I just realized I've doing my WR calculations incorrectly

[ejman]

I started working on my year end numbers and I've been simply taking my expenses divided into my liquid NW as the % of withdrawals and my average has been about 4.3% since ER back in 2002. (This includes 3 new vehicle purchases). I just realized however that I really should take SS and a small non cola pension into account in this calculation. When that is done then it turns out that my actual WR is closer to 2%. Maybe I should start living it up a little - just in time for Christmas! Merry Christmas and Happy New Year to all

 

[RobbieB]

Yeah, blow that dough!

 

[aaronc879]

If you are old enough to collect SS and your WR is 2-something then you can definitely spend more. You can't take it with you so unless you want to leave a large amount to your kids, it's time to add some luxuries to your life.

 

[ejman]

If you are old enough to collect SS and your WR is 2-something then you can definitely spend more. You can't take it with you so unless you want to leave a large amount to your kids, it's time to add some luxuries to your life.

Yes, since I realized this situation this morning, I've been thinking about it. But, we basically get most anything we want (wife has 4 miniature horses and they seem to have plenty of needs but budget covers that). My hobbies (music, reading, hiking, gardening) don't really require a lot of money to enjoy. I guess traveling might do it (expense wise) but I traveled a lot all over the world in my working years and every time I travel now it seems like such a huge hassle that I'm reluctant to engage in more of it. Unfortunately a private jet for such is not in the cards...

 

[aaronc879]

Yes, since I realized this situation this morning, I've been thinking about it. But, we basically get most anything we want (wife has 4 miniature horses and they seem to have plenty of needs but budget covers that). My hobbies (music, reading, hiking, gardening) don't really require a lot of money to enjoy. I guess traveling might do it (expense wise) but I traveled a lot all over the world in my working years and every time I travel now it seems like such a huge hassle that I'm reluctant to engage in more of it. Unfortunately a private jet for such is not in the cards...

You could get weekly massages, eat out more frequently and/or at more expensive places. You could upgrade to nicer cars or at least to nicer bedding and clothing. Get a cable package with every channel available and the newest TV. Lots of ways to increase expenses.

 

[NW-Bound]

Only 2% WR since 2002? You have a lot of catching up to do!

Knowing that you are into Hi-Fi, I suggest this Focal Grande Utopia EM Speaker as a good starting point.

 

[ejman]

Only 2% WR since 2002? You have a lot of catching up to do!

Knowing that you are into Hi-Fi, I suggest this Focal Grande Utopia EM Speaker as a good starting point.

Very nice speakers. I listened to them when I went to Denver a few years ago for the Rocky Mountain Audio Fest. But I'm quite happy with my Magneplanars... The 2% is only since I started SS in 2012

 

[ejman]

You could get weekly massages, eat out more frequently and/or at more expensive places. You could upgrade to nicer cars or at least to nicer bedding and clothing. Get a cable package with every channel available and the newest TV. Lots of ways to increase expenses.

Funny you should mention these. I recently bought a nicely appointed Chrysler 300 - enjoying it very much! but went in the other direction with cable - I cut the cord! It turns out after many years of paying for cable my wife only watches one channel (CBS) and it turns out we can get that one OTA crystal clear in my remote SW Oregon boondocks. That one is a savings of $1,300 a year with no down side.

As to massages I dunno, in this part of the world the area of town where they advertise such things doesn't look very reassuring...

 

[audreyh1]

I'm confused. WR is independent of other income. It's just whatever funds you draw annually from your retirement assets. If you have other income, that gets added on top of the withdrawal, but does not figure into the withdrawal rate.

I'm not sure how you've been figuring it that was a mistake. Were you somehow subtracting your SS and pension income and only withdrawing the remainder?

 

[ejman]

I'm confused. WR is independent of other income. It's just whatever funds you draw annually from your retirement assets. If you have other income, that gets added on top of the withdrawal, but does not figure into the withdrawal rate.

I'm not sure how you've been figuring it that was a mistake. Were you somehow subtracting your SS and pension income and only withdrawing the remainder?

age
I was simply looking at my expenses divided by liquid net worth and thinking that as long as I was around 4% it was OK. I do not actually take a percentage of assets at the beginning of the year or such. I simply take all fund distributions in cash and top off as needed by actually selling some shares. Most years no need to sell anything. I had simply not adjusted my WR thinking to adjust that's all. When I take into account SS and a small pension, it turns out that I'm only spending about 2% of liquid NW per year to cover expenses.

 

[Texas Proud]

Very nice speakers. I listened to them when I went to Denver a few years ago for the Rocky Mountain Audio Fest. But I'm quite happy with my Magneplanars... The 2% is only since I started SS in 2012

My BIL had magneplane.... I did not like them as they had too little bass.... good speakers otherwise...


I have Legacy... this is not my pic, but are my speakers... they have a downward firing woofer and a back passive woofer... but also great high end... and they can be LOUD... not that I do that....

 

[RobbieB]

I loved RMAF and bought myself a pair of Mundorf kits there.

I'm at 2% too and have more dough than I ever did.

Gotta blow more dough. I'm making it faster than I'm spending it.

 

[Koolau]

Unfortunately a private jet for such is not in the cards...

Don't know what your NW is, but if you really want to splurge on a private jet, there are services out there that can accommodate you. You don't have to buy your own. If you really need to "burn" some NW, that would do it quite nicely - and be lots of fun. I've toyed with the idea of at least flying first class in the future - especially now that SS has kicked in. My WDR has fluctuated but has rarely hit 4% with less-than-3% more typical. At my age of nearly 70, I'm beginning to wonder who I'm saving it for.

Back to the private jet for a second, if you take a group (say, kids and kids of kids) you could fill a private jet and the cost per person wouldn't be dramatically more than say first class airfare. Live a little!! YMMV

 

[DrRoy]

There's lots of services that let you rent a private jet.

