Welcome to the Bogleheads Chapter Series. This episode was hosted by the Chicago Virtual Chapter and recorded May 5th, 2021. It features James Please, the developer of the FICALC product. Bogleheads are investors who follow John Bogle's investing philosophy for attaining financial independence. This recording is for informational purposes only and should not be construed as investment advice.

OK, perfect. Yeah, so thanks for taking the time, again, on such short notice to join this chat with me and hear a little bit about FICALC. I guess a little bit of history on the app is I've been a big fan of FIRACALC and CFIRSIM and other retirement calculators for some time.

And I kind of had three goals going into building this app. One was I wanted it to work on a mobile phone because I use my mobile phone a lot. And just in my experience in the industry, I know more and more people are using their mobile phones. So that was one goal that I wanted.

And then another goal that I wanted was when I first went to those calculators, I was a little bit overwhelmed because they seemed so complex. So it was really important to me that I create a lot of guides that document how the calculator works. And really, the goal of the guides is if anyone has any questions about it, they should be able to find it here.

I'm not sure how successful I was. Maybe you guys can let me know. But yeah, so that was kind of the goal behind the guides. And then the third thing that I wanted was for there to be at least the same amount of features as FIRACALC and CFIRSIM, and ideally a little bit more, just so that there's also some added functionality to the calculator as well.

I know-- I don't think FIRACALC has been updated in some time, but I know CFIRSIM just had a rewrite. I'm not too sure. I haven't had a chance to look at it too closely, so I'm not too sure. There may be things that are in CFIRSIM that aren't in FICALC and vice versa.

I'm not too sure. But yeah, what I can do is I can speak to kind of what is in FICALC. So yeah, so a little bit of background on just this general kind of calculator, just in case there's anyone in the call who is newer to this kind of calculation.

But basically, obviously, we can't know the future. It'd be great if we could know, hey, I've got this amount of money right now. I think maybe my retirement will be 30 years long. I'd love to know if I'll run out of money or not, if I want to spend this much money each year.

We don't know that. But what we do know, what we can look at, is historical data. So we can say, hey, what if you retired in 1970 and had a 30-year retirement? Would you have run out of money or not? Then you can say, well, what about 1971? You can check all of the historical data that we have.

And that's represented here in the interface by the number of simulations that we run. This is the number of times that we run a simulated-- Here's an example of a reason why you might have You might say, hey, why don't you --retirement length, and then we'll really stress test an idea.

Maybe that would give me more confidence in my plan. Well, if you click Learn More, that's going to open up this guide. And there's actually a section here that kind of describes some of the problems if you go with a retirement that's too short or a retirement that's too long.

So I won't get too much into the details of that right now, but that's just kind of like one of the benefits that I think the guides provide. It can kind of give you some guidance on some of the range of parameters and a way to think about these different inputs and really the effect that they can have on the algorithm that's being run.

So that's a little bit of a tangent there, but I'll move on and we can talk about the portfolio. So in FICalc, you input your initial portfolio value in a dollar amount. And then what you get to do is you get to specify the allocation that you want. So for instance, 80% equity, 15% bond, and 5% cash, that's the default.

And then also the default is that it rebalances annually. Now, if you click into this, you can see that there are a number of different configuration choices that you can make. So maybe you're not interested in rebalancing. Maybe you just don't think that it's worth the effort or you just want to see the impact of not doing that work would have had historically, or you can turn that off.

Or you can do something like rebalancing every five years if you want. Another thing that you can do is you can specify what's commonly called a glide path, where the allocations change over time. So maybe at the start, you want to be pretty aggressive and have this 80% equities portfolio.

But toward the end of your retirement, you might not be as interested in larger swings in the value of your portfolio. So maybe you would cut that down to 50% equities and 45% bonds. And then maybe you want to see the impact of that kind of slow progression over time.

And then the last thing that you can change about your portfolio is how quickly you reach that new value. So the default is that it's just evenly. So halfway through-- so this is a 15-year retirement. I'm sorry, a 30-year retirement. So at year 15, you're halfway to your new values.

Well, you can change that to be instead quickly, which would get you there to that final value a little bit quicker. Or you could do slowly. So in this situation, you'd be hanging around 80-15, 80% stocks, 15% bonds. You'd be hanging around that for quite a bit longer. And then toward the end, it would speed up and kind of get you to that 50%.

So just a few different options to kind of configure how you might want your glide path to look. And you can see the results that that might have on the results. James, there's a question about breaking up the stock bond value into small value sectors and things like that.

Is it basically what you just showed us? Yeah, let me see if I can open up the chat window just so I can see that. OK, here we go. Here we go. Is there any ability to break into, say, US small value? Yes. Great question. And the short answer is no, not right now.

It's all equities. And it's all basically the S&P 500. And the reason for that is because the data source that I'm using for FICALC comes from an economist named Robert Shiller. He's a guy-- you may have heard of something called the CAPE. Well, he's the guy who came up with that.

