61 and getting closer, a question on withdraw...does it pain you?

[LARS]

Well for what it's worth, the first twenty years flew by. The next 30 to 35 we will have to see. No question with the macroeconomic world in the state it is in there will be challenges. The offset to that will be the icing of finally receiving SS (hopefully: never know with class warfare rhetoric). And lest I forget that the event horizon (i.e. death) keeps creeping forward with each passing year so the pile doesn't have to survive as long...


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[Trawler]

I understand how you feel it was tough the first couple years as always saved never went to savings for many years and switching gears was tough until a light bulb went off in my head. First we always saved for retirement and building golden goose was top priority and I think for me I really got more enjoyment watching the goose get fat than buying stuff. So now we live off the eggs. The light bulb was it is no longer about how much bigger the goose gets it now top priority how many eggs can we harvest without killing the goose. It have helped that with almost four years of FIRED the market has been good and the goose is fatter than when we started and we are living the way we want. I will say I am a bit of a timer for withdraws as only replenish the egg basket to cover 4 years at new net worth highs.

[kcowan]

We have been retired for 14 years and the "Nut" keeps growing, so we are taking baby steps to get into real withdrawal. Charitable donations increasing, gifting to kids and grandkids. Memorials for friends who have passed prematurely.

[Diver]

As a new retiree this year, I found it unnerving to make withdrawals from our after tax savings for living expenses as we perpetual travel. However, thanks to Wellington (all our tax deferred is there), Synchrony for our after tax, Quicken, DH's spreadsheets, FIDO, Financial Engines, and Firecalc, I am reassured as I see that our net worth continues to grow and the calculators say we are good. That has helped my nerves alot. DH trusts his spreadsheets, so he does not need the reassurance I do. Also, we are tracking all of our expenses in detail in a separate spreadsheet (so no cash goes uncategorized) and so far our total monthly expenses are under budget, maybe partly because we know we are tracking everything! That is also reassuring, because we are having fun at this spending level and could cut back if necessary. I do have to say that the reassurance and good advice I received from this forum last year as we were making plans was invaluable. Because of that, we now have Roth conversions in our plan starting this year, since we are in living on post tax money.

Since selling our US home in January, we have had a blast traveling all around SE Asia (Thailand, Vietnam, Myanmar, Hong Kong, Singapore, Indonesia), Amsterdam, Prague, Budapest, and heading next to South America. We are fulfilling a long time dream, and it has been a wonderful experience.

The market YTD has helped us relax a bit about this spending phase. For me seeing our net worth rise this year was the clincher. Hopefully this will help us hang on in a bad market, because it is inevitable that there will be down times. We have about 3-4 years of living expenses out of the market to help ease my nerves, and have vowed to stay in Wellington and just ride out any storms in tax deferred.

Our plan seems to be working, but it is early. I hope in a few more years to be even more relaxed about the spending phase. Not quite there yet, but the travel excitement helps takes the edge off!

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[Frankie1926]

Quote:

Originally Posted by UpAnchor Upon semi-retiring a few years ago I set in place the mechanisms for transfers from retirement portfolio to MM and monthly withdrawals from MM to checking to serve as my retirement "paycheck". As I began working progressively fewer hours I decided to "flip the levers" to start the cash flow but with modest amounts. As I head into full retirement this month I need only go online and increase those amounts. Getting the process set up early-on and getting use to watching small amounts be regularly drawn from the portfolio should reduce the pucker factor once I'm dependent upon them as a more substantial portion of our retirement income stream. Or that's my hope anyway.

This worked for me also.


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[Danmar]

I am reluctant to touch principal and generally only spend dividends. Overall plan is to leave a legacy of at least my current balance, so there is some room to withdraw principal as the portfolio increases. Maybe withdraw half the appreciation over inflation? Still trying to come up with a methodology.

Retired 10 years, age 66.

[pb4uski]

Quote:

Originally Posted by Floridatennisplayer Planning on retiring in a few more years. However, after years and years of contributing into retirement accounts, the thought of doing withdrawals even thought the right thing, seems painful to me. SS will cover the majority of my expenses and I'll have to withdraw some cash out which is already bugging me. I guess I have been conditioned to NEVER TOUCH THAT is still in my head, even though that's what it's designed for. I hate the thought of DEPLETION. Any of you struggle with this reversal in processes? Just curious. And all the calculators give me the green light, FYI. Thanks.

