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Old 10-22-2012, 06:46 PM   #1
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Hi!

Hi! Excellent Forum!

Glad to be on board!

One issue that seems to be really difficult out there is how to generate relatively safe, consistent income from retirement savings. I am spread out across lots of areas on the market, but other than our house, do not have real estate. I am trying to plan for the future, and have used firecalc a lot, but having a rough time figuring what level of withdrawal is safe. Is everyone around 4-5%?

Fin
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Old 10-22-2012, 06:50 PM   #2
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Welcome. I think you will find most at 4% or under.
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Old 10-22-2012, 06:51 PM   #3
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I was afraid of that. Thank you!
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Old 10-22-2012, 09:37 PM   #4
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Hello and welcome. My projection is 3.8% but I'm alot on the edge about such a high amount. Although I want to try for 2013 I fear I'll end up in the class of 2014 or 2015. Part of me says "damn the torpedos" and worry about "being old and broke" in 20 more years. The other part of me says "why risk 30 years of diligent savings - give it another year or two and be sure".
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Old 10-22-2012, 09:38 PM   #5
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Agree with Travelover. We are in early 50's, intend to travel/dive extensively in late 50's, but are cognizant of wife's long-lived family (F.I.L. is 84 and still gives his teenage grandkids a go on the tennis court). Thus, 3%, maybe 3.5% in first five years; has pushed our quit date back, but with a 45 year horizon for wife . . . .
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Old 10-23-2012, 07:06 AM   #6
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My view is that you need to focus on your ultimate WR rather than the initial WR. I ERd at 56 and have a pension that I plan to begin drawing on at age 60 and SS at age 70. My initial WR will be higher than my WR will be once I start drawing on my pension and SS. My focus is on keeping that ultimate WR (at age 70) to less than 4%.
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Old 10-23-2012, 09:44 AM   #7
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Originally Posted by pb4uski View Post
My view is that you need to focus on your ultimate WR rather than the initial WR. I ERd at 56 and have a pension that I plan to begin drawing on at age 60 and SS at age 70. My initial WR will be higher than my WR will be once I start drawing on my pension and SS. My focus is on keeping that ultimate WR (at age 70) to less than 4%.
Agree with this. My projections are similar.
The difficulty in saying "my withdrawal rate is xx%" is that both expenses and income vary over the duration of retirement. WR is a rule of thumb to help obtain a warm fuzzy on my projections.
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I See......
Old 10-23-2012, 10:28 AM   #8
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I See......

I hadn't thought about the use of a variable WR.... I have been working primarily upon reducing expenses, so that my WR can be low. I also don't intend to retire completely, just reduce my work load and "semi-retire" I Like the thought processes here.

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Old 10-23-2012, 11:25 AM   #9
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Welcome Fin,

We plan on a 4% solution up to when we start SS and then look at how we stand then (57 and DW is 56). We both have pensions so are path is paved somewhat differently. Having the flexability to modify your WR based on an uncertain future is not a bad thing. If we had all the answers our path would be different. Change and adjusting is a fact of life especially in ER.

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Old 10-23-2012, 11:32 AM   #10
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Because I don't have a pension, and because they continue to talk about perhaps moving back the SS retirement age again, I am going to keep my WR low. I don't want to go over 3%.
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Old 10-23-2012, 11:43 AM   #11
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Because I don't have a pension, and because they continue to talk about perhaps moving back the SS retirement age again, I am going to keep my WR low. I don't want to go over 3%.
The lower you can go the better but you do want to enjoy what you have put away for that purpose. The balance between being sure and enjoying those ER years is the difficult call especially in this environment. Was reading "How to Retire Early and Live Well" by G. Edmunds and as it was out in 2000 it looks at rates WR of 8 to 10% as being doable. My have times changes. Enjoying the read for what it is be not planning on changing my WR to 10% anytime soon. I really find that taking it all with a grain of salt and listening to my "inner self" you know like "don't do that stupid" has served me well so far.