And he also publishes market data all the way back to 1871. Unfortunately, his stock data tracks the S&P 500. And if you go to his website-- and actually, if you click the Info button on historical data, that will actually include a link. It's his name, Robert Shiller. And that will take you to the data source.

And then also on this page, he kind of describes a little bit about what the data is. So the short answer is I would love to be able to split that up to have small cap, large cap, things like that. But just due to the data source that I'm using right now, that's not possible.

There is another data source, and it's the one that's used by the Trinity Study and Bengen's original paper. They both use the same data set. And I do think that that one breaks down things in way more detail. But it's like $500 per year to get that data set.

And it's just not tenable for me to put that bill. Bonds, great question. And I'll also answer the other one by Robert Strauss. But first, I'll do the bonds, since that's also about the data source. So let's see here what he has about bonds, because I know it's listed here.

Maybe I have-- maybe I have a description here. It may be tracking 10-year treasury notes, but I would need to look that up. Unfortunately, the information on this page isn't structured in a way that makes it really easy to skim and get that out. But I'm going to say for now, I think it's 10-year treasury notes.

And then, does retirement assume starting at age 65? And then, how do you set the age? So here's an interesting thing. Starting-- there's no start age in FICalc. It's all based on how long you think your retirement might last. So it's based on-- yeah, so it's based on just how long you think your retirement might last.

So if you're 65 years old, well, maybe you might think that a 30-year retirement seems appropriate. So you might go for 30 years here. If you're 50 years old, maybe you might bump that up to 45 or something like that. So yeah, I know other calculators have that start year and then maybe also like an estimated age or something like that.

But in FICalc, it's all based on that length of your retirement, if that makes sense. I hope that answers your question, Robert. And thank you, Lady Geek, for posting that link to the data source. Cool. So unless there are any other questions about the portfolio-- Oh, back on that age thing.

So it really wouldn't know when RMDs might kick in, right? Or would it? Correct. It would not. That's something that you would need to factor in manually through something like additional income or additional withdrawals, which we can talk about once we get there. Cool. So for withdrawal strategy, another thing that I wanted in FICalc or something that I thought could differentiate it from other calculators was just adding more withdrawal strategies.

So yeah, I think there are potentially more withdrawal strategies in FICalc than some of the competitors. They might not all interest you, but they might be worth checking out. Maybe you'll learn about the things that you value in your withdrawal strategy by seeing what these different strategies prioritize. And they might not all be familiar to you.

So maybe sensible withdrawals, maybe that's something you haven't heard of. Well, for each one, there is a button that says Learn About This Strategy. And if you click it, there's a little bit of information describing maybe who came up with this strategy, what the goal of the strategy is, maybe some of the math behind it, the equation that it uses, and also some examples.

And then I tried to, in the last paragraph, kind of compare it maybe to a strategy that you might understand and maybe mention some downfalls. Like for instance, sensible withdrawals suffers from these high withdrawal fluctuations from year to year. So yeah, so if a steady withdrawal amount, like what you might get with constant dollar is important to you, then you might want to consider other strategies.

So for each of these different strategies, you can then configure it based on that particular equation. So for instance, for constant dollar, you can specify how many dollars you want to withdraw each year. And then you can choose to adjust that for inflation or not. Whereas for, say, custom BPW, you can adjust the PMT values that are part of custom, part of the custom BPW algorithm.

And yeah, so another one is Guyton-Klinger. So this one is the most complicated withdrawal strategy that I'm aware of. It just has these three rules. They're a little bit complicated. And it creates this larger form, but you're still able to fully configure Guyton-Klinger based on the paper where they kind of introduced and described this method.

So one thing that may come in a future update is there's a difference between the intention behind these withdrawal strategies and there's a difference between your ability to configure things and what the creators of these strategies want you to be able to do. So from what I could read on the Bogleheads forum, one of the original authors of BPW, Long Invest, he really did not want you to change the PMT formula values of BPW.

So that's why custom BPW is separate from that, because it allows you to modify those things. But it's different enough from BPW that it's separate. And another one is the endowment strategy. So these values here that the Yale University endowment team published, there's no flexibility from what I could read in adjusting these values.

So for that reason, it's not adjustable here. But I'm thinking of adding a future update where there would be an advanced option setting. And it would say, hey, adjusting these values may change the behavior of this strategy in such a way that it goes against the intention of the author.

But you're allowed to do that if that's something that you're comfortable doing. Tom, I see you noticed here that you may have noticed a potential error here in the description of Vanguard dynamic spending. I'd be curious to hear more about that if you're able to elaborate. Do you want me to comment now or wait till the end?

If you want to comment now. I think that the 5% is if your portfolio changes. If your default withdrawal is 4%, but then your portfolio drops a lot, it might be that the 4% is actually looking like far larger percentage of your current portfolio balance. So then it caps it at only 5%.

