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Old 02-11-2015, 07:32 PM   #41
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With $5 million in assets now, your low withdrawal rate will likely lead to considerably more assets in your lifetime. You can well afford to spend more now, and you still have reinforcements (pension and SS) coming in the future.

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a once a year family trip we would like to provide for our children/grandchildren
This is something that deserves special consideration. The family memories are priceless. Not everyone in the family may be in position to sponsor such a trip. Depending on the ages, especially grandchildren, time is of the essence and each year you put this off is a long long time to a child and they do grow and change rapidly. Make hay while the sun shines.
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Old 02-12-2015, 08:35 AM   #42
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I still think you are still being too conservative when you are basing you withdrawal on total portfolio. Heck, go back and up your 2015 spending plan. You're just trying to delay the spending longer.

Have you looked at how a 50% drop in equities would impact your withdrawals? Do you still cover your basic living expenses?

Originally Posted by meekie
I would be quite tempted to take a big chunk out, and make it your fun fund. Take something like 250k, to spend on fun things over the next few years. Keep your withdrawal at 2.5% for your new 4.75m balance.

Originally Posted by 2B
This is another approach that would give you the same result but separate your "really safe" money for living expenses from the "fun" money.
In the event my responses to above might be helpful to others:

- Re: Delaying 'bump' until 2016 . . . Yes, you are correct, and yes, there is no reason to put it off. Thanks for calling me on that!

- Re: A 50% drop in equities . . . we have a tight rein on our living expenses, which account for under 50% of our current spend. Knowing we can pull back 50% in the event of a fiscal disaster is one of our contingencies.

- Fun money pool . . . since about 50% of our annual spend is discretionary, we sorta, kinda do that already.

I should also add that our annual budget includes allocations for all identifiable run rate expenses, various contingency funds for repairs, replacements, insurance and deductibles, etc., set asides for state and federal taxes, and an accruing fund for infrequent but expensive repair and replacement items like autos, major home repairs, etc. We have a very detailed budget which we've been maintaining since ER'ing five years ago, and there have been no items to date not accounted for in our budget, so I think we've got a pretty good handle on that side of things.
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Old 02-12-2015, 08:51 AM   #43
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One approach to this might be to enter your situation into firecalc, including an inheritance for your heirs and calculate the maximum spending that still gives you a 100% success rate. I'm guessing that it is much more than 3%.
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Old 02-12-2015, 09:24 AM   #44
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This made me laugh . . . then realize that the real reason I posted is, perhaps, because I want to be told to loosen up and spend more now . . .

Funny how we so often already know the answer to our own questions isn't it?

My dream is to sell our current home and buy something smaller but with a view. I've been resisting doing so because, well, I don't really know. I really don't want to die having obtainable dreams like this deferred simply due to fear.
Ok...I'll take the bait. Loosen up and spend more now! Your expenses are likely to drop in future years. Increasing your spending levels now is well within your asset level.
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Old 02-12-2015, 10:44 AM   #45
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In the event my responses to above might be helpful to others:


- Re: A 50% drop in equities . . . we have a tight rein on our living expenses, which account for under 50% of our current spend. Knowing we can pull back 50% in the event of a fiscal disaster is one of our contingencies.

.
This was the one thing I didn't see before that I was going to comment on. So while you have a 2.5% WDR you actually spend much less for non discretionary spending so I think you are more than good to bump things up.

One of the games I've played in my ER prep is using the Flexible Retirement Planner to attempt to model these kinds of situations ...a 50% drop follow by a slow recovery and vary the spending over those times to drop to the min required and see if the money hold up over 45 years (not that I want to live that long but what I want and what I get are not going to be the same is my guess). If the money holds up I up the min to see how high I can go before I start getting significant failure rates. At spending levels that I'm comfortable with (like a lot here I would actually have difficulty being a conspicuous consumer) the only fails I see are my versions of the zombie apocalypse..things like 50% followed by 5 years so 10% declines....in which case everyone is screwed so I choose to not worry about those thing
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Old 02-13-2015, 04:31 AM   #46
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I'd spend more. I've observed as folks get older they don't need or want to spend that much. My mother in law just passed away in her early 80's . She was in good health overall till her later years . I managed her money and she never even touched her money, she lived on ss and a small pension. She did fund her grand kids college however. Her last years were spent in a nursing home., at the end she was wheelchair bound. The yield on the s and p is about 2 percent. At a 4 percent withdrawal you will be spending 2 percent of your savings a year. Ar a 5 percent return you won't ever run out of money. This assumes you are using low cost index funds. If you are not all bets are off.


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Early Retirees Perhaps Living A Bit Too Much Below Our Means?
Old 02-15-2015, 12:21 PM   #47
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Early Retirees Perhaps Living A Bit Too Much Below Our Means?

How much do you WANT to spend?

We do as we please at $85k a year. It covers all our needs and wants. It's only 2% WD. Why take out more?

