Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
How do you handle irregular withdrawals?
Old 02-11-2019, 08:48 PM   #1
Recycles dryer sheets
 
Join Date: Jan 2017
Posts: 59
How do you handle irregular withdrawals?

I know many of you target a set SWR (3-4%). Do you consider this as your routine yearly spend without periodic expenses such as car replacement or major house repair or do you include these expenses within your SWR?
__________________

TNBigfoot is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-11-2019, 10:50 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 23,761
I make sure that my recurrent expenses are low compared to the 4% WR. These encompass living expenses such as food/housing costs, and also discretionary spending such as travel expenses

In 2018, I spent 2.7%. I did not make any major purchases such as a new car, nor incur any major home repair or update.

That low WR should allow some room for unscheduled expenses in future years. I don't want to plan in finer details than that. It would take too much work, and would involve too many unanswerable questions.

PS. In past years, I did exceed 4% occasionally due to home expenses and unexpected healthcare costs.
__________________

__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 02-11-2019, 11:05 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 7,143
I consider the 4% rule, the very high end, so all my expenses including the car replacement, the new roof, should be in the SWR number. But those giant expenses are amortized over years.
So a $30K car, is really $3K/yr for 10 years
A $5K roof is good for 20 yrs, so that is $250 /yr

Basically this means most of the time I withdraw less and spend less than the 4%, when I bought the new van, it pushed my spending probably up a lot and I took out enough to cover it. No need to look at the % , as I won't buy another vehicle for at least 10 years.
My spending cash did get pretty low

The next year it was back to less than 4%.
__________________
Fortune favors the prepared mind. ... Louis Pasteur
Sunset is offline   Reply With Quote
Old 02-12-2019, 03:12 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Jan 2018
Location: Tampa
Posts: 3,606
Different ways to handle it. I am in the minority in that I use a separate emergency fund outside of my AA for these large one off expenses. Thus it doesn't enter into the yearly WR%.
On the flip side, if I am targeting 3% WR for the year and only spend 2.75%, then 0.25% goes into the emergency fund, but I consider my yearly spending and reduction of my investment accounts to be 3%.
__________________
TGIM
Dtail is offline   Reply With Quote
Old 02-12-2019, 03:58 AM   #5
Full time employment: Posting here.
 
Join Date: Jul 2015
Location: Beaverton
Posts: 908
I don't get too stuck on WR's. I'm within the acceptable range. I keep a pad in my main account if something would be needed. Prior to retiring I bought a new car for the DW and have done what needed repairs reared their ugly head. I know due to high cost of HI I will be on the higher side as I delay collecting SS. In addition my budget includes car repair and misc spends which do arise and did to the tune of $2k to my truck.
__________________
Jump in, the water's warm.
Bir48die is offline   Reply With Quote
Old 02-12-2019, 04:31 AM   #6
Dryer sheet aficionado
 
Join Date: Feb 2013
Posts: 39
Quote:
Originally Posted by Sunset View Post
I consider the 4% rule, the very high end, so all my expenses including the car replacement, the new roof, should be in the SWR number. But those giant expenses are amortized over years.
So a $30K car, is really $3K/yr for 10 years
A $5K roof is good for 20 yrs, so that is $250 /yr

Basically this means most of the time I withdraw less and spend less than the 4%, when I bought the new van, it pushed my spending probably up a lot and I took out enough to cover it. No need to look at the % , as I won't buy another vehicle for at least 10 years.
My spending cash did get pretty low

The next year it was back to less than 4%.
Sorry for the threadjack but I can't help it. Is $5k for the roof for a garden shed or a house? My house is small and would be at least 20K.
MatatuPuncher is offline   Reply With Quote
Old 02-12-2019, 05:11 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Dawg52's Avatar
 
Join Date: Feb 2005
Location: Central MS/Orange Beach, AL
Posts: 8,247
Quote:
Originally Posted by NW-Bound View Post
I make sure that my recurrent expenses are low compared to the 4% WR. These encompass living expenses such as food/housing costs, and also discretionary spending such as travel expenses

In 2018, I spent 2.7%. I did not make any major purchases such as a new car, nor incur any major home repair or update.