So it's 5% of the current amount, I thought. But maybe just reread their white paper on it. Same thing with 2.5%. I think if your portfolio grows rapidly, the current value of the portfolio-- because the standard withdrawal rate's based on this Bingen-style approach. But it allows, I thought, depending on the amount or depending on the current value you're spending based on your current value of your portfolio.

Cool. That's super helpful. I'll have to give that another read. You're right. I'm not sure it means your program is incorrect. But I think at least the description may be reread it. Right. Yeah, I'll have to give that another read. And yeah, I'll be sure to-- well, I don't know how I can contact you all.

But yeah, I'll take another look at that for sure. Thanks for calling that out. So yeah, so there are a couple of different withdrawal strategies there. And another thing that you can do is specify these minimum annual withdrawals and maximum annual withdrawals. And some of these strategies, they're pretty untenable if you just don't specify any mins or maxes, like percent of portfolio.

I mean, the available spend can go down way, way low. If maybe you're trying to shoot for around $40,000 a year and you do percent of portfolio and it only withdraws $15,000, that might be a pretty tough year for you. So this kind of allows you to say, hey, most of the time, hopefully that 4% hovers maybe around $40,000.

But I can flex down to $35,000. And then that kind of ensures that your available spend always stays at $35,000 at that minimum. And then you can also do it in the opposite way as well. You can see here with this percent of portfolio, shoots way up to $160,000.

You may not need that. So you can kind of restrict that as well and see the impact of that on the results. So that there is the withdrawal strategy. And I'll just hop on over to additional income. So the way additional income works is maybe you might get a side job.

And it's going to bring in $10,000 a year. Maybe you're expecting a raise or just an increase in that amount. That's tracking inflation. So you adjust that amount for inflation. And maybe you're going to do that for the first 10 years. So that's kind of the flexibility provided by this idea of additional income.

And maybe you plan to work forever. So you can just do income repeats indefinitely if you don't want to put that end year into it. Or you might say, I'm going to take 10 years off. And then maybe I'll get that side job. And then I'll work indefinitely. So that's kind of what additional income allows you to do.

And if we open this up-- well, OK, we have it here. So this kind of shows a few of the different use cases that additional income is intended to help you model. Some of these, there may be room for a specific feature to allow it to be a little bit more maybe accurate or more powerful for the use case that you have in mind.

But for now, it all needs to be entered as additional income. So one example is rental property cash flow. If you have a pension, Social Security, part-time job, private inheritance, any of those things that you might get as money for a given year, is this where dividend income would be entered as well?

Dividend income is factored in through these assets that you get here. So you would not need to do a separate dividend income as additional income. This would be-- these are mainly just-- these are all things that are separate from the portfolio that's defined above, if that makes sense, Greg.

Cool. So there are things that I would like to add to additional income based on feedback people have messaged me. So I know that it's not the-- I know that it doesn't support all of the features that everyone needs for everything, but it's a start. And the way that additional income works is it reduces the withdrawal that you actually make.

So one thing that's a more complicated idea in FICalc is this difference between the target spend that you have and the actual withdrawal that you make. So just to show an example, if we go over to constant dollar and we do $40,000 per year and we adjust it for inflation and we add in a job and that gives us $40,000 and we adjust it for inflation, it starts immediately and it goes forever.

We will never actually withdraw from our investments because this additional income that we've got has fully covers the amount that the equation determined that we should withdraw, if that makes sense. And if this were, say, $20,000, then we would spend that money that year and then we would withdraw the remainder, which would be $20,000, as determined from the constant dollar strategy.

Now, if you pull in $60,000 a year, you're going to take that first $40,000 and this calculator assumes that you spend all of that $40,000 that the withdrawal strategy calculates, but then that additional $20,000, that gets then reinvested into your portfolio. I assume everything is in after-tax dollars. For additional income, yes, you would definitely want to be doing after-tax dollars for this.

So I'll move on to additional withdrawals. And so, yeah, so sometimes you might know that you're spending $40,000 a year, but also you know that you need a car. And maybe you want to factor in buying a new car or a used car every 10 years or something like that.

Or maybe you're saving up for someone's college or just other things that might come up that you need to factor in. Well, you can do that through additional withdrawals. So you could do college, and you could say, OK, we're going to spend up to $30,000. We'll adjust that for inflation.

That's going to happen in four years. And it's going to start in 10 years, and it's going to repeat for four years. So that's the additional withdrawal. And the way that that works is that this is just tacked on top of whatever the withdrawal strategy calculates. So if the withdrawal strategy calculates $40,000, then when this year occurs, that's going to be a $70,000 withdrawal.

And then Rob says, when you say after-tax, anything to deal with Roth versus taxable versus tax deferred. So for additional income, these are just kind of assuming that they're just dollars that you're receiving. They would be after-tax dollars. There's not really any way to specify things like a Roth or taxable or tax deferred for FICAL.

