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View Poll Results: What Would You Consider SWR at Age 50?
< 2% 5 4.31%
2.0 - 2.5% 4 3.45%
2.5 - 3.0% 21 18.10%
3.0 - 3.5% 49 42.24%
3.5 - 4.0% 27 23.28%
> 4% 10 8.62%
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Old 07-16-2009, 04:41 PM   #41
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The problem isn't SWR, the problem is projecting your expenses
for 40 years, especially health care.
TJ
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Old 07-16-2009, 06:28 PM   #42
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Originally Posted by rescueme View Post
I'm going to respond as to the "travel" that those still in the "wo*k world" seem to pursue - that is "I'll travel when I retire".

...

A final comment; you may wait till retirement to travel, but there is a risk that you may not survive nor you health remain good enough for you to travel. Just something to think about when delaying desires for the future...
Thank you for sharing, I appreciate your perspective and I share it. The reason we are waiting to do most of our travel is more about time than money. Both of our families live in the midwest and we are on the West Coast, so we both spend a good chunk of our vacation time visiting them.

If it weren't for that, I could figure out some nice, reasonably priced vacations overseas.
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Old 07-16-2009, 08:34 PM   #43
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In threads like this it's easy to lose sight of the dangers of withdrawing too little money. Over-skrimping now might lead to regret later on if you end up with plenty of dough and insufficient health to spend it.

I hate having regrets so I just booked a fall trip . Thanks for the push !
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Old 07-16-2009, 09:04 PM   #44
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I hate having regrets so I just booked a fall trip . Thanks for the push !
Yes, thanks! I'm leaving tomorrow! Off to Burlington VT, then a couple of days in the white mountains before visiting in-laws & returning at the end of next week.
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Old 07-16-2009, 09:09 PM   #45
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Er, didn't know there'd be a pop quiz.

Just what I've been reading in the financial press, the Internets etc. about declining bond yields, stock dividends, mutual fund yields etc.

Savers are really being punished these days.
Didn't mean to put you on the spot. There are a lot of pundits making these statements, but I'm hoping they provide some research to back it up. Most of the current SWR research is based on past results - either history or a model based on history. While not ideal, I feel it is better than just the flavour of the day -- Stock market is going up - SWR = 5+%. Stock market goes down - 3% is the way to go.
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Old 07-16-2009, 10:42 PM   #46
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Yes, thanks! I'm leaving tomorrow! Off to Burlington VT, then a couple of days in the white mountains before visiting in-laws & returning at the end of next week.
We plan to visit Maui in August. Hotels are offering great deals!
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Old 07-16-2009, 10:54 PM   #47
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My plan is to start with 3% SWR and reduce it if necessary.
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Old 07-19-2009, 09:02 AM   #48
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I picked 3-3.5, after taxes thats probably about 2.5-3.0 net. Mostly just dividing your portfolio over remaining IRS life expectancy, about 34 years at age 50 if single, about 40 years at age 50 if married.

I assume continued non-mortgage spending in my planning, with rising healthcare offsetting child and work related expenses. Cars, roofs, and hot water tanks will always need replacing, same as now, either on payments or as a lump sum.

My sister in law likes Maui also, says its a little less busy.
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Old 07-19-2009, 09:46 AM   #49
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I'm curious, if you 3 percent types find your portfolio grows over time (as is statistically likely) will you ever reconsider your draw?

As an example if you start taking 30k per year from a million but five years later find yourself sitting on 1.5 million would you stick with the 30k+COLA or would you consider going upping the draw a little?
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Old 07-19-2009, 10:07 AM   #50
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I'm curious, if you 3 percent types find your portfolio grows over time (as is statistically likely) will you ever reconsider your draw?

As an example if you start taking 30k per year from a million but five years later find yourself sitting on 1.5 million would you stick with the 30k+COLA or would you consider going upping the draw a little?
That's a good point. If that happened, I would think about increasing my withdrawal rate by half a percent. It still wouldn't be very high.
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Old 07-19-2009, 11:03 AM   #51
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I'm curious, if you 3 percent types find your portfolio grows over time (as is statistically likely) will you ever reconsider your draw?

As an example if you start taking 30k per year from a million but five years later find yourself sitting on 1.5 million would you stick with the 30k+COLA or would you consider going upping the draw a little?

If this happens I will take my family including my daughter ,son in law and grandson on a few great trips . I've done this before and the memories are priceless .
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Old 07-19-2009, 12:22 PM   #52
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Originally Posted by tiuxiu View Post
I'm curious, if you 3 percent types find your portfolio grows over time (as is statistically likely) will you ever reconsider your draw?

As an example if you start taking 30k per year from a million but five years later find yourself sitting on 1.5 million would you stick with the 30k+COLA or would you consider going upping the draw a little?
Sure. I imagine I could find something entertaining to spend the extra money on.