That low WR should allow some room for unscheduled expenses in future years. I don't want to plan in finer details than that. It would take too much work, and would involve too many unanswerable questions.

Similar thinking for me.

Quote:
Originally Posted by MatatuPuncher View Post
Sorry for the threadjack but I can't help it. Is $5k for the roof for a garden shed or a house? My house is small and would be at least 20K.
In 2014 I put a new roof on a 1100 sq ft house I was about to sell and it cost $4k. How small is your house?
__________________
Retired 3/31/2007@52
Investing style: Full time wuss.
Dawg52 is offline   Reply With Quote
Old 02-12-2019, 06:17 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 9,307
I sequester excess funds not spent from my chosen SWR in an emergency fund. So far I have not tapped the emergency fund since unusual expenses (e.g. daughter's wedding) were accommodated within my SWR.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Old 02-12-2019, 06:34 AM   #9
Thinks s/he gets paid by the post
 
Join Date: Sep 2009
Location: Hong Kong
Posts: 1,677
I make monthly accruals for larger/long term items - including holidays, home renovation/repairs, luxury discretionary items, tax and a miscellaneous one. So long as the large items are less than what I've accrued I don't sweat it.
__________________
Budgeting is a skill practised by people who are bad at politics.
traineeinvestor is offline   Reply With Quote
Old 02-12-2019, 07:06 AM   #10
Dryer sheet aficionado
GreatLaker's Avatar
 
Join Date: May 2016
Location: Toronto, Ontario
Posts: 31
I have a savings fund for large expenditures like car, and replacement home items like roof, driveway, hvac and major appliances. I estimated the cost and lifespan of those items, than annualized the total. I take that amount every year and save it in a balanced mutual fund.

The annual amount comes out of my SWR, but I am saving it separately for major expenses.
__________________
The first principle in speculating is never give anyone advice to buy or sell shares, because, where perspicacity is weakened, the most benevolent advice can turn out badly.
Joseph de la Vega
GreatLaker is offline   Reply With Quote
Old 02-12-2019, 07:24 AM   #11
Thinks s/he gets paid by the post
Jerry1's Avatar
 
Join Date: Nov 2014
Posts: 2,157
For those who say you have a fund, is it a separate account? Do you actually withdrawal money and set it apart from your main portfolio? When you do this, do you then exclude that fund from your overall asset allocation? What do you invest that money in, cd’s?

I set money aside in my head. I have a $ budget and not a withdrawal percentage. Of course that budget is around 4%, at least until SS kicks in, and the budget reflects numbers for large expenses. Like Sunset, I amortize large expected expenses like car and home repair. Therefore, I’m usually under budget, but the year I need a new roof, I’ll be over budget. Hopefully within the parameters I’ve set. I have $10K for a new roof. It would suck a bit if it comes in at $20K but I do have built in cushion, so either way, I’ll be fine.

In my retirement plan, the main thing I have any worries about is a major market meltdown and no recovery in sight. Other than that, I should be fine.
__________________
Every day when I open my eyes now it feels like a Saturday - David Gray
Jerry1 is offline   Reply With Quote
Old 02-12-2019, 08:00 AM   #12
Full time employment: Posting here.
Carpediem's Avatar
 
Join Date: Aug 2016
Posts: 636
In addition to the questions Jerry1 posted, I'm curious if one method of withdrawing for lumpy expenses is more tax advantageous than another. I'm guessing the 'accrual method' is better but I'm no tax expert.
Carpediem is offline   Reply With Quote
Old 02-12-2019, 08:48 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 22,002
Quote:
Originally Posted by donheff View Post
I sequester excess funds not spent from my chosen SWR in an emergency fund. So far I have not tapped the emergency fund since unusual expenses (e.g. daughter's wedding) were accommodated within my SWR.
Same here except itís more of a emergency/splurge/large one-off expenses fund.