It doesn't get into the details of the specifics of where your money is. For instance, just looking at the portfolio, it's just equities, bonds, and cash. This isn't saying half of this is in a tax-deferred account and the other half is taxable. It's not getting into that level of detail.

It really does track kind of the math that Fangan and the Trinity study used, which to my knowledge don't make that distinction between where the accounts are. But that'd be a great feature to add for sure down the road. And then CS69 says, how can everything be an after-tax value if you don't specify the type of account the assets are in?

Well, I hope what I just said kind of matches that. Again, if you're familiar with the Fangan study, the Trinity study, the way that this calculator works is very similar to that. It does just add a few additional ideas like additional income and additional withdrawal that those studies didn't factor in.

But it's still kind of the same idea though. So the returns on equity, bonds, and cash are pre-tax returns. The cash withdrawals are after-tax. Correct. So taxes are currently not taken into account when it's calculating things like returns and growth and things like that. And that is something that people have asked.

And then cash withdrawals are after-tax. Do you mean additional withdrawals here, Bradcom? Yes. Correct. That would be after-tax. Cool. So moving on down to historical data, the full data set goes back to 1871. But you might want to restrict your data for different reasons. So for example, one reason that you might want to is that the S&P 500 didn't exist before 1926.

So if you look, Robert Schiller describes how he creates this data for 1871 through 1926. You might read that and say, hey, that sounds kind of weird to me. I don't want to trust that. I don't want to include that data. Also, Bengen's analysis and the Trinity study limited their data set using 1926 as the start date because they didn't do any of that sort of computation that Schiller did to create that earlier data set.

So that's one reason why you might want to limit your data. And that's also why the default value that the data is limited to is 1926 for that reason. So that's just another configuration option provided by the calculator. And then for user preferences, two little quick things that I just mentioned.

If you look, there's a little bit of motion when these pop-ups appear. And you might not like that. Well, if you turn this off, then it's going to get rid of that so that it's a little bit less annoying. And also, if you're colorblind, you can choose one of these options.

And it might make some of these charts over here look a little bit-- be a little bit more easy to read. So definitely worth checking those out if either of those things appeal to you. So just thought I'd mention that. So that's kind of like all the configuration stuff.

And I'm going to hop on over to the questions. Tom Pruess, "I thought the Bengen study assumed you paid your taxes with the money you withdrew. That is, the withdrawals were pre-taxed. Can anyone confirm?" So Tom, just to clarify, that is my understanding as well. And that is how this calculator works as well.

So if you're withdrawing $40,000 a year here, you're going to get a tax bill. FICALC does not include that tax bill into this. So you would need to include that into your spending, if that makes sense. And then Lady Geek, "What statistical distribution do you use to stimulate over that data?" Are you referring to these charts here or something else?

Lady Geek? Yeah, I was just trying to understand-- you know, when you get those nice charts there, there's an underlying-- you know, when you're making 121 runs, what are you varying and by how much? That's where the magic goes. Everybody calls it a Monte Carlo. Monte Carlo is just another name for running statistical distribution.

But nobody really describes the underlying models or the distributions used to create those curves. So just a little interest in the model itself. Yeah, so I can-- I'm going to-- I think I'll answer that as I describe what is in these results. So how about I start describing the results?

And then once we-- let me say, like, describe-- like, get down to this chart and describe it. And then let me know if you still have questions. How does that sound? OK, cool. So one thing-- you know, if you read the Bingen study, if you read the Trinity study, they talk a lot about this idea of success rates.

Well, if you click this-- you know, what is a success rate? What does it mean to be successful or not? Well, if you click this, you can see what the definition is of success for the strategy that you've chosen. So for a category of withdrawal strategies that I call longevity, success is defined as the portfolio never running out of money.

So in the Bingen study, if on that 30th year, the portfolio had $1 left, Bingen would say that that's a success. Now, you might disagree. But that's the definition that Bingen used. And that's also the definition used here in this success rate number. Now, that doesn't tell the full story.

And that's why I introduced these two other values that might be of interest to people. So the first is this idea called nearly failed. So if you click that, you can see what that means. That means that the end portfolio value is less than 35% of the initial portfolio value.

Now, the reason I added that is because, you know, if I was, you know, toward the end of my retirement and my portfolio value was down, was almost a third of what I started with, I might be a little bit concerned. So that's why I added that there. Because I think that's a piece of information that people would find meaningful.

But that was not captured in those studies. And we're seeing here that it's 0%. And that's because I added some of these additional incomes. So I'm actually going to refresh the page to wipe all that data out. And you can see here that with this sort of default $1 million portfolio with this $40,000 strategy, we're getting 5% of these simulations as being nearly failed.

