This calculator starts out very simply and requires a portfolio amount and an assumed spending amount as shown:
Just this simple step used in conjunction with expected Social Security, and maybe a possible pension, can start to give a retiree a good idea if his or her nest egg is close to being able to produce the desired income. The FIRECalc tool allows for more sophistication, as well, for those wanting to put in their own assumptions. Just click the tabs on the home page:
Note, for example, that you can put in the fees you pay on your investment portfolio, making the investment return calculation more realistic. You also can add Social Security and lump sum payments.
The end result is a graph that shows all the possible paths that gives a nice visual to understand the chance for success based on historical data.
FIRECalc's philosophy is straightforward:
If your retirement strategy would have withstood the worst ravages of inflation, the Great Depression, and every other financial calamity the US has seen since 1871, then it is likely to withstand whatever might happen between now and the day you no longer have any need for your retirement funds.