Never Run Out of Money in Retirement – Use This Free FIRE Calculator!

Show notes may be found below the videos, all of which are also available on our Safe Withdrawal Rate series playlist.

Part 1: Walkthrough of the SWR Toolbox

Do you want to avoid the biggest retirement risk? This simple to use tool will let you model your safe withdrawal rate and help ensure you don’t run out of money. In this walkthrough video, we teach you how to use this powerful, flexible, and FREE tool created by Karsten Jeske. Using the SWR Toolbox, you can ensure that you have a personalized plan that works with your own financial situation.

Part 2: Eric + Jason discuss how they’re using the SWR Toolbox and how Jason is struggling to spend as much as he can safely do in early retirement

How much money can you safely spend in retirement? In part two of this series on safe withdrawal rates, we discuss the #1 tool we’ve found to help you answer that question. Topics covered include the SWR Toolbox, our thoughts on Social Security, the challenges of spending in retirement, and how to get comfortable with increasing your withdrawal rate.

Part 3: Walkthrough of the CAPE-Based Rule tab in the SWR Toolbox

Do you like the idea of a portfolio withdrawal strategy that can’t run out of money? This walkthrough video is the third part in our Safe Withdrawal Rate (SWR) series, and teaches you how to model a variable withdrawal strategy based on the CAPE ratio. Using this powerful and FREE tool created by Karsten Jeske, you can design a personalized plan that works with your own financial situation.

Part 4: How Jason builds his retirement paycheck using the SWR Toolbox

How do you plan to set up your retirement paycheck to avoid running out of money? In this episode, Jason talks with Eric about how he uses a free online tool to manage his finances in early retirement. Topics covered include his variable withdrawal strategy, managing cash, portfolio rebalancing, and much more.

Show Notes

Download the Safe Withdrawal Rate (SWR) Toolbox

  • The Safe Withdrawal Rate Toolbox is available via Karsten Jeske’s Early Retirement Now blog. The current version can be downloaded via Part 28 of the SWR series. This is also the post where the revisions to the calculator are described. To see the history of this tool, you’ll need to go back to Part 7. We found reading both posts to be essential to really understand how the tool works. Please ensure you follow the directions in the video to make your own copy of the tool. There’s no need to email Karsten to request edit rights!

Essential Blog Posts

Safe Withdrawal Rate series: This is the landing page for the 61-part SWR series (it will surely continue to grow) for which Karsten is best known. Be sure to start with the guidance he provides on how to navigate this great but expansive content. Many essential topics are covered in the series and not all of them involve deep dives into math! While we think all of his posts are interesting, you’ll find guidance below about the specific articles we think are most important to the topic of this video – in addition to Parts 28 and 7 listed above.

In Part 3 of this series, we covered the CAPE-Adjusted Safe Withdrawal Rate tab in the Toolbox, and described what the Shiller CAPE is. For those who want further details, there’s ample material available on Karsten’s blog for you to review. In addition to the introduction to the feature provided in Part 28, Big ERN recently wrote several posts concerning a new “better” CAPE ratio – i.e. CAPE model 2 in the SWR Toolbox. This article introduces the concept, while the next, “The 4% Rule Works Again! An Update on Dynamic Withdrawal Rates based on the Shiller CAPE – SWR Series Part 54” dives into details on how the SWR Toolbox employs this factor to model a variable withdrawal strategy. To go a level deeper on the foundations of this approach, including how to evaluate these types of strategies, you’ll definitely want to read Part 18: Flexibility and the Mechanics of CAPE-Based Rules.

Sequence Risk is more important than your average return rate. Surprised? Be sure to check out Part 15: More Thoughts on Sequence of Return Risk. As mentioned in the video, SWR is overwhelmingly determined by the first 10-15 years of portfolio drawdown.

Are you the kind of person who wants all the gory details about the math underlying the SWR Toolbox? If so, you won’t want to miss Part 8: Technical Appendix. It’s got all the information you need to fully understand how Karsten’s approach works. There are also some good references at the bottom of the post on related material found elsewhere.

Did you know we’ve spoken to Karsten twice before? “What the FIRE Community Gets Wrong” was the first time he came on Two Sides of FI. We covered a lot of ground in this episode about safe withdrawal strategies – so much so that we also released a follow-up video called “Karsten Spoke, We Listened. Here’s What We Learned”. These two episodes are popular with our audience for a good reason and are definitely worth viewing for anyone interested in SWR strategies.

Our second conversation with Karsten also featured Fritz Gilbert (from The Retirement Manifesto), in a continuation of their debate about the merits of bucket strategies. In “What’s Wrong with This Popular Retirement Strategy?” we covered a lot of ground that you won’t want to miss!

Other Show Notes

We get a lot of questions about portfolio rebalancing. Would you like a free tool to help you rebalance your portfolio using the same approach we do? This calculator provides a convenient mechanism to enter and track your asset allocation, flag when any assets exceed your allocation targets, and model any rebalancing that may be needed. It’s really easy to use as you’ll see in our introductory video.