And then another thing that, you know, people are interested in are this idea of a large portfolio where in FI Calc, that's defined as the end portfolio being 300-- sorry, 300% larger than the initial portfolio value. So some people, you know, they want to maximize how much they spend in their life.

They don't want to have lots and lots of money left over. So you can actually see with the constant dollar strategy, you get a third of your simulations with this large end portfolio. Now, if you go down to something like the endowment strategy, you're going to see here that it does a little bit of a better job at, you know, not getting to that nearly failed state or to that large end portfolio state.

So that might be something that might be interesting. All right, percent of portfolio. All right, cool. So why does percent of portfolio use longevity? It seems it should never be able to run out of money. So I'm going to answer that. But first, let me get into a strategy that is not longevity.

So an example is VPW. So if you think about it, so one of the qualities of VPW is that in the final year, your portfolio is $0, right? So if you look here at this chart, it's $0. That is by definition. That is the goal of the strategy. And all three of the strategies in this maximized spend bucket have that in common.

So if you use that Bengen or Trinity study definition of success, then you're always going to get a 0% success rate. So instead, the success is defined as when two things are met. One is that the portfolio is exhausted. And the final year withdrawal is greater than or equal to your minimum specified withdrawal.

So if you say that you always want to be able to withdraw $20,000 and you specify VPW, and on that final year, you're only able to withdraw $15,000, that's considered a fail for VPW. So it's a little bit of a different definition. It's unique to FICalc. You may disagree with that.

You might agree with it. Definitely open to feedback about that. And then for percent of portfolio-- OK, so why is this one measured as longevity? It seems it should never be able to run out of money. Well, the strategies that tend to not run out of money are ones that are good fit for longevity.

The point of longevity is that it shouldn't run out of money. So if you devise an algorithm that literally can never run out of money, it's still good to evaluate it as a longevity one. Because the alternative is, which is the maximized spend, what they have in common is that that final year always drops you to $0.

Percent of portfolio doesn't have that quality, so that's why it's longevity. I hope that makes sense, David, but I'm definitely open to hearing alternative perspectives on that. So moving on down, there's a little bit of analysis that-- oh, well, actually, one thing I want to say. An additional-- something I'd like to add in the future to FICalc would be the ability to adjust these values.

You might say less than 35%. I'd be pretty worried if it was less than 45% or 50%. Well, I think users should be able to configure that. Or you might say-- David, you might say, this is a bad definition of success for percent of portfolio. Well, you should be able to modify that.

So that's a feature that I'd like to add. I don't have it yet. And then also the ability to add additional analysis blocks that might be something that appeal to you. So kind of beginning to blur the line a little bit between this calculator app, which has more restricted functionality, and a spreadsheet app, which would really give you kind of limitless flexibility with how you modify that data.

And on that note, I will mention that you can download all the data in FICalc as a CSV and then load that into a spreadsheet app if you want to do your own analysis. So you can do that. Cool. So portfolio at the end of the retirement, this just tracks information about that final portfolio value.

So one thing I would like to add would be a way to specify, say, what's the portfolio like at year 5? What about year 10? What about halfway through? I don't have that yet. You can only look at the final year. But I think it'd be pretty cool if you could also specify kind of like the time scale that you'd like to see.

If you click these three blocks over here, you can actually see a sorted list of all of the in-portfolio values. If you click Largest, then they'll be sorted biggest to small. If you click Smallest, they'll be sorted smallest to large. And then if you click $0 Portfolios, it's going to show-- oh, whoa.

We've got a bug here. Well, I'll have to fix that bug. It's not showing the $0 ones. But it should be showing the $0 ones. So yeah. And then here we go. We got these charts. So this chart is meant to show the quantiles of the data. So it's supposed to show the median value.

It's then supposed to show the values that are within 50% of that median. So 25% larger, 25% smaller. Yeah. And then the 90% quantile, and then the 100% as well. And then it also shows the initial portfolio value. So you can kind of see about where these values sit.

So one thing to keep in mind is that these charts, they're kind of a V1 version of the chart. The mode should actually be what's at the peak. But right now, it's the median. So that's just something to keep in mind is that the actual distribution curve would look a little bit different.

So just keep that in mind. It's more meant to communicate the idea. OK, cool. So we have a question from Mosh. And I'm sorry if I'm mispronouncing that. Constant dollar minus minus dollars, additional income, plus dollars. So the net result is what the calculator uses is a portfolio withdrawal.

Assuming constant dollar is greater than additional income plus portfolio return. Just give me one second. I'm going to read that again to make sure I understand it before I respond. Mosh, I'm going to ask maybe if you could elaborate a bit more on that final paragraph. I'd be happy to answer it.

But I'm having trouble following along with what you're asking there. I totally understand. Hopefully you can hear me. I can hear you, yeah. Awesome. Thanks, James. Terrific looking tool. So what I think I'm asking, and I think you've confirmed it, but I wanted to just be sure. Because if I'm not sure, I suspect other people aren't sure as well.

