Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 04-17-2017, 02:28 PM   #21
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,237
Quote:
Originally Posted by pb4uski View Post
+1 but only 5 years in my case. I saved this money for my retirement... if there is something left for my kids then it is estimating error on my part..
+1.

Our SWR for the 3 years since we retired is over 5%. We have no plan to reduce it until SS for DW and I in a few years.

I told my kids not to count on an inheritance expect for the house we live in and the summer place down the Cape. We fund both of their annual Roth contributions and if there's any money left for them when we croak it will be gravy....
__________________

__________________
Corporateburnout 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 04-17-2017, 02:35 PM   #22
Thinks s/he gets paid by the post
 
Join Date: Mar 2017
Location: New York City
Posts: 1,646
Quote:
Originally Posted by Corporateburnout View Post
+1.

Our SWR for the 3 years since we retired is over 5%. We have no plan to reduce it until SS for DW and I in a few years.

I told my kids not to count on an inheritance expect for the house we live in and the summer place down the Cape. We fund both of their annual Roth contributions and if there's any money left when we croak it will be gravy....
hahaha , i tell my child that im spending his inheritance hahah
__________________

__________________
Blue Collar Guy is offline   Reply With Quote
Old 04-17-2017, 02:47 PM   #23
Recycles dryer sheets
 
Join Date: Dec 2014
Location: St. Charles
Posts: 388
Quote:
Originally Posted by pb4uski View Post
+1 but only 5 years in my case. I saved this money for my retirement... if there is something left for my kids then it is estimating error on my part.. given that SWR is somewhat of a worst case scenario and our WR will be relatively low once SS starts it is likely that we will die rich.

Total return or BUST!
Only 1 year into FIRE in my case, but this pretty much sums up our status, as well. We have always told DS that anything left at the end was an error. That being said, based on current spending the income and cap gains from the after tax account could fully supplement SS in 4 years. Cash would supplement any required extras and inflation adjustments, and the IRA's (2/3's of our portfolio) could basically go untouched. Of course Uncle Sam has a thing or two to say about that so RMD's probably will just be a withdrawal and re-investment, with some gifting.

Some here would say that means I worked too long. Could be, but I look at it as insurance for the unexpected. It is one reason why the cost of Health Care for the next 3-4 years does not scare me (much). And we did not deprive ourselves in the 10 years prior, so we have enjoyed our efforts.

Or, maybe we will blow a pile on an adventure .
__________________
If your not living on the edge, you're taking up too much space.
Never slow down, never grow old!
CardsFan is offline   Reply With Quote
Old 04-18-2017, 07:05 AM   #24
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 8,152
I move the amount I plan to withdraw for the year from my inherited IRA at the beginning of each year. (usually the RMD amount since my dad was already drawing when I inherited it.). I pay taxes on it. If I have enough cash (from dividend and capital gain distributions) all is good, if not I draw some extra cash in the process of rebalancing.

Monthly I move my post tax cash to my checking account.

This works for me.
__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 7%, rental income 18%
rodi is offline   Reply With Quote
Old 04-18-2017, 07:23 AM   #25
Recycles dryer sheets
 
Join Date: May 2014
Posts: 439
What I do is have 3 different bond funds and they pay monthly. They provide more than I need to live on, so I can put some money back in the market. The rest of my portfolio is in stocks , and this has worked well for me.
__________________
Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things. Charlie Munger
UnrealizedPotential is offline   Reply With Quote
Old 04-18-2017, 07:35 AM   #26
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 2,764
Quote:
Originally Posted by ERD50 View Post
We're not in any disagreement, I don't think.

But in the case where the dividends cover everything, there really isn't any meaningful question. You don't touch the principal, because you don't need to. No math involved, no real decision to make.

Doesn't make any difference if you look at total return or not.

-ERD50
Agree. Have generally just spent divs since retirement but in my case the portfolio has grown a lot after 10 years of retirement, so have started to supplement my divs with small sell downs. I expect the portfolio will still grow over time but not as much. Again, to think that a hard wired withdrawal rate set at the beginning of the withdrawal phase would be optimal, seems a little suspect. Need to be flexible.
__________________
Danmar is offline   Reply With Quote
Old 04-18-2017, 09:28 AM   #27
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 5,287
Send a message via Skype™ to kcowan
What amazes me is that the fundamental premise behind Firecalc is to spend away everything before death. With any reluctance to dip into principal for extraordinary events, this does not work.

Maybe we should have 2 kinds of membership here: believers and pretenders?
__________________
For the fun of it...Keith
kcowan is offline   Reply With Quote
Old 04-18-2017, 10:09 AM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 17,690
Quote:
Originally Posted by kcowan View Post
What amazes me is that the fundamental premise behind Firecalc is to spend away everything before death. With any reluctance to dip into principal for extraordinary events, this does not work.

