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Going over SWR
Old 12-31-2013, 09:14 AM   #1
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Going over SWR

Let's face it folks we have had an outstanding year in the market. Has anybody decided to pull a little more this year from their investments for travel, hobbies, or just plain indulgement?
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Old 12-31-2013, 09:28 AM   #2
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Well, I use a fixed % of my portfolio value on Jan 1 (i.e. Dec 31 of prior year) as my withdrawal, so it looks like we get a 16.5% raise this year! Whoops - make that a 12.5% raise. The portfolio has to recover the Jan 1 withdrawal first before we get a "raise". Had a nice raise last year too.

So no, I'm not exceeding my set WR!

I like my method that takes a good chunk off the table after a strong market year. But I have to live with accepting a pay cut after bad market years. No problem as I stash some of the extra in a short term spending fund for rainy days.
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Old 12-31-2013, 09:33 AM   #3
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I'm new to this ER thing (May'13) so I'll be sticking to my SWR plan for 2014. For 2013 my SWR was 2.5%. Based on my ending net worth in 2013, 2014 is looking like a 3.6% SWR, but this will include a new (used) car purchase next year which may push into 2015.
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Old 12-31-2013, 09:43 AM   #4
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Actually going to reduce my withdrawal rate by about 50% due to the fact that I started taking social security. No plans for changing spending habits either.
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Old 12-31-2013, 09:44 AM   #5
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I have a pending trade which will result in about .35% of portfolio balance going into cash. Been 2 outstanding years. Total returns 14% and 23%-much better than Cdn market as a whole.
I would expect sustainable total returns more like 8-10% over next few years. Cash income will be about 5% higher in 2014 vs 2013, so yes a little raise but spending should decrease by about 18% as 2013 had some big special items.
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Old 12-31-2013, 10:19 AM   #6
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We spent some money on a house remodel this year which put us way over our traditional budget. I'm not sure if I specifically did it because of the strong market, but I did rebalance at the end of the year by selling some equities.

We do really enjoy the changes we made to the house, but I'm still getting used to spending that kind of money all at once. Kind of fun and a bit frightening all at once.
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Old 12-31-2013, 10:44 AM   #7
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I have only been withdrawing from my portfolio for 2 1/2 years (~2.5% of starting portfolio value) and have been withdrawing the same dollar amount since then, with no adjustments for inflation, good years in the market etc. I want to keep doing this for a while if possible, to maximize my financial "pleasure" in the subsequent years of my retirement.

So no - no extra withdrawals for me. My spending for the last few years has been ~17K/year and I know it will increase at some point. By not withdrawing extra now, I am effectively "saving for a rainy day" by leaving more in the market.
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Old 12-31-2013, 10:48 AM   #8
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Let's face it folks we have had an outstanding year in the market. Has anybody decided to pull a little more this year from their investments for travel, hobbies, or just plain indulgement?
Not a chance. My budget is flat into 2014 for the third consecutive year. We're doing fine, enjoying ourselves, and I'd rather stock up the rainy day fund.
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Going over SWR
Old 12-31-2013, 10:51 AM   #9
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Going over SWR

I recently withdrew some money from my TFSA. It had been invested in an index fund and had done very well. I took advantage of the tax free gains (which might not last) and used that money to pay off the balance of the mortgage on an investment property. The payback is better cash flow and saving ~3 years of mortgage payments. I don't think of this as "spending" but just prudent realignment of my finances in pursuit of my goals of eliminating debt and generating income. I also gained more TFSA investment room.
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Old 12-31-2013, 11:04 AM   #10
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I think of money in our retirement fund as funds to be there and grow for the long term - 20 years or more, and subject to quite a bit of year-to-year volatility due to our 53/47 allocation.

I think of funds that I withdraw as money to be spent in the near term - the next few years. So if I withdraw more than I spend in any given year, I'd rather stash it in short-term funds and keep it out of volatile equities or intermediate term bonds so that it's available if I need to spend it in the next year or two or three.

