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Adjusting Safe Withdrawal
Old 05-10-2013, 07:10 PM   #1
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Adjusting Safe Withdrawal

DW and I have about 15% of our retirement assets in a second home for DD and DGD. Home will be sold by 2020, increasing available retirement funds.

Full retirement starts this year - ages 64 and 62. No mortgages.

How should I calculate SWR now and after sale of second home?
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Old 05-10-2013, 07:53 PM   #2
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Firecalc has an option under "portfolio changes" to reflect a one time lump sum addition to your portfolio. You can enter the number with a 2020 date and see how it affects your calculations. Ideally if you can ignore the potential sale and live off your remaining investable assets, the home sale will be gravy. If not, you will have to give it your best guess as to what the home might be worth in 2020.
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Old 05-10-2013, 08:57 PM   #3
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The phrase "Safe Withdrawal Rate" is kind of misleading. Some people think it means a level percent of current assets that you withdraw every year. It's more like a "Safe Withdrawal Dollar Amount", which happens to be expressed in the first year as a percent of your beginning portfolio. Firecalc actually provides something that could be called "Safe total spending dollar amount".

That may be confusing. If so, just do what Ready said.
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Old 05-10-2013, 09:10 PM   #4
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Any asset which can be liquidated is a part of your investment portfolio and can be included now at its present value if you are willing to sell it now, or in 2020 at its estimated future value.
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Old 05-11-2013, 04:55 AM   #5
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I treat the eventual sale of our second home as an emergency fund for sometime in the future. It will have no bearing on our SW rate from liquid investments in early retirement.
Of course that may just be another way for me to rationalize staying on the job a little longer.
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Old 05-11-2013, 07:59 AM   #6
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Quote:
Originally Posted by Ready View Post
Firecalc has an option under "portfolio changes" to reflect a one time lump sum addition to your portfolio. You can enter the number with a 2020 date and see how it affects your calculations. Ideally if you can ignore the potential sale and live off your remaining investable assets, the home sale will be gravy. If not, you will have to give it your best guess as to what the home might be worth in 2020.
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Old 05-11-2013, 02:58 PM   #7
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Thanks.
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Old 05-11-2013, 04:18 PM   #8
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Originally Posted by foxfirev5 View Post
Of course that may just be another way for me to rationalize staying on the job.
Why yes, yes it is! A clever twist though.........
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