Maybe we should have 2 kinds of membership here: believers and pretenders?
Maybe it's just semantics, but I don't see that as the "fundamental premise behind Firecalc" at all.

I'd say the fundamental premise is that with defaults, historically you would have spent away everything before death in only ~ 5% of the cases. In many cases you have more buying power than you started with, and in quite a few cases, way more than you started with.

But yes, you have to accept that historically, this involves dipping into principal to some extent, I think even in many of the 'good' runs, during bad times of those overall 'good' runs.

It's not easy to spend away everything just before death, unless your income is almost totally from pensions and annuities, or you know your date of death.

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 04-18-2017, 10:31 AM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 9,486
I kind of like the idea of 2+2 equaling 5. This allows for the expenses of a good financial advisor.
__________________
Yes, I have achieved work / life balance.
travelover is offline   Reply With Quote
Old 04-18-2017, 10:56 AM   #30
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Apr 2013
Posts: 5,068
Quote:
Originally Posted by travelover View Post
I kind of like the idea of 2+2 equaling 5. This allows for the expenses of a good financial advisor.
It also keeps O'Brien happy.
__________________
MRG is offline   Reply With Quote
Old 04-22-2017, 12:20 PM   #31
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 677
Quote:
Originally Posted by Blue Collar Guy View Post
hahaha , i tell my child that im spending his inheritance hahah
Ha! We've told our kids that their inheritance will be a sports car wrapped around a tree.

Which, it turns out, isn't a good thing to say to them just before suddenly going on an unannounced trip out of town without your cell phone.
__________________
rayvt is offline   Reply With Quote
Old 04-22-2017, 01:42 PM   #32
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 677
Quote:
Originally Posted by marko View Post
It's pretty simple for me. I was brought up to never touch the principal. In my case this is multi generational wealth where my predecessors didn't touch the principal either and lived on their dividends and interest.

I'm not blind to the total return approach but for me this is easier, cleaner and has nothing to do with 2+2=5
The term "principal" doesn't apply to stocks, only to bonds. It's like assessing a baseball team in terms how may yards they gained rushing. It is nonsensical.

Nonetheless, if you want to discuss it in "2+2=5" terms, what is the "principal" of a stock portfolio? The amount you put in? The portfolio value when you retired? The highest portfolio value?

If you bought, say,1000 shares of BRK-B at $71 and BRK-B is now at $163, and you sell 10 shares to raise $1,630 of cash, have you touched principal or not?

Suppose instead you bought 1000 shares of some dividend-paying stock at $71 and reinvested the dividends and now have 2000 shares now at $71, and you sell 20 shares to raise $1,620 cash. Have you touched principal or not? And what is the dollar amount of the "principal"?

If you drop dead before giving your answer, what does your heir say the amount of the principal is?
__________________
rayvt is offline   Reply With Quote
Old 04-23-2017, 09:51 AM   #33
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 2,764
Quote:
Originally Posted by rayvt View Post
The term "principal" doesn't apply to stocks, only to bonds. It's like assessing a baseball team in terms how may yards they gained rushing. It is nonsensical.

Nonetheless, if you want to discuss it in "2+2=5" terms, what is the "principal" of a stock portfolio? The amount you put in? The portfolio value when you retired? The highest portfolio value?

If you bought, say,1000 shares of BRK-B at $71 and BRK-B is now at $163, and you sell 10 shares to raise $1,630 of cash, have you touched principal or not?

Suppose instead you bought 1000 shares of some dividend-paying stock at $71 and reinvested the dividends and now have 2000 shares now at $71, and you sell 20 shares to raise $1,620 cash. Have you touched principal or not? And what is the dollar amount of the "principal"?

If you drop dead before giving your answer, what does your heir say the amount of the principal is?
Agree. That's why I say "only spend dividends". Some people might interpret this to mean "never spend principle" but that isn't correct as you pointed out.
__________________
Danmar is offline   Reply With Quote
Old 04-23-2017, 10:14 AM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 5,928
Quote:
Originally Posted by Corporateburnout View Post
We fund both of their annual Roth contributions and if there's any money left for them when we croak it will be gravy....
I have to think this is a good idea, especially if one's children have chosen professions that are not "High Income" jobs. The kids are being setup for a good retirement and the parents can spend, spend, spend and not feel guilty. Win-Win!
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 04-23-2017, 02:48 PM   #35
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 5,287
Send a message via Skype™ to kcowan
Quote:
Originally Posted by rayvt View Post
If you bought, say,1000 shares of BRK-B at $71 and BRK-B is now at $163, and you sell 10 shares to raise $1,630 of cash, have you touched principal or not?

