you the results of every starting point, since 1871. You can get a sense of just how safe or risky your retirement plan is, based on how it would have withstood every market condition we have ever faced.

Seeing the results will illustrate better than thousands of words.

At the right, enter how much you need, how much you have, and how many full years you want the plan to last (or the calendar year you want the plan to end). Then click the submit button to view the results in a new window. (Not sure how much you will need? Check the US averages. Not sure how many years to plan for? See Vanguard's longevity calculator for an estimate.)

Without any other information, FIRECalc will assume you want to keep your annual spending about the same for as many years as you specify, you aren't planning on receiving any Social Security or pension, and your retirement portfolio is invested in a "couch potato" portfolio of 75% stock index and 25% bond funds, with a 0.18% fee to the fund. But you can change any or all of those assumptions. You can refine the spending and investment assumptions, explore the impact of some of your decisions, factor in all sorts of exceptions, and/or let FIRECalc search for savings or spending levels that will let you meet your goals. Just click on any of the tabs at the top to enter the optional information.

Each tab will take you to a description as well as the place to enter the optional information, but in short: Start Here is this page, where you enter spending, portfolio balance, and years. Other Income/Spending is where you enter Social Security, pensions, and other yearly adjustments. Not Retired? is where you specify when the plan is to start, and how much you'll add to your portfolio until then. Spending Models lets you select from several approaches to spending during retirement. Your Portfolio allows selection of different investments. Portfolio Changes lets you make lump sum changes to your portfolio at some future year. Investigate allows you to investigate the consequences of some of the other choices you can make in planning your retirement.

All data is preserved as you go among these tabs. You don't need to click Submit until you are finished.

How it works - the philosophy:
FIRECalc makes a single fundamental assumption:

If your retirement strategy would have withstood the worst ravages of inflation, the Great Depression, and every other financial calamity the US has seen since 1871, then it is likely to withstand whatever might happen between now and the day you no longer have any need for your retirement funds.

If you accept that assumption, then just tell FIRECalc how much you have and how much you'll be spending, and FIRECalc will tell you how often your strategy would have worked throughout history. Or what you need to change to make it all work.

How can FIRECalc predict future returns from past performance?

It can't. And it doesn't try. In fact, it tries to predict what will not happen. This might sound confusing, but it's really simple.

Consider an analogy: Suppose you are building a house in Honolulu. No one could predict the temperature for any given future date during the decades the house will be used. But if you know that it has never been under 52° in that location in all of recorded history, you could make an intelligent judgment about how much heating capacity is enough.

Planning for an Anchorage-style winter would be a true waste of money that could be better used elsewhere.

FIRECalc works the same way, using stock market history and your portfolio and spending plan instead of weather history and furnace capacity, to give you the information to judge if your savings, combined with your Social Security, pensions, and other resources, are sufficient to handle the winter.

Your Social Security: Enter the annual payments you expect to receive, in today's dollars. Use the estimate you may have received from the Social Security Administration (times 12), if available.

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.

Pension Income (or off chart spending reduction) Off Chart Spending

Pension Income (or off chart spending reduction) Off Chart Spending

Pension Income (or off chart spending reduction) Off Chart Spending

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? (Enter values in 2024 dollars; FIRECalc will assume future savings will keep up with inflation.)

How will your spending vary in the future?

Constant Spending Power: Future spending will be about the same as entered above, adjusted for inflation. This keeps the approximate spending power constant during the term of your retirement.

Bernicke's Reality Retirement Plan: Start with the constant spending power model, but use Bernicke's "Reality Retirement Plan". Current age:  Note: If you indicate you are 56 or older, then the spending will be reduced immediately.

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 inflation-adjusted yearly spending 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.

Percentage of Remaining Portfolio: Adjust your spending depending on the value of your portfolio each year, spending the same percentage of your remaining portfolio in future years as you are spending the first year. You can soften the impact of large drops in your portfolio by setting a minimum spending in any year to no less than percent of the previous year's spending. (Spending is reported in inflation-adjusted dollars, as with the other models, so you can evaluate future spending power.)

You can enter 95 to approximate the "95% Rule" from Work Less, Live More.

The 95% rule applies to the Annual Spending. 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 instead of 4%, and allows you to set a different value than 95%. An additional objective of the 95% rule is that your portfolio retains the same value at the end of the term as you started with, rather than merely remaining "in the black". The results will report how often that would have happened.

Note: FIREcalc supporters can make yearly spending revisions throughout the duration of their plan.

The cheapest index funds charge around 0.18%. Some charge 3%, or more.  If you are not sure this matters, be sure to investigate various fees here or using the option in "Investigate different choices. (Entries are typically 0.18 to 2)

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):

A portfolio with consistent growth of %, and an inflation rate of %

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