will my money last in retirement it's the ultimate question for anyone chasing Financial Freedom and absolutely the biggest question at the heart of the fire movement whether you are just starting out or you are fine-tuning your path to early retirement we'll explore what it really takes to ensure your money not only lasts but continues to grow in retirement if you have ever wondered how to achieve true Financial Freedom this episode is for you hello hello hello welcome to the Bigger Pockets money podcast my name is Mindy Jensen and joining me just a little bit later
is my not ass simulation co-host Scott trench normally this is a part of the show where he would insert his own little pun but he's not we'll get back to that next week but for right now Bigger Pockets has a goal of creating 1 million millionaires you are in the right place if you want to get your financial house in order because we truly believe Financial Freedom is attainable for everyone no matter when or where you're we're starting today we are bringing on Lauren Boland she is a dear friend of the podcast and integral to
the fire Community through her cire Sim calculator that she created way back in 2013 this is an episode that relies a lot on uh video so if you are not watching this on our YouTube channel you might want to hop on over there and watch it there you can also open up the fire Sim calculator it is at the letter c as in cash cire sims.com follow along input your own numbers look at what we're actually talking about it is an excellent tool and we are going to be discussing it on the show today using
screen sharings if you would like to fire along hop on over to our YouTube channel which is youtube.com/ BiggerPockets money Lauren Boland from the seires sm.com Welcome to the Bigger Pockets money podcast I am so excited to talk to you today it's always great to talk to you Mindy and Scott I'm sure it's going to be great by association I love that okay so Lauren let's Jump Right In what is your money story what does that look like oh that's a a tricky one I think um so I I'd say that my money story starts
off um when I was a kid I grew up in sort of a lower middle class um family um my dad my parents were divorced so we sort of had um money issues in that fashion and I think money was always hard uh when I was growing up we definitely ran to times where it was maybe not going to be able to pay the mortgage or it was going to be hard to get a car repair and things like that and that really stuck in my brain uh for all the way through adill Hood honestly
till now which is kind of you know that's a whole other uh therapy issue to talk about but um when I got to college I you know worked hard worked toward the end and when I met my now in-laws for the first time at graduation I had learned that they retired at age 51 and I didn't know that that was really possible like where I grew up people worked until their bodies gave out people worked until they died um so that really sparked uh a knowledge in me that I I just needed to go find
out how that was possible and I you know at the time when I was 22 or whatever I didn't really want to ask them it seemed like an embarrassing thing like how did I not know this and so I really took my early 20s to try and figure that out um and so since then I'd say we really focused on hitting pretty high savings rate numbers uh until we had kids and then things leveled off but was we still pretty good compared to uh the average American and uh I'd say right now we're probably f
um we both work and I have it in my uh crosshairs to figure out when to pull the trigger there um on retiring early but we're in a great great place because of early decisions we made can you give us a little bit more context about your career and what you did or what you do during an yeah absolutely so I my undergrad was sort of a generic it degree type thing and I got a MERS in systems engineering um and so I did a lot of different uh jobs around those things in the defense
contract in world and then sometime around 2011 or so uh I started to learn programming uh computer programming on my own I didn't really get much of that during my undergrad and um eventually I actually wrote uh cire Sim as a project to sort of get more uh real world examples of large code bases under my belt and try and do something thing of of a passion project and it turned out to be a longlasting project that was in 2013 this is 11 years old this is 11 years old and it is what launched me
into becoming a software engineer so I'm currently a software engineer with uh big university so that's awesome okay so you created this as a project when did you release it to the world yeah so I created as a project I released it in 2013 um and really like this is this is going to if you haven't heard this it'll be a good surprise but um it was intended as a better fire Cal if you're familiar with the old site fireal it's still out there um it is attached to a site like called early retirement.org it's
like forums and and I had learned on those forums I was hanging out in those forums I learned that people were like clamoring for new features on this thing like why can't we have this this why does it work this way why can't why can't we add this thing and I learned behind the scenes that they didn't have anyone that was developing it they had bought that fire Cal from someone who had literally sailed off in into the sunset as an early retirement on a boat so I tried to fill that Gap okay so let's
walk through the cfiresim what numbers are you running like what is this what is the purpose of this yeah I mean on a on a larger scale the purpose of this is to visualize what it would look like for you to save some amount of money for a number of years and then um stop saving and use that money for living expenses um I think personally one of my big things about retirement projections like this is that humans are really bad at trying to think about things that are more than a few years in the
