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bug in time estimate?

I think something's wrong with the time-until-retirement estimate, or there's something i'm misunderstanding.

I entered $100k income, $75k expenses, and $1m portfolio, and got this result:

https://networthify.com/calculator/earlyretirement?income=100000&initialBalance=1000000&expenses=75000&annualPct=5&withdrawalRate=4

It looks like the ROI reaches $75k shortly after 6 years, but the time-until-retirement is over 9 years. The table of figures stops updating some but not all of the columns after 6 years. A glitch?

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Sebastian Kuzminsky shared this idea  ·   ·  Report…  ·  Admin →
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  • Anonymous commented  ·   ·  Report

    I noticed the exact same thing. The graphical representation does not match the written one.
    The figure shows that I reach retirement a couple years BEFORE the numerical one does...

  • Adminkablamo (Admin, Networthify) commented  ·   ·  Report

    Hey those are really good ideas. I don't have a repo for this. But I totally should. I'll try to make that happen tomorrow. I'll update here when I do.

  • Sebastian Kuzminsky commented  ·   ·  Report

    That makes sense, thanks for clearing that up for me.

    I think the "Percent Of Expenses Covered By ROI" column threw me off, the number i was expecting was really "Percent of Expenses Covered By Withdrawal Rate" and i didn't look close enough.

    Some suggestions to make the table clearer:
    * Have the Expenses and ROI columns extend down all the way (mine end as soon as ROI reaches Expenses).
    * Replace the "Percent Of Expenses Covered By ROI" with "Percent Of Expenses Covered By Withdrawal Rate".
    * Add a "Income from Withdrawal" column that starts at retirement.
    * Add a "Amount of ROI reinvested" column.

    Is there a repo somewhere with the code? I could add those features if you think it'd be useful.

  • Adminkablamo (Admin, Networthify) commented  ·   ·  Report

    Thanks for commenting! Good question. Its not a glitch. Its because you're withdrawal rate is less than your rate of return.

    Your withdrawal rate is 4% and your rate of return is 5%. So at 6 years you are making 75k every year due to your 5% rate of return. However you're withdrawal that year will be less than 75k because your withdrawal rate is 4%.

    5% of your nest egg = $75k.
    4%of your nest egg = some number less than $75k

    In other words your nest egg isn't big enough to cover your expenses yet.

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