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Old 10-23-2012, 11:49 AM   #12
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The lower you can go the better but you do want to enjoy what you have put away for that purpose. The balance between being sure and enjoying those ER years is the difficult call especially in this environment.
Absolutely. And because of that, I'm now fighting the "just one more year" syndrome.
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Time to fly!
Old 10-23-2012, 03:57 PM   #13
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Time to fly!

Yes, the big issue, when to make the leap. How many more years of unhappiness or unrealized dreams? Tough question, when at 48, I have friends becoming alcoholics, having heart attacks, losing their wives to cancer, the list goes on. How much risk is worth the gain of taking that trip, those classes, spending 6 months making your house and garden perfect

I dunno.... Wife is ready to make the leap this spring....
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Old 10-23-2012, 04:34 PM   #14
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We have a long way to go, so we're not too precise yet on WR but probably 3-4%.

Honestly we've reached a point where there is not much more we can do to prepare for FIRE. Income is high, savings are high, and we're just filling the buckets. I imagine as we get closer to our goal we can start being more precise about retirement budgets and WR. God knows what healthcare and interest rates will look like in 15-18 years.

SIS
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Old 10-23-2012, 04:54 PM   #15
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Hi Fin, welcome to the forum. We're at a little over 4%, and was more than that when I quit work paid employment at 46. It's not for the faint of heart, but then again, I really like rollers coasters and bungee jumps.

If your budget can be cut in time of need, your plan is flexible and you have a fallback option of some sort 4% can b enough. If your budget is bare-bones and you have no flexibility, it might be better to save a little more.
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Old 10-23-2012, 06:26 PM   #16
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Ours is projected to be in the 6% range for the first several years but later drops to about 2% based on budgeted spending. Makes me a tad nervous but I don't want to die with a boatload of money and a lot of what ifs.
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Old 10-28-2012, 02:02 AM   #17
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Welcome to the forum, fin.
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Old 10-28-2012, 07:31 PM   #18
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Originally Posted by FinleyG View Post
Yes, the big issue, when to make the leap. How many more years of unhappiness or unrealized dreams? Tough question, when at 48, I have friends becoming alcoholics, having heart attacks, losing their wives to cancer, the list goes on. How much risk is worth the gain of taking that trip, those classes, spending 6 months making your house and garden perfect
I know what you mean. We all probably know/knew people that worked those few extra years, and then never got to enjoy more than a year or two of retirement (if that) due to illness or sudden death. I retired over 2 years ago at age 54.5, and have no regrets. Longevity does not run in my family, and I didn't want to wait any longer. The key is to really know your expenses and be prepared reduce expenses beyond your Plan A budget, if it becomes necessary. I've found that the sheer joy of being free to do what I want to do greatly outweighs the value of the few minor things I've had to cut out of the budget these last couple years.
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Old 10-28-2012, 07:59 PM   #19
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FinleyG, I split my ER budget into 2 parts. The first part is getting to age ~60 using only my non-retirement accounts. The second part begins at age ~60 when I have access to my "reinforcements:" my frozen company pension, Social Security, and unfettered access to my IRA (a rollover from my old job). I have about 2/3 of my money in my taxable accounts because they have the tougher task of providing income to cover my monthly expenses.

That being said, my SWR based on all of my investments is about 2.5%. Even if I used only my taxable accounts in the SWR denominator, it would be about 3.7%.

Your idea of working part-time is a good one. I switched from full-time to part-time in 2001 so I could regain my personal life which included resurrecting old hobbies and starting some volunteer work. Losing most of my awful, daily commute was very important but 7 years later (in 2008) I had to get rid of all of the commute. So I did.
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Old 10-28-2012, 10:42 PM   #20
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Welcome aboard Fin.

I retired a year ago. I use a 2.5% WR for now. I am 48. If everything goes according to plan, as I get older and closer to pension and SS eligibility age, I will likely take on more risk.
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