future they they're not really good at thinking in compound interest and so showing people visually what would happen if you were to retire and use your money um for expenses is sometimes a daunting task for the brain so I want to show them visually so my good friend Chris mimulo over there um who's a a blogger out there he has written about retirement calculators a ton and he classifies cire Sim as a medium Fidelity uh sort of retirement calculator which means you're not going to put in individual account balances and things like that you're um
going to be putting in sort of rough numbers and giving it um some historical guidance and then it's going to give you sort of an output that will point you in the right direction so for this you're putting in just sort of an overall portfolio value so the default is a million dollar um and then you're giving it an overall sort of asset allocation based on equities bonds golden cash um I use those particular things because the data is readily available from the Robert Schiller uh data set so that is why those four as people
have asked me why not crypto why not this and that's the answer to that where do I put my home equity that is a great question you don't oh man wow look at that we got meet up for not including that in our net worth and discussion the other day on our uh Mindy and I and and look at that Lauren doesn't even there's not even a field to enter it on this calculator I love it there shouldn't be because that doesn't have anything to do with your retirement so love it exactly and I you
know we can get to get into this um a little later but there are ways to model taking some of that Equity out downsizing your property like that those are all things that do add to your investable assets and once you do that I think you should include that in your calculation but until then nope 100% 100% Scott and I will continue this conversation with Lauren Boland about how to calculate your fine number in a minute but first I want to tell you about momentum 2025 Bigger Pockets virtual investing Summit starting February 11th we're kicking
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grab your spot don't miss the early bird deal if you sign up before January 11th 2025 you can snag a 30% discount all right let's get back into it with Lauren Scott I'm really glad that you asked that question I it gives me the opportunity to say anybody who is using the cire Sim calculator or simulator or whatever I'm going to call it a calculator throughout this whole uh episode and if you have a problem with that listeners then I'm really sorry I'm not trying to offend you um but there is a an about link
right up at the top leftand Corner about questions click on that and read through it this is a free resource that offers a whole lot of information is it going to cover absolutely every single situation out there possible no because it's a free resource Lauren likes to sleep sometimes Lauren has a family and a job it is a great starting point it is a great let me see if I can do it because if you run your numbers and Lauren's beautiful calculator says you have a 0% chance of success well then something has to change
or you are just going to work for your entire life so I love that this gives you a starting point it gives you some reassurance or it gives you some things to work on oh I guess a 100% Bond portfolio at age 25 isn't really the best choice or you know all cash Lauren you brought up that there's no crypto that was actually the first thing I looked at in here but also okay there's no crypto so if you have crypto throw that to the side just like Scott's uh home equity put that to the
side and run this with all of the options that there are here I have 0% of my net worth in gold so that's just going to say zero on here but if somebody had way more net worth in gold then their their simulation would change and it can it can tell you oh you know the bond portfolio isn't such a great option at your age or maybe you've got such a high period of success or such a high potential for success that you could you could add a little bit more bonds into into your portfolio
for some some rebalancing but I want to point out before anybody starts listening and like oh well it doesn't say this and it doesn't say that this is a free resource that's really flipping awesome what is that number up at the top how many simulations have been run oh as of right now 35,4 76,5 I would say that people like this I would say that about 600,000 of those are Mindy as well we got about 348 in other people doing this let's get into the tool here let's go through these these fields and talk about
these things these are self-explanatory retirement year the the year retirement starts the year retirement ends what what is data method yeah so I I would say I would um put a caveat on the self-explanatory because I think the self-explanatory for a lot of data in finance nerds um I having experience in software engineering and user interface uh design and things like that people don't necessarily know that and I think it's It's tricky sometimes to put this much data on one page and make it super understandable so to your question data method essentially is the your
choosing whether or not you're going to use historical data for this or sort of a constant rate so like if you're in a spreadsheet making your own thing you're probably going to use a constant rate you're going to say I don't know stocks make 9% or whatever and inflation is 2 and a half% and bonds make 4% something like that I'm just making these numbers up um that's a constant rate of return um using data it's going to use this Equity data Bond data and cash data from the Schiller data set that goes all the