When we're looking at the calculator, you have a constant dollar withdrawal. Let's say, for the sake of discussion, $40,000. That's where you start as your default. Let's say at some point, 10 years-- so I retire early. And after 10 years, I get Social Security. And let's say my Social Security is, let's say, $20,000.

So obviously, the net of those two numbers is $20,000. So logic would tell me that that $20,000 should come out of the portfolio, not the $40,000. And I just wanted to verify that that's obviously plus any portfolio return. So that's all I was trying to say in that kind of convoluted last paragraph.

So is that accurate what I said? That's accurate. And thank you so much for explaining that. Yes, that is an accurate description of what happens in this calculator. That's what I assumed. And I appreciate that, James. Assuming if I download the CSV file, I can then look at that and actually see it in the data, see it behaving that way.

You should be able to, yeah. And I think once we click into some of these years, we can see that as well. And on that note, that kind of is a good segue down here into this available spend. So this is called available spend and not withdrawal amount. So although constant dollar is saying-- people talk a lot about withdrawing.

This is saying that you have that $40,000 a year. It is not saying that you actually withdrew $40,000 that year. So that's an interesting thing, right? Because this withdrawal strategy is a little bit different from maybe what you would want to spend. But it does actually determine, based on your additional income, what you actually do have available to spend.

And what you can kind of see here is that these charts aren't optimized for every single use case. So it's kind of weird. It's like this straight line. But this is kind of how it renders when-- well, look at that. It says average initial withdrawal amount. I need to update that label there to say average spend amount.

So yeah, because it's saying all withdrawals are $40,000. But it's actually all available spend is $40,000. And then if we even turn this off for a minute, you can see, again, this is another example where the chart hasn't been optimized for every use case or just kind of every situation that you might find yourself in.

And the reason that this chart is displaying this way is because you're pretty much always withdrawing $40,000 unless you run out of money. And then you withdraw $0. So yeah. OK, cool. So I'll move on down to simulations by star year. So this is another kind of distinguishing feature that I wanted to include in FICalc, which was the ability to really drill down into a particular year and see information about that year.

So just at a high level, there are three color-coded values for each year. A red year, that means it ran out of money entirely. These yellow years or orange years, that means it almost ran out of money. It's less than about a third. And then these blue years, that's when you end with a lot of money with that over 300% of the initial portfolio.

So just kind of at a glance, you can kind of see, OK, look at that. The '60s, start of the '70s, that was a rough time. Maybe around the turn of the century, that was also a bit of a rough time. And then you can kind of see that there were these more booming times in between those.

And then when you say ran out of money, you mean according to the planning available amount for that year, agree? What I mean is that if you say-- I mean, really what I mean is when you say ran out of money, it means the end result is that you have $0 in that portfolio.

So if I click into one of these and I look at this portfolio value, boom. We hit $0 in 1990, several years before the portfolio ended. So that means that any red means that there's $0 in that portfolio, either on a final year or in any year during the retirement, really.

And then are those end portfolio numbers considered in constant or inflation-adjusted dollars? Every dollar that you see on this page is in first-year dollars. And actually, if you just give me one sec, I will show you. So if you come to this page and it's your first time visiting the page, you'll see this message here that kind of explains that CS69.

So all dollar amounts displayed have been adjusted for inflation to be in first-year dollars. So I hope that's clear enough to help kind of allow you to kind of understand what's on the page here. All right, so what I'll do is I'll hop on in. I'm actually going to turn back on that.

OK, I must have deleted it. But I'm going to turn on that Social Security for $20,000 starting 10 years in, lasts forever, adjusting it for inflation. So I'm going to turn that on, and we're just going to hop on in here. So you can see that has a pretty cool result on our retirement here.

And what I'll do is I'll hop into 1972, and we'll see what happens. So what you can do is you can see portfolio information about this particular retirement from 1972 to 2002. So you can see the median, average, standard deviation, largest, smallest down here, final value. So you kind of get this information.

And then you can kind of also just visually see how that portfolio changed over time. And then also, if you come down here, you can see the same thing for that available spend. And you can see that it's always showing $40,000. So I think one of the highest impact features I could update to FICALP would be showing the withdrawal that you made on the same chart as the available spend.

I think it'd be pretty cool to see that you're actually withdrawing $40,000 for these first 10 years. And then when Social Security kicks in, that would show you drop that down to $20,000. And then you would kind of see that $20,000 a year withdrawal. You can't see that right now.

You do have to download the CSV and dig into that. And then, so you're just using the X year blocks. Is there any option to randomly change the sequence of returns? Great question, Rob. In the works, not done yet. So I actually have it pretty much working. But the problem is that right now, it can run 120 SIMs pretty quickly in the browser.