Did you save that money to hoard it or to use it in retirement?

I had no trouble in that it was part of the plan all along and I set up a monthly automatic transfer of a fixed amount from my online savings account (part of the cash portion of my AA) to our local bank as my monthly retirement "paycheck" (in addition to dividends from our taxable accounts).

Even so, our nestegg is 14% higher than when we retired and 23% higher if I include the winter condo that we bought from the nestegg.... thanks to strong market returns over the last 4-5 years.

[Alan]

Quote:

61 and getting closer, a question on withdraw...does it pain you?

No it doesn't pain me to make the withdrawals, although the first 3 years I was very conservative.

[Koolau]

To OP's point, specifically, yes, at first, it bothered me a lot to make withdrawals. We really needed to do so for the life style we chose, even though I have a modest pension and now DW takes SS.

I eventually got used to making withdrawals as needed. It helped that the portfolio continued to increase. Soon that may not be the case. This is now the final year that I will be able to withdraw the exact amount I want as next year, I will be subject to RMDs. I think I will hate that more than figuring out on my own how much I might need for a years expenses. At some point, since my port is roughly half qualified money, my overall portfolio may start to decrease (unless I find a good way to use any left-over RMDs in taxable funds - not my strong suit.)

Don't worry, you will get used to it and you will be glad you have a portfolio to tap - even though it will feel very strange at first. Good luck and YMMV.

[John Galt III]

Age 62 and getting by very well with only pension, knock on wood. I will start SS in a few years and income will go way up. Hope to not have any withdrawals til RMD at 70.

[Car-Guy]

Approaching 5 years into retirement now and it has never concerned me to "tap" my retirement savings. Amazingly to me, my "cash/investable" net worth continues to stay within 5% of what I had when I retired. Sometimes 5% more, sometimes 5% less, inflation adjusted. However, my "estimated" physical asset value has increased considerably but is harder to track/calculate. (Expensive hobbies)

I'm beginning to realize I can easily increase my WR if I wanted to but really find no interest to do so.

[kcowan]

I have to admit that our draw-down in 2008 did make me wonder when/if it would turn around. But I had to remind myself about FIRECALC and the odds-based approach. Tough out the down years watching it decline and don't overspend in the up years. In 14 years, there have been only 2 down years so far so we are due for a few more. I am ready for them!

[socca]

Quote:

Originally Posted by John Galt III Hope to not have any withdrawals til RMD at 70.

I am living entirely off dividends and business income. I hope to be able to keep this up until I finally kick the bucket at age 200 (could be a bit less ). According to my current conceptualization, when it comes time to take RMDs 17 years from now, I still will not be touching principal. Each RMD will just be a transfer of principal from the tax-deferred bucket to the already-taxed bucket. Of course, there will be less principal after the transfer as the IRS finally collects its deferred taxes, but that's the only consequence.

[MrLoco]

Your fear is not withdrawing the money you saved for retirement. Your fear is running out of money. If you have a 50/50 stocks/fixed income AA; withdraw 2.5 to 3.0%, supplemented with a pension/social security/ annuities and maybe a part time job you will not run out of money.

A more important consideration is to really get a handle on expenses as this is directly correlated to your withdrawals.

Relax.

[RobLJ]

Since the OP seems to be able to "get by" on pension and SS, that is my suggestion--transfer dividends (bonds and stock) automatically to a stock account and probably long-term gains from stock mutuals with less turnover, like indexes.
In that way, OP can "feel" his way into spending income, until he becomes comfortable spending principal if necessary. In large up years, I plan to "spend" large gains or capital gains into cash or short-term, as a kind of bucket approach, available for either spending or reinvestment.
I'm semi-working (12-15 hours on a modified employment), so I'm not withdrawing, but I'm cheered to see the last 4.5 years of gains would fund what I plan to withdraw without affecting the balance-or 10% cash outside of the 401k/403bs/IRAs.
This is a mental problem, however, after years of automatic savings funded by employment.