That's my mental compartmentalization anyway!
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Old 12-31-2013, 11:05 AM   #11
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I recently withdrew some money from my TFSA. It had been invested in an index fund and had done very well. I took advantage of the tax free gains (which might not last) and used that money to pay off the balance of the mortgage on an investment property. The payback is better cash flow and saving ~3 years of mortgage payments. I don't think of this as "spending" but just prudent realignment of my finances in pursuit of my goals of eliminating debt and generating income. I also gained more TFSA investment room.
Congrats! I agree that's not "spending" as it didn't disappear in your net worth. Rather - you lowered some debt.
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Old 12-31-2013, 11:52 AM   #12
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Not a chance. My budget is flat into 2014 for the third consecutive year. We're doing fine, enjoying ourselves, and I'd rather stock up the rainy day fund.
About the same here. Oddly, we significantly increased our spending during the last down-tick in '08-09 because prices (and availability) for things like home improvements and travel were so good.
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Old 12-31-2013, 04:34 PM   #13
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I'm very pleased that 2013 spending was down about 1% on 2012. Hoping to stay basically flat again in 2014.
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Old 12-31-2013, 10:01 PM   #14
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Still on budget. Next year could make up for this year.
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Old 12-31-2013, 10:53 PM   #15
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About the same here. Oddly, we significantly increased our spending during the last down-tick in '08-09 because prices (and availability) for things like home improvements and travel were so good.
There you go. A downturn in the economy provides a buying opportunity for those of us who are well funded. Though I don't want to see others suffer in a downturn, it's a great time for us to spend money wisely. We get a bargain, and someone in dire need of work gets a job. Win-win.

In hot economic times, it's tough to even get someone to give you a quote on a project.

edit/add: To answer the OP's original Q, I'll update our spending spreadsheet soon, when all the accounts are updated, but so far it seems we've spent a bit below previous years. No major repairs, maintenance, or remodel/upgrade projects. I've already decided to loosen up a little and buy a few little hobby gadgets that I can't justify on pure economic terms. But we are talking a few hundred bucks, maybe less, so really no big deal. The market swing helps, but isn't a major factor.

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Old 12-31-2013, 11:42 PM   #16
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Let's face it folks we have had an outstanding year in the market. Has anybody decided to pull a little more this year from their investments for travel, hobbies, or just plain indulgement?
Yes, that is my plan. I have a certain lifestyle that I am used to, and I am set in my ways, but just out of curiousity I might want to push the edges some in 2014 and see how that feels.

I will not be going higher than a safe withdrawal amount, though. I am planning to spend more than in previous years because I am underspending and can't take it with me.
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Old 01-01-2014, 08:11 AM   #17
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Took RMD. First withdrawal ever. That was good. Taxes were withheld. That was bad. I expect to use RMD as my SWR for the time being.

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Old 01-01-2014, 08:16 AM   #18
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Took RMD. First withdrawal ever. That was good. Taxes were withheld. That was bad. I expect to use RMD as my SWR for the time being.
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Old 01-01-2014, 09:09 AM   #19
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Took RMD. First withdrawal ever. That was good. Taxes were withheld. That was bad. I expect to use RMD as my SWR for the time being.
Hey! Your WR% will go up every year! Nice!
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Old 01-01-2014, 09:27 AM   #20
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Took RMD. First withdrawal ever. That was good. Taxes were withheld. That was bad. I expect to use RMD as my SWR for the time being.

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2014 will be the first year I have to take an RMD. I am not having taxes withheld as I plan to consult part time and continue to fund my solo 401k. I'll continue to pay estimated taxes quarterly as I have over the last 15 years. My RMD will be my annual WR for the foreseeable future (we have a nice SS base also).

With no debt, two paid for houses and a nice chunk in our taxable accounts, we will also have the potential to leave a large legacy amount, unless some unforeseen medical issue(s) rears its ugly head.
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