Suppose instead you bought 1000 shares of some dividend-paying stock at $71 and reinvested the dividends and now have 2000 shares now at $71, and you sell 20 shares to raise $1,620 cash. Have you touched principal or not? And what is the dollar amount of the "principal"?
In both cases, your original portfolio is $71000 and your SWR @ 4% is $2840 per year. Forever.

In good times, you will make more than 4% but that will compensate for the bad times when you will make less than 4%. If your portfolio averages 7% per year for 10 years, then you can handle a portfolio decline of 25% and still be on plan.

It is the simple math of compounding. If you spend any portion of those above average gains, then your ability to handle a decline will be less.
__________________
For the fun of it...Keith
kcowan is offline   Reply With Quote
Old 04-23-2017, 04:46 PM   #36
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
braumeister's Avatar
 
Join Date: Feb 2010
Location: Northern Kentucky
Posts: 7,815
Quote:
Originally Posted by kcowan View Post
It is the simple math of compounding.
If there is one thing I've learned on this forum it's that nothing is simple.
__________________
braumeister is offline   Reply With Quote
Old 04-23-2017, 04:52 PM   #37
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 41,008
Quote:
Originally Posted by braumeister View Post
If there is one thing I've learned on this forum it's that nothing is simple.
Other than "Psst: Wellesley"
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 04-23-2017, 05:04 PM   #38
Thinks s/he gets paid by the post
 
Join Date: Mar 2011
Posts: 3,428
Quote:
Originally Posted by rayvt View Post
The term "principal" doesn't apply to stocks, only to bonds. It's like assessing a baseball team in terms how may yards they gained rushing. It is nonsensical.

Nonetheless, if you want to discuss it in "2+2=5" terms, what is the "principal" of a stock portfolio? The amount you put in? The portfolio value when you retired? The highest portfolio value?

If you bought, say,1000 shares of BRK-B at $71 and BRK-B is now at $163, and you sell 10 shares to raise $1,630 of cash, have you touched principal or not?

Suppose instead you bought 1000 shares of some dividend-paying stock at $71 and reinvested the dividends and now have 2000 shares now at $71, and you sell 20 shares to raise $1,620 cash. Have you touched principal or not? And what is the dollar amount of the "principal"?

If you drop dead before giving your answer, what does your heir say the amount of the principal is?
I take your point but within the context of my comment the point was to live off of dividends and interest and not spend the base funds/shares that provides those dividends whether they've been diluted by dividend payouts.

Over time the principal grows despite distributions which may/may not deliver larger distributions.

The same position holds for a multi generational trust fund that sends regular checks to beneficiaries but the base holdings are seldom (if ever) sold themselves to meet those obligations. Shares may be sold in order to access other opportunities but the payout to beneficiaries remains the same as does the base holding amount.

Maybe a better way to put it is "Never reduce the principal "
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline   Reply With Quote
Old 04-24-2017, 08:23 AM   #39
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 5,287
Send a message via Skype™ to kcowan
Quote:
Originally Posted by marko View Post
Maybe a better way to put it is "Never reduce the original principal "
FIFY
__________________
For the fun of it...Keith
kcowan is offline   Reply With Quote
Old 04-29-2017, 06:44 PM   #40
Recycles dryer sheets
 
Join Date: Jun 2014
Posts: 431
To ERD's point.
If you need $x/mo or year no matter what, and there's no tax benefit by choosing one account over another it makes no difference where it comes from.

However, if you ARE flexible and in your mind $s spent in excess of dividends are more valuable and thus you'd change your spending habits rather than sell equities then it does make a difference.

However you could just as easily lower the $/mo and be back at step one anyway .

My own opinion is to choose the process that let's you sleep at night and avoids actions that are value destructive. Those two things seem to be the biggest dangers for me.

H
__________________

__________________
petershk 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 Much Power Does a Laser Printer Draw? haha Other topics 21 11-01-2013 08:51 AM
New thoughts on the draw down phase walkinwood FIRE and Money 30 03-29-2011 06:38 AM
extra expenses? lowered expenses? 72t? retiringat50 FIRE and Money 6 01-08-2008 08:30 PM
Real World FIRE Income Poll, Average Monthly Draw ShokWaveRider FIRE and Money 14 09-12-2006 10:50 PM
Worst Draw-Down haha FIRE and Money 11 02-11-2005 08:21 AM

 

 
All times are GMT -6. The time now is 02:42 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.