way back to 1871 um so F fundamentally the way I like to explain this is if you're running a simulation that is 30 years long okay so say you're trying to retire by 60 and you're being conservative and you're like I'm going to make the simulation till 90 it's 30 years long the way that this works is it takes every string of data that's 30 years long so starting let's say 1871 to 1901 and it plugs your portfolio um number along with your expenditure numbers into it and see how would your portfolio do over that
30-year chunk then it does it again over the 1872 to 1902 again over 1873 to 1903 so on and so forth all the way to the current data and that's why you see these lines um Mindy is now on the output page and you see these lines that are vastly different okay if you hover over one of those lines it will make get sort of bold and it will show you the entire track of that particular 30-year chunk or whatever you choose um which tells you when you retire it really matters like look at that
um the depend depending on when you retire you could end up with $6 million in the scenario that she set up or it fails in a couple of those blue ones in the bottom right so yeah that is essentially what this historical data method gives you awesome so so that's the default option and the one I always use I haven't even bothered with some of these other ones but you're saying you could you could also just say I want to look at what happens if i' just do a 1966 and now I just get one
of those lines yeah so the the individual one is definitely a feature that people were asking for and the reason it defaults to 1966 as I'm sure maybe you know because of the data implications it's probably one of the worst times in history you could have retired because massive inflation and a down stop stock market or um sort of a sideways one so so it's the most conservative possible you take the one of the one of the most horrific times to retire in the history that we have data for and you say let's start with
that one and if we pass that we're probably pretty good and that's why you picked that right something like that awesome well let's do this let's change this number to 2.5 million and the reason I'm going to change 2.5 million for the rest of our our our discussion here is because about we have pulled our audience about how much it takes to be considered rich in America and 50% of the audience said bu a number up to 2.5 million and 50% said above 2.5 million maybe the rest of people in America don't think that's accurate
but that's what the Bigger Pockets money audience thinks and that at a 4% rule should equate to about $100,000 in spending so it's great you're doing this because I've thought for years that I need to change that number I I really only have it at that number because the sort of original Trinity study had those as sort of the default numbers well I'm going to email you some feedback then you know this is the complaint department right here right our default numbers uh for this so okay so we have and then we have walk us
through what um uh the spending plan and inflation type me here yeah so I'm going to go in the opposite order uh since inflation type's sort of easier to talk about um so inflation type is essentially I think there's only two choices um been a while since I've clicked anything other than the historical so CPI or historical just uses our um us CPI data set from for inflation so it has its ups it has its downs and just like the data on the equities um you get a random sampling based on the 30 years that
that that particular simulation is I tend to like to use that because it shows you know some periods of um deflation actually in in the late 1800s it shows some periods of massive inflation and it shows some like sort of Flatline um sort of area so I like to use that you can also use a constant number which is like you know you can choose 3% or 2.5% which you know sometimes is better like maybe you're maybe you um change your data set to be a smaller amount of years and you just want to do
a a constant number so um that's the simpler of the two so spending plan I could talk for an entire hour just on spending plan but basically this is going to determine how your spending number changes over time so the very two basic most basic ones are you're either going to have it inflation adjusted or not inflation adjusted so not inflation adjusted means if you're spending $100,000 this year next year you're spending exactly $100,000 not a penny more the year after that you're spending $100,000 again even though what that $100,000 is worth isn't paying for
as many Goods so that's not inflation adjusted if you choose inflation adjusted it is going to slowly increase your spending along the lines of inflation whichever you pick in the inflation type so if you choose CPI historical and one year it's 3.5% um inflation your spending is going to be raised by that much so typically people choose that because you know you're going to try to have the same buying power um through a certain period of time some people lower their um lower their expenses at different periods of time and that's that's also a choice
now if you go beyond that there is a lot of options in there so if you choose um if if mind is controlling it you choose the variable spending plan it will highlight sort of one of the other features in here which um is a spending floor and a spending ceiling so there are I'd say I I guess I can't remember the last count but there's a handful of what are called variable spending plans that change your spending based on certain market conditions so the variable spending plan right there will change your um spending based