And for Jerry: yes, I have separate accounts for retirement investments versus short-term funds. I always have. Could be done easily in a spreadsheet, I just like have accounts segregated.
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 02-12-2019, 08:54 AM   #14
Thinks s/he gets paid by the post
38Chevy454's Avatar
 
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 2,161
I don't do a specific percentage, although I monitor and keep within a targeted value. If I have a larger expense, I just sell some shares and get extra money. What I sell depends on how the market is doing and with respect to my overall AA, although mostly due to market conditions rather than AA. Sell when high is the goal of course.
__________________
The advice we're giving you is invaluable, that's why it's free
Experience is a good teacher, but the tuition can get expensive real fast

Semi-Retired 7/1/16: working part-time (60%) for now [4/24/17 changed to 80%]
Retired Aug 2, 2017; age 53
38Chevy454 is offline   Reply With Quote
Old 02-12-2019, 12:02 PM   #15
Recycles dryer sheets
 
Join Date: Jan 2012
Posts: 314
good question.....I keep my WR for living expenses low (~2.5%) which includes 2 week travel within the US only.

Extended Overseas travel, big ticket items etc will sometimes raise the WR to 4%+ for a year. Since the big ticket expenses are not expected to occur each year, I don't worry if the WR in any one such year exceeds 4%. Keeping an emergency fund in a separate account would be unnecessary extra work for such expenses in my opinion. I don't wish to complicate my finances too much.

Thanks
Rickt is offline   Reply With Quote
Old 02-12-2019, 02:49 PM   #16
Thinks s/he gets paid by the post
 
Join Date: Jun 2017
Location: Western NC
Posts: 1,215
Quote:
Originally Posted by TNBigfoot View Post
I know many of you target a set SWR (3-4%). Do you consider this as your routine yearly spend without periodic expenses such as car replacement or major house repair or do you include these expenses within your SWR?
Live in a town home & pay a monthly fee which handles all outside maintenance including the roof.

I am currently getting my deceased relative's SFR ready to sell & am reminded every time I go over there how much a PITA a standalone home is in terms of maintenance/repair.

And after years of driving 15-20+ year old vehicles I plan to start leasing whatever's on sale, turning that cost into a fixed monthly expense.
ncbill is offline   Reply With Quote
Old 02-12-2019, 03:31 PM   #17
Moderator Emeritus
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 42,126
Quote:
Originally Posted by TNBigfoot View Post
I know many of you target a set SWR (3-4%). Do you consider this as your routine yearly spend without periodic expenses such as car replacement or major house repair or do you include these expenses within your SWR?
The latter.

My viewpoint is that your SWR is analogous to your paycheck when working.

How you handle irregular large expenses when you are retired with a specific, fixed SWR, will probably reflect how you did exactly the same thing if you ever worked at a job where you were paid a fixed amount.

What I did back when I was working, was the same as what I do now that I am retired. I spend less than that fixed amount of income and save the extra for a rainy day.

Then when something like car replacement or a major house repair comes up, I use the money I saved in previous years.
W2R is online now   Reply With Quote
Old 02-13-2019, 08:10 AM   #18
Full time employment: Posting here.
 
Join Date: Jul 2015
Location: Beaverton
Posts: 908
I pull out money once a year that matches my budget. This year I did an additional $10k because an unexpected trip to Europe came up. I usually fund May 1 but I had an uneasy feeling in November so set aside money to sit until May. Then I transfer to Fidelity so I can earn the current rates. From there I pay myself twice a month transferring to WF bank and disbursing to he various pots. All money until I get at least FRA has come from a 50/50 of deferred comp and taxable investments to keep my tax bracket at a sensible level. Iím
__________________

__________________
Jump in, the water's warm.
Bir48die is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
How Would You Handle All That Money If You Won? rdy2go FIRE and Money 22 01-09-2016 05:03 PM
Retirement? Retirement?!? You can't HANDLE retirement!! Nords Life after FIRE 24 06-17-2009 03:47 PM
"How do you handle the steep downturns in the market" azauthor Life after FIRE 36 01-24-2008 09:43 AM
How do you handle scheduled windfall/bonus time? Olav23 FIRE and Money 15 06-19-2007 10:03 PM
Why did you choose that handle? GTM Other topics 76 03-06-2005 01:14 PM

» Quick Links

 
All times are GMT -6. The time now is 11:42 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.