Edited: I see you've already decided lol. So ignore my question...




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Old 02-15-2015, 12:40 PM   #48
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One thing I would look at on the withdrawal rate is to see how much of it goes to taxes and investing fees.

There is a big difference between withdrawing 2.5% of portfolio to spend and having another 1.5% go to expense ratios and advisors fees versus withdrawing 3% and paying expense ratios of 0.15% and paying no advisor fees.

There is also a big difference between paying 5% or less of withdrawals on income taxes and paying 15% or more of withdrawals towards income taxes.
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Old 02-15-2015, 01:25 PM   #49
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What is it that you want to do that will require more money? The thing that comes to my mind is travel. From what I read, most people spend more when they first retire then spending goes down as they get older. If you and DH are in good health maybe now is the time to do this. Who knows how things will be when SS kicks in? You guys have done an awesome job of building your nest egg, but the one thing you don't have control over is your health. As I write this I am reflecting that I tend to feel like you. We are 54 and DW is 55. We are almost there for ER but we are getting to the age where people are getting sick or they pass, just out of the blue. DW is the one telling me that planning for the future is good, but some balance is needed. I assume you have reviewed all of your spending. Can anything unnecessary be eliminated? It seems like you have lots of cushion, you don't want to have regrets down the line. FWIW.
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Old 02-17-2015, 05:34 AM   #50
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Isn't this whole topic I think we are spending less than we could?


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Old 02-17-2015, 07:58 AM   #51
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Yeah, but I' working hard to correct that. Sorta fun.
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Old 02-17-2015, 08:53 AM   #52
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Old 02-17-2015, 04:45 PM   #53
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Some additional follow up -

As indicated in Reply #29, my husband and I agreed to bump our Jan 1 portfolio WR from 2.5% to 3% effective immediately. I found I had a very hard time sleeping the first few nights afterward, instead waking up repeatedly in a panic about the thought of spending more than we do currently. But, by about day three, I started to relax and actually embrace the idea of loosening up some of the reins we've been holding so tightly.

Now, about a week into this, we've moved ahead and booked a 60-day world segment cruise for 2016. We also researched some Caribbean all-inclusives, and have told our family to reserve time this summer for an all expenses paid trip courtesy of Mom and Dad. We've also decided to sign up for a charity walk later this year, and will simply donate the required funds to the charity, rather than attempting any sort of fundraising.

I think this may possibly be the only site currently in existence where a topic such as this could be understood and rationally discussed.
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Old 02-17-2015, 04:51 PM   #54
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I was expecting the "I found I had a very hard time sleeping the first few nights afterward, instead waking up repeatedly in a panic about the thought of spending more than we do currently" comment to end with "I just can't do it," but happily it appears it isn't so. Congratulations on finding a way to loosen up the purse strings and enjoy life a bit more.
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Old 02-18-2015, 03:26 AM   #55
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Can one be proud of anonymous people on the internet? I sure feel a little bit proud

Congratz, also for finding great uses for the additional breathing room!
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Old 02-18-2015, 06:15 AM   #56
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As indicated in Reply #29, my husband and I agreed to bump our Jan 1 portfolio WR from 2.5% to 3% effective immediately.
Good move. I still think you still have room to safely increase spending. As you age you will likely not have the desire or physical ability to enjoy your assets like you can now.

Try running FireCalc using the Bernicke option. The results will shock you. I truly believe in this as I've watched my parents and in laws go through the transition.

DW and I have "safe" living expenses covered by small pensions and social security. There is a CD ladder covering our eventual SS and medical expenses until Medicare kicks in. I'm then taking 5% of the remaining portfolio for spending above the "safe" living expenses - trips, toys, gifts... I really think I could go up to 6% without risk but I'll see how things go this year. This will be my first year using this budget.

My retirement starts 27 February (5 "in-office" days left ) .
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Old 02-18-2015, 09:07 AM   #57
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2B I hope you start your own thread when you are finally retired.
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Old 02-18-2015, 09:15 AM   #58
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2B I hope you start your own thread when you are finally retired.
Am I getting obnoxious hijacking everyone else's threads?

I plan to do a narcissist happy dance of a post when I'm finally out the door.
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Old 02-18-2015, 09:21 AM   #59
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Am I getting obnoxious hijacking everyone else's threads?

I plan to do a narcissist happy dance of a post when I'm finally out the door.
Not obnoxious, just fragmented.
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Old 02-18-2015, 09:34 AM   #60
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Not deliberately, but clearly a byproduct of our current approach. In that it would go to our children and grandchildren, all of whom we love, genuinely enjoy and see frequently, we are very much ok with that.
As others have said, you've got enough to probably go to 3% or 3.5% and still be in great shape. Given what you posted here, why don't you stay at 2.5% for yourself and use another 0.5% to start passing on money now to those wonderful children and grandchildren. Cash gifts or lots of memories and fun together doing things they likely cannot afford to do at this time!
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