What Is FireCalc?
Simply put FireCalc is a retirement calculator. Most retirement calculators take raw numbers and see how your finances will fair up. The problem with that is you cannot control how the market will react. Yes, we do have the average over the last 100 years and that can help for some basics but, wouldn’t it be better to know exactly how things have worked in the past?
FireCalc will take your personal information such as your age, current savings, yearly spending, how long you expect to be in retirement, etc. Then calculate all time frames in the last 100 years (more actually) and sees how often you would have succeeded.
For instance if you put in that you expect to retire for 60 years, have $800,000 in savings, and only expect to spend $24,000 (my personal plans) it has a 100% success rate. It says at worse I will end with $800,000 in savings and best I will have $23,250,766, a huge range.
How Does FireCalc Review Your Retirement?
Where as most retirement calculators are trying to plan your future based off income you hope to receive FireCalc shows you what your income would have been if you had retired.
Essentially FireCalc doesn’t plan your retirement at all, it simply shows you possibilities of the past. This helps you to make an informed decision for your future.
The example FireCalc uses is that of 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.
The same is true with your finances, you can’t tell exactly what the market will do in the coming years, but you can tell what it has never done before, and what likely will never happen. Also you’ll be able to tell what the absolute worse that has ever happened and plan for that if it should happen again.
Should FireCalc Change Your Plans?
After a thorough FireCalc review inputting savings I don’t have, savings I do, when I want to retire and if I retired right now I discovered a few things. First, the calculator gives amazingly detailed information over the last 140 years. This makes me more comfortable planning the next 30 or 60 years even if it’s not entirely possible.
Second, you really can plan for everything. If you plan on having a pension, retiring in a few years, selling a house, buying a house, have a few years of higher expenses, or whatever else this calculator will do it. There are things I never would have thought about in retirement that this calculator can plan for.
What If It Says I Will Fail?
This calculator is very likely to tell you you’ll fail, especially if you put in your current actual numbers. I know for me i have a 5.8% chance of success if I am able to save $40,000 for the next 5 years and then retire. A 94.2% chance of failure is not something I feel very good about.
Does that mean that I shouldn’t even try to retire early in 5 years? To me that means I need to add income for the next five years to make my success better. $40,000 a year is a lot but I can increase my income and invest all of it and I could very well succeed.