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FireCalc vs. Personal Capital Retirement Plan Success Rate

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  • Live Free MD Live Free MD 
    Participant
    Status: Physician
    Posts: 73
    Joined: 01/03/2017

    There are several tools available to predict whether your portfolio will last throughout your retirement.

    One of these is FireCalc: https://www.firecalc.com/

    Another tool is Personal Capital’s retirement planner: https://www.personalcapital.com/financial-software/retirement-planner

    With our current assets, yearly spending and asset allocation, FireCalc predicts a 98% chance that our resources will last indefinitely (>60 years).  On the other hand, Personal Capital predicts a 65% chance of success.

    That is quite the discrepancy.  I realize there are lots of variables to consider here.  I also understand that FireCalc is purely using historical data, while Personal Capital may be using more predictive models.

    Any other thoughts on why Personal Capital’s outlook is much more conservative than FireCalc’s estimation?

    Sports Medicine Physician. Athlete. Big Mountain Enthusiast. Blogger at http://www.LiveFreeMD.com

    #197339 Reply
    Vagabond MD Vagabond MD 
    Participant
    Status: Physician
    Posts: 3171
    Joined: 01/21/2016

    I am not familiar with the Personal Capital calculator and do not want to create an account just to familiarize myself. I am a huge fan of the FireCalc, but I also use others for modeling and planning, too. In general, they all have different approaches, assumptions and models and none should be individually be relied upon. Think of them as second opinions.

    "Wealth is the slave of the wise man and the master of the fool.” -Seneca the Younger

    #197384 Reply
    Liked by Peds
    Avatar Dicast 
    Participant
    Status: Physician
    Posts: 400
    Joined: 01/09/2016

    I would make sure your asset allocation is accurately represented in firecalc. Personal capital is going to be using your actual holdings to project returns. Maybe you have less potential return than you think? FWIW, I’m 100% success on firecalc and 82% on personal capital if I try to match up everything.

    Get outside of your bubble.

    #197724 Reply
    Live Free MD Live Free MD 
    Participant
    Status: Physician
    Posts: 73
    Joined: 01/03/2017

    I would make sure your asset allocation is accurately represented in firecalc. Personal capital is going to be using your actual holdings to project returns. Maybe you have less potential return than you think? FWIW, I’m 100% success on firecalc and 82% on personal capital if I try to match up everything.

    Click to expand…

    Thank you for the tip.  Even if I try to match up the asset allocations, I still get 98% with FireCalc and 65% with Personal Capital.  Like most things, the truth may lie in the middle.

    Sports Medicine Physician. Athlete. Big Mountain Enthusiast. Blogger at http://www.LiveFreeMD.com

    #197742 Reply
    ENT Doc ENT Doc 
    Participant
    Status: Physician
    Posts: 3024
    Joined: 01/14/2017

    Have you verified that the underlying assumptions are the same?

    #197743 Reply

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