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2015 Withdrawal Rate
Old 12-30-2014, 01:20 PM   #1
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2015 Withdrawal Rate

After completing the 2015 budget and withdrawing the funds from the portfolio, my 2015 WR is 2.42%.

I plan to increase spending slightly over the next 5 years until SS kicks in, then give myself a more significant increase.
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Old 12-30-2014, 01:25 PM   #2
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Does your withdrawal rate change from year to year?
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Old 12-30-2014, 01:37 PM   #3
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Unless you are doing % of remaining portfolio your WR will change annually based upon portfolio at year end (and tweaks to the budget / planned spending level).

This will be my first year of ER (11 weeks to go !!!). At current planned spending and portfolio value my WR will be 3%.
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Old 12-30-2014, 01:59 PM   #4
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Out of curiosity, what was your WR in 2014, 2013, etc?
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Old 12-30-2014, 02:05 PM   #5
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With my first year of retirement beginning in 2015, my spending allowance above my pension is 6.55%. Part of it is from the fund to pay my deferred SS and pre-Medicare expenses and the other part is 5% allowance from the remaining portfolio. I don't know if I'll spend all of it but I'll try.

I'm a firm believer in Bernicke. I won't want to spend as much when I'm older and I'd rather enjoy it now. I have a base budget of pension and SS which will easily cover my basic living expenses. The 5% portfolio withdrawal is all for travel and other things I can enjoy.

The one dubious benefit from being a OMY-er is that the total savings exceed what most reasonable people would say are needed for a successful retirement.
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Old 12-30-2014, 02:10 PM   #6
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My plan for FIRE is not to use a SWR as THE methodology, but rather a 'check'.


Our WR will be based on expenses paid for by different asset pools, pensions and when the time comes SS.


Different time phases will have different expense profiles, so the WR will vary.


By adhering to the LBYM philosophy, our WR will be below 4%.


Then, depending on how assets are performing, how much our balances are, we may take our more in a given year for travel or other 'big' expenses.
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Old 12-30-2014, 02:17 PM   #7
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Our NET SWR for 2015 = 2.5%. This is what we get to spend next year.


Our GROSS SWR = 3.2% because TER (ER+taxes) = 0.7%.


We are in the process of switching brokers to lower our port's TER to 0.2%.
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AA = 60/35/5. Expected CAGR = 5.7%. GSD (5y) = 7.8%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.5%. Net Port Yield = 1.7%. Term = 36 yr. FI Duration = 4.9 yr. Portfolio survival probability = 86%.
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Old 12-30-2014, 03:36 PM   #8
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So far, including taxes, medical, and every penny spent,

yearWR
2010: 2.61%
2011: 1.98%
2012: 2.12%
2013: 2.40%
2014: 1.70%
2015: 1.66%


(Edited to add: tweaked to reflect what I withdrew for 2015, this morning)

I'll have SS for the full year for the first time in 2015.

Possible house buying adventure: I will not feel one bit bad about withdrawing considerably more this year, later on, if I find my dream house. I have no intention of engaging in LBYM competition with this group and every intention of spending more soon. I feel Father Time breathing down my neck now that I am already 66 years old (OMG, how did THAT happen? ), and you can't take it with you!
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Old 12-30-2014, 03:40 PM   #9
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To those of you posting your WR, are you measuring it against your initial portfolio amount or your current portfolio amount?
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Old 12-30-2014, 03:47 PM   #10
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I don't know yet. I retired last January and spent a lot this year but had vacation payout and inheritance so spent freely doing some one time things like a new boat and started helping pay for college for a great nephew, plan to keep helping him.
Now my portfolio is well over a million I figure I can withdraw about 30-40K if I feel like it, giving the boy 10K giving me about 2K a month on top of my 800 SS which is more than I am likely to spend. I don't actually have a budget but figure I spend about $1,500 a month on everything so will have twice that.
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Old 12-30-2014, 03:49 PM   #11
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Quote:
Originally Posted by REWahoo View Post
To those of you posting your WR, are you measuring it against your initial portfolio amount or your current portfolio amount?
Mine was not a Trinity study type SWR, but a percentage of my portfolio value on January 1st of each year. Here is my table again, with the Trinity study equivalent percentages now included in another column. I also included the WR assuming my portfolio was at its 2008-2009 lowest value, just for kicks, since I always compute that too.