on how well the market is doing in a good Market it allows you to spend more in a bad Market is allows you to spend less however from a data standpoint when you allow that that to happen you get weird things that happen like if you start off at 100,000 like you might have one year where it dips down to like $60,000 worth of spending and realistically maybe you can't do that so you can sit set a floor that is the lowest it'll ever go and you can set a ceiling to be the highest it
will ever go um those floor and ceilings are active for any of the variable types of spending awesome this is super powerful any other I mean this is this is something that we can go into all it looks you has six different other options here um can you give us like an overview of what these other options are for those who are want to truly nerd out to the next level in using these tools I I just stick with the inflation adjusted spendings I think it's the most simple way to to run the calculation yeah
the the short elevator speech is essentially some of these are methods that are developed by different financial planners or financial analysts out there that have spent time researching this and then um some are Community Based like VP PW is one that I believe was developed by people in the boal hats community and that's essentially the die with zero one where it will par it will change your spending based on um trying to have a life certain life expectancy and you end up with zero dollars at the end awesome and then these other ones um are
further research opportunities for our listeners since we need to keep moving because there's so many powerful parts of the tool here um on that absolutely if you are wondering what what we're talking about Scott is showing his uh screen on our YouTube channel and he is running various numbers all throughout this whole uh scenario and I'm doing my own numbers that are a little bit different and um Lauren what do you consider to be a s a a good success rate there's like I'm at 90% I'm like oh you know some of these some of
these portfolios are pretty high and if I would have retired in 1920 too boy would I be wealthy um despite being a person who's developed a tool like this I will tell anybody who asks that um that is not a simple question that is a much more complex question than you think and there is wild debates about what is a good success rate some people will only accept 100% success rate in all of their different simulations across different tools um that is way too conservative in my opinion um some people have written I know Michael
kites has written a paper about Monte Carlo simulations and essentially says if you have any sort of flexibility in your plan as long as any given year you have a 50% success rate you're probably going to be fine like and you redo that every single year you have a 50% success rate going fine going forward you'll probably be fine what do I think I mean I personally look to see if it's above 80% to feel good um I'm not going to go for 100% I think that that will end up making people work too long
and if you ask anybody who's used tools like this you can really easily have a false sense of precision by just tweaking certain things to make it you know do what you want it to do well and I think that's really important to note you can get yourself all you know oh well what if I I think I call it eraser math or I think I've heard it called eraser math oh well I did it this way and I didn't like the number so let me erase something and try over well what are your actual
numbers this only works with your actual numbers or your goal numbers like if your goal is a million dollar and you only have 500 right now that doesn't mean you run it at 500 to be like oh I guess I'm never going to retire you run it at your goal numbers and if the goal numbers work great if the goal numbers like what is it on just 1 million one million with 40,000 spending the million with 40,000 spending and the 2.5 million with $100,000 in spending should be identical right mathematically is that right Lauren that
is right that is right should be identical I actually have a question on that Lauren because I've been thinking about this and I think and I haven't I haven't gone and modeled it out myself I I would have to do it in a spreadsheet because I'm not the Superstar engineering programmer that you are here but there's something about how it's harder you it's not linear right to generate $100,000 in income on a $2.5 million portfolio because there's taxes that are involved is that factored into this simulation at all that is a great Point Scott and
I want to definitely tell people and I tell people in the about section and tutorials taxes are not included in this this is meant to be more of a simple gut check situation and if you are using this tool to actually try to set your retirement plans without paying attention to taxes then you're going to have a bad time and I suggest that you factor that in so if you've done calculations of your own for any amount of time you could probably guess some sort of tax rate that you're going to have based on your
particular assets and I would add that in so in your case like if you're if you have $100,000 income and you think that some amount of it is capital gains and some amount of it is you know whatever uh other income like add on 10 or 15% to to you know account for that um now to be clear the Trinity study ban study doesn't really account for taxes either so it's like you know it's a it's a balancing act um and I'll also I want to double back to what Mindy said is what's important to