But I had it run like 100,000 or like 250,000 to try to be a legitimate Monte Carlo simulator and a competitor to some of the other ones that are out there. But right now, the algorithm is too slow to do all of that in the browser. So I either need to improve the efficiency of the algorithm or move it to the server.

And on that note, one thing I'd like to mention is I care a lot about privacy. FICalc doesn't store any of your data anywhere. No information that you type into this calculator leaves your device. I don't ever want that to change. And also, if you click Privacy, you can kind of see our privacy policy, which is we don't store your data.

We don't sell your data. That's not what FICalc is about. I do have Google Analytics on the site. And that's because I just like to see who's using it and things like that and where they're using it from. I'd love to move off Google, honestly, and maybe go with a more privacy-focused alternative.

But it's just a time commitment. And I think that it would also cost me a little bit of money. So I just haven't been able to justify that. And then on that note, there is actually a single ad. And FICalc-- I'll show you it right now. Here it is.

I hate this ad. I'll probably remove it. But I was just trying to think of ways to justify it. There are a lot of features that I'd like to add to this calculator. But it's really hard to justify spending potentially hundreds of hours when I'm doing the big-time investment.

It's not currently earning me any money. Cool. Talk about the programming tool. Yeah, it's built in a framework called-- well, so the programming language that I'm using are HTML and CSS, which you have to use for the web, and JavaScript, which I use for some of the interactive behaviors.

And then within JavaScript, there's a framework called React that makes it a little bit easier to build interactive web applications like FICalc. So FICalc is a React front-end application. And other than that, kind of everything that you see is custom. So that's pretty much the TLDR of the tech stack there.

And I'm trying to think of what else. You know, I actually want to head back a little bit and go back to a question that Lady Geek asked a little bit ago about the statistical distribution. I'm curious if that question has been answered, Lady Geek, or if you still have an open question about that.

Yeah, it's more of a fundamental question. Like, you run 121 simulations. Simulation number one, you get a data point. What do you vary on simulation number two? What parameters are varied? And that's where I'm trying to understand the statistics. What parameters are you varying in with what distribution? I guess it's just more of a curiosity than anything.

That makes sense. Yeah, so this is not a Monte Carlo simulator that has things like small perturbations on data. It's using Schiller's dataset, unmodified. Simulation one starts at 1871. Simulation two starts at 1872. That's the only difference between the first sim and the second sim. So there are 121 sims being run here because that's how many 30-year intervals there are between 1871 and 2020.

And Tom mentioned a good point that if you change the number of years, you'll get more or less simulation. So if I bump this up to, say, 120, you can see only 31 sims are run. Whereas if I knock this down to five, we're going to see 146 because there are just more five-year intervals that fit in the dataset.

So it's more like a sliding window? Yeah, I think sliding window is an accurate way to describe it. Yeah, that's what I said. That's why I ask very basic questions. Well, I learn a lot, certainly. But because it's also a use of terminology, because when you say Monte Carlo, I'm thinking normal, log normal, all the classical.

But now you're talking about variation of the actual dataset in time where your start and end points are. So I think that's a different perspective of what people are assuming, well, me, of the underlying mechanics here. That makes sense. Yeah, and there's a lot of proprietary information on the-- no, the commercial tools, everybody kind of hides exactly how they do it, and they all claim accuracy.

And this is very open, very clear. So that's good. So one thing that you might be interested in is there's a section in the guides called How It Works. And it really is intended to be a very clear description of everything that happens. So you can even go on to what happens in one simulation year and that kind of stuff.

So that might also interest you. So definitely check that out as well. Yeah, because the other nice thing I heard that-- let's say I'm very-- I'm an engineer, but very detailed on getting the basics right, especially when I did a lot of things for the wiki. Terminology is so important.

Because as soon as you said everything is brought back to year one dollars, it made perfect sense. Because in finance, that's the main difference between-- actually, between engineers and finance people. As engineers think forward in time, finance brings everything backward in time. So that's why they talk about net present value.

You talk-- you reference things in the present time. And that's just a different mindset than engineers. I think of things about 20 years out and how is my product going to work. And of course, I have perfect data. But so they say that it's a matter of defining the basics fundamentals.

I see you threw a few equations in your explanations, which is good. So thank you. Yeah, absolutely. I'm 100% in agreement about the importance of making sure that the terminology is-- that the correct terminology is used and that the explanation of what's going on is as clear as possible.

I would love for FICalc to be completely transparent. It may not be there yet. But if anyone sees something that seems like an unanswered question, just let me know. And I would absolutely add something to the guide that explains that. And I see here we have a question from Jaina or Jana.

Sorry if I'm mispronouncing that. But it's just asking a little bit about my background. Yeah, I'd love to share that. So I'm kind of a hybrid role, designer, engineer. I work at Netflix. I've been interested in fire and that kind of thing for a little over 10 years now, I guess.