The reason I only have to take 3% now is because of a pension. If there was no pension, my WR would be higher.
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Old 07-19-2009, 01:09 PM   #53
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Care to elaborate and point to information that supports your statement?
At the very least we'll likely add another "failure" to the 4% historical record. It looks to me that a retiree of the 2000 vintage, with a 60/40 allocation and a 4% withdrawal rate is pulling more than 8% out of his portfolio in 2009. It seems improbable the portfolio will survive another 21 years.
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Old 07-19-2009, 01:18 PM   #54
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I think a lot depends upon how flexible your retirement plans are. If you plan on selling the big house and buying a condo in Florida to retire, then your lifestyle is pretty fixed.

I retired 10 years ago (at age 50) to Indonesia where I could buy land and build a house for $50,000 - I used money that was collecting dust in a mutual fund. My daughter and her husband live (and pay rent) in my US residence and also watch over some real estate rentals. That gives me a lot of flexibility to sell something if I need a chunk of cash.

Then, I can adjust my monthly expenses on my trusty Excel spread sheet. I rent a car and driver for $30 a day which is a lot cheaper than buying a car. I can adjust how often I travel + I don't need car loans, insurance, depreciation, etc. I can choose to eat steak or lobster for $10 or rice, vegetables, eggs, like the locals for $1.

I can live cheap, or live like a king. Right now my investments in the US are down so I am in a "save money" mode and pull out very little. But as I get older and when Social Security kicks in, I might do a little more traveling and buy a nicer motorcycle.

Flexibility in lifestyle is really important, IMO.
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Old 07-19-2009, 01:26 PM   #55
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Flexibility in lifestyle is really important, IMO.
The wife and I have discussed this as well. We're comfortable with living overseas and figure the extra years needed to get from a safer rate (3%ish) aren't worth it if we can go with 4% and react as needed, especially since we'll be in our mid 40s and able to attempt seasonal work as a supplement if needed.

Even in steady waters the overseas option can open up more possibilities stateside. Example = have 3k per month, probably can't afford to live in San Francisco, but if you're willing to do two years in Panama for 2k per month you it will offset a 5k year in San Francisco.
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Old 07-19-2009, 06:19 PM   #56
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Originally Posted by tiuxiu View Post
I'm curious, if you 3 percent types find your portfolio grows over time (as is statistically likely) will you ever reconsider your draw?

As an example if you start taking 30k per year from a million but five years later find yourself sitting on 1.5 million would you stick with the 30k+COLA or would you consider going upping the draw a little?
I intend to live off the muni interest and dividends, reinvesting anything over 3% or so that our first years will likely require, rebalancing as much as possible with the excess cash thrown off. If we get to the point 5 or 10 years down the road, that a continued 3% WR will leave us more than we wish to leave behind, then we may have a nice splurge, or we may bump up the percentage 10-20bp. We'll see when we get there. Things change, people change, needs and desires change...who knows what we'll do.

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Old 07-19-2009, 09:48 PM   #57
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The reason I only have to take 3% now is because of a pension. If there was no pension, my WR would be higher.
If your pension is not fully cola'd, your WR will be increasing over the years. FireCalc includes that in the testing but it's something I have to remind myself of from time to time since my pension is, sadly, not cola'd.
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Old 07-19-2009, 10:21 PM   #58
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If your pension is not fully cola'd, your WR will be increasing over the years. FireCalc includes that in the testing but it's something I have to remind myself of from time to time since my pension is, sadly, not cola'd.
The pension is not cola'd.

When DH is 62 (in seven years), he'll start taking social security...I'll take mine three years later. Our calculations show when he starts taking ss, we'll only have to withdraw 2.5% to meet our needs (and a few of our wants). The WR will creep up on us over time. Hopefully it won't get too creepy....

I appreciate you pointing this out....I need all the help I can get.
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Old 07-19-2009, 11:38 PM   #59
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One thing I have noticed the longer I am retired is the more I ask myself, "Do I really need this?" I look around and look at all the junk I have collected but never use. I initially wanted to buy a new digital camera with all the whistles and bells... and in the past I would have put it on my credit card.

But now, I look at the old, simple digital camera and my even older SLR camera which still takes good pictures and think... I really don't need a new toy. The same goes with handphones. I don't need to access the internet from my handphone, I don't need to take pictures, etc. I'm retired and don't need to keep up the fast pace.

Ask yourself, "what is going to happen to all this junk when I kick the bucket?" -- and you may find the cost of your retirement years is less than you think.
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Old 07-20-2009, 10:51 AM   #60
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Maybe I'm more of a risk taker. Or maybe I'm far enough away from ER that it is kind of academic at this point.

But if I need $60k per year, 4% withdrawal rate is $1.5 mil nest egg. 3% withdrawal requires $2 mil. I am NOT going to work an extra 5 years to increase my percentage of success from 90% to 100%, or whatever the percentages really are.

Sure, I'd love the security of 2%, but it would be kind of eliminate any hope of ER. I'm like others, where I'd try out 4% for a few years, and if the market crashed I'd look into Plan B (cutting expenses) or Plan C (finding another j*b).
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