know about this kind of tool is you don't necessarily have to just go off of your goal numbers um you can set up a period of time where you're accumulating and then tell it when you are going to retire so if you set the retirement year into the future and add sort of of an adjustment down below about how much you're going to be adding to the portfolio every year you can sort of have a two-phase situation um things you know are different when you do it that way but you can you make that happen
Okay let's let's do it I got 1.5 million portfolio today I want to spend $100,000 in retirement starting at 2035 and we're going to have that be a 40e retirement because I'm going to live be I'm going to live until 2075 so all right you're going to live till 20 two 20,27 is what you wrote that's right 2075 yeah good for typo offer there that puts me at 85 so I'm maybe 85 I'm going to take care of myself eat right you know all that kind of good stuff okay so now how do I add
in more how do I add in how much I'm going to add to the portfolio yes that's a great question so honestly the one of the most powerful things about seire Sim is something that I have left up to people for their imagination a little bit and trying to figure out how to best use it so the bottom section of cire Sam has this little section and it says add adjustment on it and every time you click add adjustment it sort of dumps in another section of where you can put in something that adjusts your
portfolio Okay this is going to sound very simple but there's a lot of applications so you can add either an income and savings adjustment which adds to your portfolio or you can add spending um adjustment which takes away so any sort of situation in which you think you you can think about that will add money for any period of time like one year or 5 years or 10 years or forever or any sort of situation you can think about that spends for any period of time you can add in here and add a label so
I if I were you I would type in something like under label I'd type in contributions or work work time you know W2 job or something like that and you can put in how much you're going to add to your portfolio every year so he's typing in 10,000 and then what's important is you choose a period of time that lines up with your retirement so starting year is 2024 ending year is whatever you put up above for your um retirement date and just like a lot of the numbers above you can choose whether or not
to inflate this number within with inflation numbers or constant numbers or just not there you go so you're getting a different kind of number situation I like that number 40 million yeah good Lord the the time the timing on that is amazing it's like if you what what year does it say 1921 you started 1921 see what's happening there is your working period is Right during the Great Depression and you're dumping money into it ah nice I like it you're hitting the load perfectly okay oh awesome so okay so this this and then if I
want to if I want to say I'm also going to get a uh inheritance of or a gift from a family member of 50 Grand here I could just add that right you can add that and you can uncheck the little box that says recurring which will then just allow it to happen for one year whichever year you choose awesome so I can put that in uh you know 20 2026 um or whatever right um okay and then I can just keep adding these as far as I want to go as far as you want
to go yeah I add things like college tuition for my two children who are going to be going to college at two different fouryear periods um I sometimes create scenarios where I'm going to downsize my home like we live in a very a high cost of living area like what would it look like to sell our house you know pocket half of the equity and move somewhere cheaper um lots of different scenarios like that exist it's and it's it's great to put in those put those things into your simulations and I I highly recommend people
in general to do different calculations whether it's on a spreadsheet or with a tool doing a conservative one uh sort of median sort of uh simulation and an optimistic one and making your decisions based on that awesome so now I can add my home equity because I'm actually going to downsize in 2028 and uh that then gets it allows me to add a onetime contribution here so that's where you home equity um on there which I think is just a Fant okay so we have these adjustments right and so what like I've told people before
there's some other like higher Fidelity uh tools that do a better job at giving you sort of Frameworks for all the different situations that these might occur but really in the back end it's just doing an adjustment like I am it's just changing your income stream or your spending stream um for some number of years I think I I always want to call it like this is a fantastic tool 35 million use cases but if you are planning for a number that is much higher than $100,000 per year in annual spending you need to start
being pretty careful because that's when taxes really throw this out and and I'm working on this concept I haven't I have not gotten there yet like I said but the it's geometrically harder it's way harder to generate a high income and sustain it for a long period of time and then generate a low one not just because of the asset base but because of that Dynamic of tax situation um with pull there so this is probably not this is you should probably be very conservative with these numbers would I think You' agree Lauren if you're