And yeah, I've just kind of always thought how it would be pretty cool to give back to the community. I've learned so much from blogs, from forums, just from all the resources and tools people have made. So I just always thought it'd be really cool if I was able to build something that people found valuable.

So that kind of motivated me to put FICalc together. I hope at least some people find it useful. Yeah, so that's a little bit about me, I guess. Barnes is asking, FICalc uses first year dollars. So after, say, 10 years, I'll be removing $40,000 plus whatever inflation was over the intervening 10 years, correct?

It's a great question, Barnes. And let me try to clarify. Every dollar that's displayed on this results page will be adjusted for inflation to be in first year dollars. But that does not mean that the underlying calculation is keeping everything in first year dollars. So your question about it would be removing $40,000 plus whatever inflation was, that's something that you specify at the withdrawal strategy level.

So for constant dollar, you specify that you want $40,000 per year. And then you specify, I do want to adjust this amount for inflation. Now, because that is specified, that's why when we come down here and we see this available spend, we see that everything's $40,000, because you specified in the withdrawal strategy that it's going to adjust for inflation.

So over time, it's actually increasing that amount that you're withdrawing each year, the actual number of dollars. And then when we actually display the results, we show it in current year dollars, because I think that that's a little bit easier for you and just users and myself to kind of evaluate that.

Now, if we turn this off, we can kind of see things are going to start going crazy because we're no longer adjusting it for inflation. So in first year dollars, it's really going to track inflation. And we're going to see a more variation in actual purchasing power that you have.

And then Rob says, what inflation projection do you use? So this is using the CPI data from Robert Schiller. And I think it's -- I'm not sure. I know there are different kinds of CPI, so it looks like he says consumer price, all urban consumers. That may be the one he's using.

You definitely want to give this paragraph a read just to make sure that that is the actual one. But yeah, it's CPI, U.S. based, and potentially the all urban consumers CPI value. Okay, cool. So we have another question from David. I think there are two basic categories of SEMs, historical, aka backtesting, and Monte Carlo.

Cool. Yeah, David, that lines up with kind of my understanding as well. I think there's value in both. I definitely appreciate the backtesting approach, and I also like the Monte Carlo approach, as you've described it. I did start work on a Monte Carlo version of FICalc. It's not done yet, but, you know, people have expressed to me that they find value in that as well, and I think it would be pretty cool if that were an option available.

So I'm trying to think if there's anything else worth touching on. I think one thing I want to mention again is, like, this thing works great on your phone, and most users of the app do browse it on their phones. So definitely, you know, if you have a phone, you know, check it out.

If you're just at the grocery store and just wanted to run a quick calculation, perhaps add the word "backtest simulation" and footnote it. It's a great point. I definitely agree. Maybe adding the word "backtesting" or "historical" or something like that right here on the calculator could make that a little bit more clear.

Plus one to that. Thank you. You know, I'm going to just hop into the guides real fast just to see if anything comes to mind that we might want to call out. So this -- I will call out one thing. So when you click "learn about this strategy," you're going to get this description here.

Well, if you go into the guides, there's another page. There's another section for the withdrawal strategies, and right now they don't link up. So there's a separate description of Bettenklinger here than there is in the calculator. And you might be thinking, "What the heck? Why would you do that?

Why not just have one?" I definitely want one. I'm just not there yet. I plan to really -- the goal was to really go really detailed here on the guides. And they are a little bit more detailed than what's in the actual calculator. For instance, it has this, like, strengths and weaknesses section for each of the strategies.

And, again, that's based on my opinion. So you might have a different opinion, which is fine. But if you do, I'd love if you shot me an e-mail, because I'd love to hear more about it. And then, yeah, I guess one other thing I want to mention is, if you want to save a calculation -- so here we go.

We've got this Guyton-Klinger calculation. Let's do a 35-year retirement. And let's rebalance every five years. You can hit save. You can -- there's this button over here, save or share. And it gives you this URL. And if you copy that URL, you can then paste it into a new tab, and that's going to load that back up.

So as you can see, we've got Guyton-Klinger here. We've got that five-year rebalance, and we've got that 35 years. So that's kind of how you can share a calculation, if you want to send it to a friend or family member. And then you can also bookmark that, and that's kind of how saving your calculations works as well.

And then just briefly, a few, like, high-impact things that I think could be interesting to add. One would be this idea called similar results. So what if you run this calculation for 35 years and $1 million? Well, what if, when you scroll down to the bottom here, it said, well, what would the results be if you had done 40 years and $1.1 million?

And just kind of a brief summary of that. And then there would be a link, and you could click in, and you could kind of view that. So that would just be a way to kind of get a quick glance at some minor tweaks that might interest you. And then another one would be a way to set up two calculations side-by-side and kind of do a side-by-side comparison.

Right now you can do it by having two browser windows side-by-side, but some people expressed to me that they would find value in there being just one in the -- just one in the app.