yearWR(1st of year %)WR (Trinity)WR (3/9/2009 portfolio assumed)
2010: 2.61%2.61%3.45%
2011: 1.98%2.13%2.82%
2012: 2.12%2.22%3.03%
2013: 2.40%2.64%3.68%
2014: 1.70%2.00%2.82%
2015 (tentatively planned): 1.66%1.92%2.75%


(Edited to add: tweaked to include what I withdrew for 2015, this morning)
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Old 12-30-2014, 03:59 PM   #12
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Quote:
Originally Posted by jkern View Post
After completing the 2015 budget and withdrawing the funds from the portfolio, my 2015 WR is 2.42%.

I plan to increase spending slightly over the next 5 years until SS kicks in, then give myself a more significant increase.
What do you use as the denominator?
Bruce
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Old 12-30-2014, 04:15 PM   #13
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Quote:
Originally Posted by Live And Learn View Post
Unless you are doing % of remaining portfolio your WR will change annually based upon portfolio at year end (and tweaks to the budget / planned spending level).

This will be my first year of ER (11 weeks to go !!!). At current planned spending and portfolio value my WR will be 3%.
But in that case you have a fixed withdrawal rate based on the initial portfolio value, and thereafter adjusted only for inflation.
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Old 12-30-2014, 04:27 PM   #14
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Originally Posted by W2R View Post

I have no intention of engaging in LBYM competition with this group and every intention of spending more soon.
Great point. From looking at your charts, you are in great shape to be able to do this.
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Old 12-30-2014, 04:30 PM   #15
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What do you use as the denominator?
Bruce
I used my portfolio balance as of 12/30/2014 for the denominator.

The last two years WR's were 2.44% 2014 and 2.60% 2013. I don't use a planned withdrawal rate. I take the total amount needed for the coming year's budget minus rental income divided by the ending portfolio. My calculated WR is just a temperature reading to see how I'm doing.
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Old 12-30-2014, 04:32 PM   #16
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Originally Posted by david1961 View Post
out of curiosity, what was your wr in 2014, 2013, etc?
2014 2.44%
2013 2.60%
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Old 12-30-2014, 04:34 PM   #17
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Quote:
Originally Posted by BBQ-Nut View Post
My plan for FIRE is not to use a SWR as THE methodology, but rather a 'check'.


Our WR will be based on expenses paid for by different asset pools, pensions and when the time comes SS.


Different time phases will have different expense profiles, so the WR will vary.


By adhering to the LBYM philosophy, our WR will be below 4%.


Then, depending on how assets are performing, how much our balances are, we may take our more in a given year for travel or other 'big' expenses.
I completely agree with you. I follow the same philosophies, except I won't have a pension.
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Old 12-30-2014, 04:37 PM   #18
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Quote:
Originally Posted by W2R View Post
yearWR(1st of year %)WR (Trinity)WR (3/9/2009 portfolio assumed)
2010: 2.61%2.61%3.45%
2011: 1.98%2.13%2.82%
2012: 2.12%2.22%3.03%
2013: 2.40%2.64%3.68%
2014: 1.79%2.11%2.98%
2015 (tentatively planned): 1.50%1.73%2.48%
If you don't mind, I have some questions. I assume the numerators for all three WRs are the same for any given year (the amount of money you withdrawal that year). And I know what the denominators are for the (1st of year) and (3/9/2009) WRs. For the denominator for the Trinity study, do you use the portfolio value when you ERd? If not, what is used?
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Old 12-30-2014, 04:45 PM   #19
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Quote:
Originally Posted by David1961 View Post
If you don't mind, I have some questions. I assume the numerators for all three WRs are the same for any given year (the amount of money you withdrawal that year). And I know what the denominators are for the (1st of year) and (3/9/2009) WRs. For the denominator for the Trinity study, do you use the portfolio value when you ERd? If not, what is used?
I hope I did it right!

I used the initial (12/31/2009) portfolio value, increased by the CPI-W for each year between then and the year for which the computation is being done, to get the denominator used for that year.

These denominators are completely independent of any portfolio values following the initial value.
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Old 12-30-2014, 04:49 PM   #20
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Makes sense. Thanks for the info!
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