trying to generate like 250k for example like a fat fire level of retirement wealth absolutely okay what I like is playing with the numbers so I have my actual portfolio value in here right now and I am playing with okay what if I spent $100,000 which feels really rich to me and I make 100% I'm never going to run out of money okay then I bump it up to 200,000 it says you're going to do it I bump it up to 300,000 it says now you've got some problems so then you can play around with
this a little bit I can't fathom a year that I spend $300,000 but I certainly can't fathom multiple of those years in a row where that would that would come and wipe out my portfolio but it's still above 50% Michael kitus is uh 50% number here so that's when I think you can really start having some fun with this I mean this has to be a fun thing this shouldn't be stressful or you know am I ever going to retire look at where you where what you're at now and where you want to be and
you know like I could see people using this to potentially avoid one more year syndrome Lauren she says from her own job let's also talk about say here because I I've talked to a lot of people along with Mindy on finance Fridays and Bigger Pockets money and I don't see very many fire people with the 7525 stock Bond portfolio it's all 100 Z right I I Mindy you have what's your bond portfolio look like uh pretty similar to maybe even less than yours Scott what's yours at mine's 100% equities unless you count my one hard
money note which matures this month uh that I have so it's all it's all all stocks Lauren what's yours ours is probably around 9010 um and it fluctuates obviously but yeah we I feel like ever since I was in my 20s I had to sprinkle in some sort of bond because going 100% felt weird but honestly like from all the literature I've read and things and I mean I've poured over big earns website I mean not you know 100% seems great to me um and there's a lot of you know papers that say if you're
not 100% once you retire you should slowly work your way to 100% And that's a better success rate 100% bonds no 100% stocks it's basically the rever reverse of traditional thinking we have to take one more final ad break but more from Lauren after this thanks for sticking with us let's jump back in okay yeah I am 100% stocks um when it comes to things that I can enter in my uh portfolio on SE firesome I've got some random syndications and random uh you know private notes and and things like that but I'm zero gold
zero cash zero bonds um zero crypto if you had that there's no field for crypto which I think is great I think that uh you know I I not I would not consider any crypto part of my retirement plan so I love the fact that it's not even an option in your spreadsheet that's that or in your in your calculator here that's fantastic Lauren great Forward Thinking for you that's a sharp sharp thinking that's pun for my crypto one thing I wanted to to to ask about here is like how does that change so we
had a 96% success rate by way I think this is a key output here right the success rate is the one of the first outputs below this big nice pretty graph um rainbow chart here and and it was 96% success rate when we have a 60/40 stock Bond portfolio it drops by 8% but the average ending portfolio balance goes from let's see what it was what we have here is a 96% or success rate for a 4% withdrawal on a $2.5 million portfolio and the average ending balance is 5.2 what I think is interesting and
why most people perhaps are right to have a 100 Zer equity and Zer you know uh stock stock Bond portfolio um at least from a historical data perspective is because the failure rate only drops by 8% 8 percentage points um and then the ending portfolio balance increases by nearly $2 million over these time periods so I don't know have you found that that is the case for a lot of people who use the simulator that they're assing a 100% 0% stock Bond portfolio I think that that is true um that a lot of people go
for 100% And what's great Scott is that if you play around with this enough you'll realize that um that what you just demonstrated the higher stock percentage being like not really a different change in success but much higher um portfolio rate that is Amplified when you start to do some of the variable uh spending methods and you set like a hard floor in a hard ceiling because what that ends up doing is it gives your portfolio extra breathing room during down times to sort of recover and then when things go back up it will increase
it so yeah if you're you're using variable spending yep so exactly that's exactly what you should do there so but so what Scott did is he had the $100,000 um sort of Base spending and he set a floor of 75,000 and a ceiling of 20 ,000 now you got to make sure that your own personal values will allow you to drop 25% in your spending um if in a down Market but that is a you know decent decent chunk to do but doing that will often highlight some of these um uh sort of allocation changes
okay remind us for our non-engineering wizzes what what is a zv value yeah so um in the uh about or the tutorial section it'll tell you essentially that is just how much the variable spending um changes so for instance if the Market's up 10% one year um if the zv value is 0.5 it's going to increase your spending by 5% it's going to use half of the increase of the market um and if it's down it's going to do the same thing so if the zv value is one it's going to perfectly follow the market
like Market's up 20% your spending is going to be up 20% you thought of everything this is fantastic this is a really really really really strong tool here um now big let's ask another question here I got rental properties right this Bigger Pockets you know a lot of folks uh listening are going to have a a rental property or two and let let's let's just for the sake of argument let's not factor in the mortgage amortization let's assume the rental property is paid off and I'm going to get you know let's say I got a
