What figures for fund performance models

Linton

OldMusicGuy wrote: »

How can anybody have a calculator that predicts the future? All of these things are just very simple rule of thumb illustrations that make simple projections. As I've posted before, I looked at some of my projections from pension providers from the early 90s and they are laughably incorrect.

cFIREsim will at least give you some insights based on what has happened in the past. Like it says, it allows you to evaluate if your money will last in retirement if the market does no worse than the great depression, 1970's stagflation, or the dotcom bust. However, that will not allow for how things will shape up in the future given the geopolitical risks we are now facing, the growth of AI and economic trends like sustained periods of low interest rates.

I've run several cFIREsim simulations and I get 100% success rates but that still doesn't make me feel secure. But then I am very risk averse.

Any prediction must be based on assumptions. Useful predictions should state the assumptions used. Pension statement predictions have for a long time. The H-L pension calulator does. If you dont like the assumptions dont believe the prediction.

In order to plan for the future you must make assumptions, there is no other way. It isnt sensible to say "I dont know what is going to happen so I wont do anything". It is much more sensible to base the plan on assumptions that would have worked out at any time in the past 100 years.

But things almost certainly wont turn out as planned because of unforeseen and unforeseeable events. At least if you have planned properly the chances are you will be far better off than most other people who havent. In any case, with a really serious global event you may well find that insufficient pension is the least of your problems.

AnotherJoe

GSP wrote: »

I know its up to individuals to make decisions, but if these calculators so freely available on reputable company websites are apparetly not fit for purpose, isn't there something amiss here in an "industry" that's supposed to have information scrutinised by regulatory authorities etc.
Why have areas that are tight with rules, only to have very loose assumptions elsewhere in other areas?

Actually they have very tight assumptions. The problem is, they work on a straight line basis, which sort of works, long term in accumulation since you can average growrth, but is a disaster in decumulation since you cant average that unless perhaps you have massive safety margins (which then means you are most likely still scrimping i to leave money to your descendants,even if that wasnt your aim

Not all problems have an easy solution.

But there are no rules (AFAIK) on how decumulation is modelled and unless they perhaps used firesim type models its hard to see how you would show it. This is where an IFA would probably help many people.