In Part 4, Jason mentions his “IPS” or Investment Policy Statement. Chasing short term market conditions adds a lot of risk to reaching your long term investing goals. In “Is This a Part of Your FIRE Plan?”, we talk about how an IPS can help ensure you stick to your strategy, and avoid market timing and other investing pitfalls. Topics covered include defining portfolio makeup + objectives, the mechanics of cash generation + rebalancing, and why you might consider implementing an IPS yourself

cFIREsim (or  Crowdsourced Financial Independence and Retire Early Simulator) is a very popular and powerful FIRE calculator created by Lauren. We found a lot of value in this tool throughout our FIRE journey, and clearly many others do as well. In the developer’s words, “What can cFIREsim do? At its core, you can enter information in the a few simple inputs and return the basic simulation. At its most complicated, it can determine your portfolio success based on 80 individual portfolio adjustments, multiple types of inflation, multiple types of market returns, and graphically show you the results. There are many options to choose from outside of the ‘Basic Inputs’ “, including a number of variable withdrawal strategies under “Spending Plan”.

Variable Percentage Withdrawal (VPW) is another method besides CAPE-adjusted WR for allowing market conditions to influence the amount you take out of your portfolio in drawdown. As mentioned in parts 2 and 4, VPW is popular among some adherents the Bogleheads approach to investing. As you’ll read at this link, this method “adapts adjustments to portfolio withdrawal amounts to the retiree’s retirement horizon, asset allocation, and portfolio returns during retirement… to allow the retiree to spend most of the portfolio using return-adjusted withdrawals. By adapting withdrawals to market returns, VPW will never prematurely deplete the portfolio.”

stickK is the app Eric mentioned in Part 2 to help track adherence to a goal – like keeping to spending your planned withdrawal rate. Created from a behavioral economics framework, stickK allows you to create “Commitment Contracts, [which are] a binding agreement you sign with yourself to ensure that you follow through with your intentions—and it does this by utilizing the psychological power of loss aversion and accountability to drive behavior change.” We’ve not tried this yet but this is a pretty appealing (an a little scary) idea!

You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.

10 Replies to “Never Run Out of Money in Retirement – Use This Free FIRE Calculator!”

  1. I’d love to hear how you use Karsten’s SWR spreadsheet *post* retirement. I found it invaluable to help me understand if I was ready to pull the trigger. Now that I have, I’m trying to figure out if I should:
    1. Re-baseline periodically (e.g. grab the latest version of the sheet and re-enter info, essentially as if I were retiring next month)
    2. Keep your past history and just update balances to calculate a revised SWR.
    3. Maybe something else completely different.

    Would be great to hear what’s working for others.

  2. Hey y’all, I’m catching up on the show. Almost to present day!

    Jason, I’m just wondering how your daughters age factors into your buffer. Declining dinners out while she’s at home could be a potential regret, no? Boosting that dinner budget just to increase the experiences with her should be worth it.

    I’ve heard about people doing a forced spend budget. Setting aside an arbitrary amount above your usual budget that you must spend in a given time horizon (monthly, quarterly, etc).

    Anyway, love the show! Love the vulnerability. Keep it up guys!

  3. I tied to use the calculator with no inflation, 100% cash, no growth on cash and used various portfolio values (120k)…then i set time frame to burn up the portfolio at 1yr ….meaning there will be zero balance at the end of 1 yr. Unfortunately it shows i have excess monies left…about 30% of portfolio left. This doesn’t make sense to me….
    120k /12m = 10k/m
    Balance after 1st month=120k-10k-11k
    and so on
    So after month 12, portfolio should be zero.

    Try this for yourself and see what i mean

  4. Great podcast!
    Love this tool but having a problem with one thing. When I change the Portfolio Today amount (tab 2, cell E5) the RW changes in the opposite direction that I would think. For example, if I enter $500,000 my WR is 12.25 but if I enter $1,000,000 the WR drops to 7.75%. Shouldn’t my WR get bigger as my net worth goes up? The more money I have the more I can withdraw, right? Not sure what I am doing wrong. Or if I am not reading it correctly.

    1. Vin, this is apparently a common question that Karsten gets. That’s what should happen if you have positive supplemental cash flows. The cash flow’s positive impact on the SWR is spread over a larger portfolio; therefore the SWR goes down. But you can verify that if all supplemental flows are zero, the SWR is not impacted by the initial portfolio.

  5. Great podcast. I completely understand Jason’s concern with withdrawing the maximum calculated withdrawal rate each year. Being conservative, I think is a normal trait, especially when doing something like retirement very early. I think the real reason for the conservatism is that – There is no guarantee of anything. While the calculator may be very proven, there is no Absolute Guarantee for you.

    1. Thanks, Brad! So glad you liked it. I have moved up my withdrawal rate since the episode, but I’ve still got (for me) comfortable room between my WR and the calculated ceiling. Feels right to me for now, but we’ll see where it goes! -Jason

  6. I’m glad to know that I’m not the only one that geeks out over the ERN SWR Toolkit. It really gives me a lot of confidence in the numbers that I’m looking at in retirement. I retire in 2 months, and am struggling with the concept of withdrawing my funds after being fed a paycheck for 30 years. I have some positive cash flows that will start in a few years from a former pension and have discounted Social Security. The ERN tool shows a really high withdraw rate – and I plan to take between 3.5-4% every year which is still well below the ERN rate. Great podcast and thanks for contributing to the community.

    1. Thanks, Mark! Oh yes it seems you are not the only one 🙂 Congrats on getting into the home stretch! It is definitely a change. Just remember that this is also a paycheck, just one you are making to yourself. Best wishes to you!

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