$500,000 in paid off rental property portfolio generating $35,000 a year in cash flow that I'm willing to count on at retirement how how would I model that in here yeah absolutely and honestly this is one of the more asked like features or like additions that people say like hey you should add stuff regarding uh real estate rentals and my current answer to that is like hey this is sort of a medium Fidelity sort of tool and we're not you know it's not super detailed however you can do a pretty good job at doing that so
what I would do if I you is I'd have probably two different adjustments one is going to be your rental income minus whatever maintenance expenses whatever um for for whatever period of time you're going to hold that property and then a second adjustment would be probably your best guess at when you're going to cash out of that if you're going to so like you could have a sale date and um figure out what you're going to uh sell that property for okay so I would just add these in this would not be a Rec rental
property sale would not be a recurring item it would be inflation adjusted rental property housing is onethird of the CPI so it is by definition and inflation adjusted stream of income for the most part you know it's some puts in takes in there so I would I would I would do that I would do the same thing I would also consider a rental cash flow estimate inflation adjusted more or less especially over a long time per Orizon for 30 years and that's how you would add these to it and I'd say Okay 500,000 in capital
gains at some point in the future let's do that in 2065 um and then I'll have uh this one goes from 20 when did I retire here I retire 2024 okay 2024 through 2065 exactly awesome and now my portfolio is going to 100% succeed every single time because that's a power of adding real estate to the the calculation here I mean it's it's like it's just adding another income stream you got yourself a job just by owning that asset that's also a wonderful thing here you know maybe that's a way to think about it is
that 8% offset is failure rate for the portfolio is more than offset by um a rental property which in some ways provides an income stream similar to what the bond portion of a portfolio might do um so there's some there's some you know that's an interesting learning I wasn't expecting to come up with that on you know to go through that today on this but that's the cool about this tool yeah one of the things I like to encourage people to do is use the adjustments to simulate like part-time work cuz that's a very common
thing in the fire Community like oh I'm going to I'm going to drop to part-time for some number of years and you can do that like you can say you know you can say you're retiring this year but you can add like five years of part-time work and see how that affects your success rate and you know frankly it's it's nice to see that I you know I wish a long time ago I was able to have a little more Dynamic and fancy situation where if the market drops you know within first 5 years of
retirement you can like put in a dynamic um sort of part-time job that you go back into the workforce and see how that affects your portfolio because that's one of the fears of a lot of fire folks is sequence of returns risk so um but anyway in general a part-time job adding it in there adding in an income scam stream for some period of time seeing how that affects your success rate is a great exercise awesome and if you want a more a different way to insert rental property cash flow and rent rental property Equity
you can keep that to yourself and send compliments to uh Lauren via the emom me button at the top of the screen so I like the theme Here Scott yeah awesome are there are there any other section so we've gone through we gone through the the kind of core sections here we have a basic section which allows us to talk about the dates we want to retire portfolio value and how what how we want to assume we're going to withdraw which I think are very very there's a very very clever setup here but it requires
folks to educate on this we've got the portfolio which uh has very simple and effective uh mechanism of excluding all of your home equity all your cryptocurrency all those other good things and just including the assets um that you probably should be depending on for your um your retirement um here and then we have um the ability to add adjustments and you have a major placeholder here for Social Security which is not something you can edit we have not covered this yet but did you want to add anything yeah just real basic like I'd say
that before I mentioned um some other tools are do a good job at trying to um show uh users what sort of different uh adjustments they can come up with without you know just trying to be creative and one of the things that was most asked for when I was developing this is please put in a placeholder that already shows Social Security and yes that does make this more us Centric but I'm using us data and I am in the US so there you go um but really behind the scenes all that is is just
another income adjustment so and maybe that's maybe that's the theme here like you can think of a lot of these things as just an inflow and outflow and like hey that's that's what this game is so I'm I'm I'm what am I 30 I'm 34 right now and so Social Security is is you know way way off in the distance how would you teach someone to get these values like um in here and make make accurate assumptions for far away from retirement great question so my go uh my suggestion to people is to visit the