Quote:

Originally Posted by Danmar I am reluctant to touch principal and generally only spend dividends. Overall plan is to leave a legacy of at least my current balance, so there is some room to withdraw principal as the portfolio increases. Maybe withdraw half the appreciation over inflation? Still trying to come up with a methodology. Retired 10 years, age 66.

[RobbieB]

I love making withdrawals, writing big checks and sending thousands every month to support my lobster and caviar habit.

Thousands for solar panels, dental work, booze and exotic hotels on the Monterey coast.

Ye-ha! And I now have more dough than I ever had. I'm still making dough faster than I can spend it. That's the LBYM lifestyle baby -

[jollystomper]

To the OP, we will be in a similar situation as my pension will cover about 60% of our target spending, and if we choose to take SS early pension + SS could cover over 80%. So part of my "pre-retirement planning" is to increase spending to get used to making withdrawals . We are modelling our retirement spending and have loosened the purse strings for some long term home improvements, and had to deal with a couple of unexpected expenses. With dividends coming in we have learned the withdrawal impact is not as great was we thought, and we are actually below our expected withdrawal rate so far.

We also have enough in cash to cover withdrawals through our earliest SS target date, so there is comfort knowing that our withdrawals will likely not force us to sell securities for a while.

[shotgunner]

Quote:

Originally Posted by Floridatennisplayer Planning on retiring in a few more years. However, after years and years of contributing into retirement accounts, the thought of doing withdrawals even thought the right thing, seems painful to me. SS will cover the majority of my expenses and I'll have to withdraw some cash out which is already bugging me. I guess I have been conditioned to NEVER TOUCH THAT is still in my head, even though that's what it's designed for. I hate the thought of DEPLETION. Any of you struggle with this reversal in processes? Just curious. And all the calculators give me the green light, FYI. Thanks.

Seriously, it gets easier the more you do it and it's a lot easier in a bull market. Going to work, saving and investing, LBYM are or become habits, habits for 30 to 40 years. Habits are hard to break.

I think the fear of running out of money is far greater than the actual possibility for a person conditioned to be LBYM.

The occasional and continuing loss of friends and classmates also contributed to my ease of entering the withdrawal phase, each death is a splash of ice cold water reminding me my problems are small, I won't live forever and enjoy life while I have the legs and lungs to do it.

I find it interesting you are concerned about this when you still plan to work a few more years, could you retire now but your concerns have you in a One More Year (OMY) mindset?

[BarbWire]

Quote:

Originally Posted by misshathaway I retired last October at 58.... One thing that really helped me initially was having my Vanguard advisor look over the portfolio and help me set it up for the retirement phase. Before that I kept thinking "What if I did the numbers wrong? What if there is some huge iceberg I didn't take into consideration?" BTW a one-time advisor lookover is free. I already knew I wanted to avoid managed funds and he didn't suggest any anyway.

How does one get this service -- which is exactly what I need?

I have a Flagship representative who is, in general, pretty clueless and who pointed me to their Vanguard Personal Advisor Service to manage my portfolio, which is not what I want.

What specifically should I be asking for (and from whom) for the one-time lookover? I need help developing a strategy for creating an income stream and possibly rebalancing / tweaking for the retirement phase.

Thanks!

[skipro33]

Man, if the thought of withdraws are getting to you, just wait until you actually make one and they take another 25% for state and federal taxes!!

I realized, of course, that the money in my 401K, 457 and IRA was tax deferred, that I would have to pay taxes on those funds when I withdrew them, but that was academic. It wasn't until I made a $20,000 withdraw and my account dropped by $25,000 that I realized what my account was REALLY worth. I always thought of my $Millions$ as mine. It's not. A big chunk of it is the governments and they'll take their share out when I take my share out. OUCH!!

It feels like a built-in inflation; I want to buy a candy bar for a dollar but I have to withdraw a buck twenty-five to buy it. Oh, and that buck twenty-five? They take MORE taxes out of that at the cash register!! DOUBLE OUCH! 8% more. Now a buck twenty five buys me 92 cents worth of goods. I'd be happy to withdraw 92 cents to buy a candy bar, but I have to withdraw a buck twenty-five to buy the candy bar. Federal income tax, State income tax and State sales tax. OUCH, OUCH, OUCH!!