III. My current plan passes by a wide margin
With my total outlay projected to grow to an eye popping $319,970 / year, how well does Fidelity think my current retirement plan will weather the test of time?
To come up with the results below, Fidelity's retirement program ran my current financial plan through "at least 250 historical market simulations*." My comments follow the graphics. [View first post in this series.]
* Fidelity's retirement program tests whether or not there is at least a 90% chance your money should last to age 92. Fidelity also states that men have a 25% chance of living to 92; women to 94.
My assets at age 92
Alternate scenarios
Click to see what happens if I quit my part time job today
Click to see what happens if medical / Medicare costs at age 65 are twice Fidelity's average
My comments
- The numbers above show how much money Fidelity projects I will have, at age 92, under three market conditions.
- A 90% confidence level means that -- based on historical performance -- one out of ten times assets will fall short of the smaller number (my number is $3,098,505). Conversely, 9 out of 10 times my financial plan is expected to meet or exceed this number.
- Getting to the higher number -- $6,664,853 -- assumes I achieve the historical market average for my current allocation (which is heavy in bonds). [According to Fidelity, the average return for my current allocation is 5.84%.]
I. Can my retirement plan stand the test of time?
II. 42 more years of rising expenses (it's not a pretty sight)
III. My current plan passes by a wide margin
IV. Whats the max I can safely spend each year?
V. What happens if I assume more market risk?
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Financial experts tell us: Withdraw no more than four percent of savings a year; allocate investments in a balanced mix of stocks and bonds, etc." This advice, while good, is generic - and does not take into account the many peculiarities of my financial situation ... Read
This graph is Fidelity's projection for my annual income and expenses. My comments follow the graph. [View first post in this series.] My annual income / expenses Read
I also wanted to know how much more I could "safely" spend. So I played with expenses to determine what point I become exposed to a 10% chance of running out of money at age 92. The results below assume expenses begin at $6,444 ... Read
While my current plan and asset allocation are on solid ground, I wondered what will happen as I continue to increase the allocation to equities in my portfolio (which I am doing via dollar cost averaging). So in this test, I compare my current asset ... Read