 

[jebmke]

I'm confused. WR is independent of other income. It's just whatever funds you draw annually from your retirement assets. If you have other income, that gets added on top of the withdrawal, but does not figure into the withdrawal rate.

I'm not sure how you've been figuring it that was a mistake. Were you somehow subtracting your SS and pension income and only withdrawing the remainder?

I think OP was just calculating burn rate as percent of total assets, ignoring the fact that some of the burn rate was paid for with income. I do the same. I just look at total outflows (expenses, taxes, gifts to charty ....) as a percent just to get an indication. I don't have any income (pension or SS) yet so gross=net for me -- everything I spend is a withdrawal.

 

[Another Reader]

I loved RMAF and bought myself a pair of Mundorf kits there.

I'm at 2% too and have more dough than I ever did.

Gotta blow more dough. I'm making it faster than I'm spending it.

I'm curious if you are blowing any of your money on charity. I know you love your shelter girl and you are in central California. Your local shelter, its' Friends organization, and the local rescue groups could put some of that dough to good use.

I send food monthly via Chewy.co to a shelter that has very limited government support. A couple hundred a month can really make a difference in situations like that.

 

[street]

What I did is figure in my SS when I plan on receiving it and used my expenses over a 25 year span to come up with a number. I then just used the number that would come from my savings account that I would live on and excluded the SS because that wouldn't be part of my NW portfolio. Would that be correct? I'm not using my NW number I'm using just money to figure my WR is that correct?
Example >>> it will cost 1M to live for 25 year. We wife/me will receive 600K for 25 years. So 400K is the number I would use to come up with a WR is this right??

I hope I haven't stepped out of place asking this in posters thread.
Thank you

 

[perez99]

Is 'liquid net worth' similar to 'investable assets' ?
wondering why the OP is using some version of Net Worth...

 

[ejman]

My BIL had magneplane.... I did not like them as they had too little bass.... good speakers otherwise...


I have Legacy... this is not my pic, but are my speakers... they have a downward firing woofer and a back passive woofer... but also great high end... and they can be LOUD... not that I do that....

Those look very nice. The Magneplanars can be very tricky to set up for good bass but it can be done. I just love the realistic soundstage they present and the type of music I like to listen to doesn't have chest pounding bass so their relative lack of such is a non issue for me. But they are certainly finicky in their set up ( mine are 8 1/2 ft from the front wall) I do have a very understanding wife

 

[ejman]

I think OP was just calculating burn rate as percent of total assets, ignoring the fact that some of the burn rate was paid for with income. I do the same. I just look at total outflows (expenses, taxes, gifts to charty ....) as a percent just to get an indication. I don't have any income (pension or SS) yet so gross=net for me -- everything I spend is a withdrawal.

Exactly right but I only count liquid NW as the denominator not total assets. So I don't include the value of my house, cars and such. I guess although theoretically they could be converted into cash It just doesn't seem right to me to include them in the calculation of burn rate. ( I have to live somewhere, drive to the store etc)

 

[ejman]

Is 'liquid net worth' similar to 'investable assets' ?
wondering why the OP is using some version of Net Worth...

Yes, that's how I look at it.

 

[ejman]

Don't know what your NW is, but if you really want to splurge on a private jet, there are services out there that can accommodate you. You don't have to buy your own. If you really need to "burn" some NW, that would do it quite nicely - and be lots of fun. I've toyed with the idea of at least flying first class in the future - especially now that SS has kicked in. My WDR has fluctuated but has rarely hit 4% with less-than-3% more typical. At my age of nearly 70, I'm beginning to wonder who I'm saving it for.

Back to the private jet for a second, if you take a group (say, kids and kids of kids) you could fill a private jet and the cost per person wouldn't be dramatically more than say first class airfare. Live a little!! YMMV

Intriguing idea but frankly, just the thought of doing such would probably send my pacemaker into overdrive. As many others have noted a lifetime of LBYM does cause some preconditioning. I thought I was really upping the game by buying what to me is a semi luxury car...

 

[NW-Bound]

Very nice speakers. I listened to them when I went to Denver a few years ago for the Rocky Mountain Audio Fest...

That's more than I have done. I only ran across these French speakers on the Web, and thought they would be a quick way to blow $260K for people who are rolling in dough.

Another Web page says they are only $180K, but it may be because of the varying conversion rate of the euro at the time they write about these speakers.

 

[audreyh1]

age
I was simply looking at my expenses divided by liquid net worth and thinking that as long as I was around 4% it was OK. I do not actually take a percentage of assets at the beginning of the year or such. I simply take all fund distributions in cash and top off as needed by actually selling some shares. Most years no need to sell anything. I had simply not adjusted my WR thinking to adjust that's all. When I take into account SS and a small pension, it turns out that I'm only spending about 2% of liquid NW per year to cover expenses.

OK - I see. You were just comparing your spending to your net worth and forgot that you were getting income from SS and pension that was covering some of those expenses.

I assume that spending include taxes paid, in which case yes, your spending your NW at a pretty low rate.

The way this is usually done is you determine what your spending needs (including income taxes) are for most years. Subtract the income you expect to receive from income streams such as SS and pension or annuity. Then the remainder is what needs to be financed by your investments. SWR studies are then used to determine how large your retirement fund needs to be to supply the additional income from investments and what asset allocation should be used to meet survival/volatility goals.

Overall, sounds like you can give yourself a raise!

 

[45th Birthday]

I'm in a similar situation, investment income more than covers spending. So, my "withdrawal" rate is actually a negative number. My net worth is 25% higher today than the day I stopped working for money. Been ratcheting up the spending and will continue to do so, but don't see my withdrawal rate becoming a positive number ever.