S my ssa.gov website um it is tied to your social security number sometimes it takes a couple weeks for you to like fully register there I believe that you have to get like a piece of actual mail snail mail and have a a pin for them to verify you but once you are verified on that website it has your working record from the very first time you had an actual W2 job all the way back to then and shows every year your adjusted gross income and will calculate your benefits and what it's going to give
you when you retire um I personally like am on the side that thinks that you know people um that are you know below actually I can't remember the age below their mid to late 50s are going to uh have less benefits so I tend to take my number and you know say that I'm going to get 75% of it that's the latest sort of estimate that younger folks are going to get out of the social security program so I take the number from the web government and subtract out 25% so for for the most part
this number but I mean I mean for the most part for practical purposes I just ignore I've never even put the number I never put a value in at all into that category when I'm running these simulations I probably should but it's like why why would I you know because that's so far off in the future I I I personally wouldn't be comfortable allowing a portfolio to dwindle to nothing without Social Security uh coming into play and for my intents and purposes I leave it there but if you don't if you don't want to do
that you can go through the work product of going to my or going to Social Security ssa.gov um to go and get that information yeah that's very conservative you Scott but I respect it could we run over to the um the results page Scott on any one of these that you've done this has all the assumptions we just talked about $2.5 million portfolio $100,000 spending we've got our zv value Define at 0.5 ceiling spending floor spending ceiling super realistic here 35,000 oh nope I I I do have the $35,000 in rental income um that's added
in there and that puts in 100% stock portfolio no no bonds so this is the output tab that you're asking for Mindy yes I just want to run through what these numbers mean so the success rate 100% okay that's real easy to understand the spending over time that just shows the spending that you've been doing that particular ular year that corresponds with the portfolio on to the left is that correct that is correct so the spending overtime it's important to note to people that number one this entire page is inflation adjusted dollars so this is
in today's dollars which highlights I think honestly one of the things that Scott said before is when you're not adding taxes in there also like your portfolio can run away well it's even it's even like bigger a a bigger effect than you think because the nominal dollars is actually higher um so all this is inflation adjustment and what that means is the spending over time chart if you just use inflation adjusted spending it should be flat okay it'll look like just a line and that's sometimes confusing to people but over time you're spending the same
amount um Scott right now has one that has like crazy lines on it and that's because it's using the variable spending plan and it's changing the spending every year based on the market and it very visibly is hitting the ceiling and the floor that he put in in the input page so yeah overall you have a portfolio chart that shows the value overall value of your portfolio and then you have the spending um side that shows what your spending is Lauren I obviously as you could tell had a tremendous amount of fun going through the
spreadsheet it's not a spreadsheet I I'm sorry I keep prer to a spreadsheet it is a the tool that you've built here uh that is absolutely fantastic really well researched tons of great data link UPS thank you so much for sharing it uh uh building it and sharing all of the the ways to use it with us today this was a lot of I'm always happy to talk to people this and nerd out and it you know brings me lots of joy to hear people who have used it and retired be because they've looked at
the numbers and felt safe about it all right Lauren this is this is fantastic I so appreciate your time walking us through this calculator so people can or simulator whatever so that people can see all the different ways that they can check out their uh their numbers and and run all the numbers click on all those things and change everything and see how it how it can best suit you uh where can people find you and where can people find their Cal your calculator yeah that's a uh right now you can go to cire Sim
so the letter c fire sims.com um I'm also on blue sky I'm trying to give up Twitter like that's that's tough and those are the primary places you can find me you can also find me uh in the financial Independence subreddit which I've recently started being the one of the moderators for again for my for my for my second stint I'm I'm a big fan of community and I really enjoy that place so those are the places you can find me um with so on uh Blue Sky my my tag is just seire Sim and
then in on Reddit you can look me up my username is laurencore knows Lauren knows and I do know like knowledge knows like knowledge knows not face knows Lauren k n o WS okay awesome I am again so thankful for your time today this was so much fun and I will talk to you soon I'll see you in uh in Cincinnati at economy yes I can't wait to see you in Cincinnati I I love economy so much and I will be going as much as I can yeah the economy conference is super awesome it's sold
out this year but stay tuned for tickets for next year all right Lauren thanks again and we will talk soon thank you so much pendy all right that wraps up this episode of the Bigger Pockets money podcast he is the Scott trench and I am Mindy Jensen saying if I don't see you around I'll see you a square
