Inverse SWR Poll

[Midpack]

Also probably been done, but I can't remember it lately. Even with the downturn, we're at 33X (liquid assets). Shooting for 50X, mostly because we have no pension, 9-10 years before MediCare and little faith in SS for the duration.

20X would be 5% SWR
25X would be 4% SWR
33X would be 3% SWR
50X would be 2% SWR

 

[audreyh1]

Wow 50X is a really high number! That's a lot of extra years of accumulation. Unless you really would rather keep doing what you are being paid for anyway, in which case it doesn't matter.

When we retired at 39/44 (25 years to Medicare for me) with no pension and no planning on SS, I felt pretty darn safe at slightly above 33X expected expenses in liquid assets.

It turned out after a few years retirement, that we were living 10-15% or so under our expected expenses, so that we had actually retired at 45X, because we just didn't spend quite as wildly as I thought we might.

So you can also tweak/pad the projected retirement living expenses part of that number.

IMO - you are financially independent now, with a really conservative SWR if you choose to quit drawing a salary. That just means the world is your oyster, and you can choose to do whatever you like and change your mind whenever you like without concerns about earning a living.

Congratulations!

Audrey

 

[LOL!]

I thought the early-retired folks were a less conservative bunch and would go out the door at 25X or less because they couldn't stand working anymore.

 

[audreyh1]

I think there are kind of two approaches for the early retirees on this board.

1. Folks who have an early retirement goal/number, and work diligently to achieve that number and then when they do, retire!

2. Folks who weren't necessarily anticipating early retirement, but who realize at some point that they are/approaching financially independence (i.e. no longer "have" to earn a living). They take a look at the situation, figure out whether retiring (or changing careers, perhaps) is really an option. These folks might still work for a while, knowing that they can cease whenever they choose.

I was definitely in the latter camp.

Audrey

 

[audreyh1]

I thought the early-retired folks were a less conservative bunch and would go out the door at 25X or less because they couldn't stand working anymore.

I think that's only a subset of the retirees. There are lots of other reasons to retire besides not standing to work anymore.

Audrey

 

[DblDoc]

We're definitely in camp 1. Shooting for 3.5% SWR without a pension and SS is not factored in at all. Medical is still the big unknown.

DD

 

[bbbamI]

I'm kind of like you audreyh1. I felt comfortable at 25X. I just ran my numbers and we're at 35X even in this downturn. Whodah thunk it?

 

[audreyh1]

I'm kind of like you audreyh1. I felt comfortable at 25X. I just ran my numbers and we're at 35X even in this downturn. Whodah thunk it?

Well, I wasn't really totally comfortable with the idea until 33X given our young ages.

But congrats to you at being at 35X now even after all this carnage! What a great cushion you have!

Audrey

 

[FIREd]

We are shooting for 33X minimum. A couple of years ago, I wrote on this board that I would retire when we reached 25X, but things have changed: 1) 2008 happened, and after reading a lot about SWR, 25X now just looks too risky for a very early retiree and 2) Our income has increased significantly over the past 2 years (while our expenses have remained flat) and it will allow us to achieve 25X in the next year or two, almost 8 years ahead of schedule. So we are now shooting for 33X for extra security. It looks like we should still be able to reach 33X way ahead of schedule, so we might be able to achieve 40X or 50X by the time we reach our intended retirement age (45), depending how it all works out.

 

[W2R]

(In determining the level of expenses below, I subtracted the part that will be paid for by SS and tiny pension.)

32-34 times what I plan to spend in ER (determined by size of my nestegg though I may not want/need to spend that much)

 

[audreyh1]

I don't know what to use for my annual expenses, so I haven't voted yet.

(In determining the various levels of expenses below, I subtracted the part that will be paid for by SS and tiny pension.)

101 times the bare bone expenses (my actual spending from 2002-2007)
47 times my spending in 2008 (splurge after receiving windfall)
66 times my spending in 2009 (cut back due to market crash)(average monthly spending times 12)
29 times what I plan to spend in ER (determined by size of my nestegg though I may not want/need to spend that much)

W2R - I think that means your number is 29X. It's what you plan or would like to be able to spend in retirement that counts, even if you can live way below that number if you have to.

Audrey

 

[W2R]

W2R - I think that means your number is 29X. It's what you plan or would like to be able to spend in retirement that counts, even if you can live way below that number if you have to.

Audrey

OK!! So basically this is just an SWR question, then. I made a mistake in my calculations and corrected it (in computing what was taxed and what wasn't - - so much easier to do all computations before taxes and get expenditures before taxes). So now, it is 32-34. OK, I will vote then.

Edited to add: my doctor added some new medications last week and I think the various side effects are impeding my calculations at present. Plus, the thread title SAID "Inverse SWR"... duh!! Not my day, apparently.

 

[ziggy29]

In reality it might as little as 20X for the first few years until small pensions and SS kick in, at which case I hope for it to be 2.5% to 3% (33-40X). A lot of it, as is usually the case, depends on the health care situation in another 10 years or so.

 

[Animorph]

(edit: I posted coincidently with ziggy29, to this is not a response directly to the above post)

I wish I had it that simple. I'm retired, DW decided to keep working for a few years just because she wanted to. We have one kid in his last year in college, and one that is just applying to colleges. We're paying for that, so we have high expenses for another 4 to 5 years. I'm 54, DW is 49. my SS kicks in in 8 to 16 years, DW's SS in 13 to 21 years. Both with substantial amounts. DW has a significant pension that will start in 6 to 16 years. I just refinanced the mortgage at 4.375% fixed for 30 years, so that expense will disappear late in retirement. I would expect at least one of us would live that long. We'll have to find individual health insurance (if possible) when DW finally retires in maybe a year or two. Then we will transition into Medicare in 11 and 16 years respectively. After all that stabilizes, I think I'll be at something like 2% withdrawal rate, and nearly all will be coming from a Roth account, which also makes a big difference (hopefully still by then).

FIRECalc can still be run with most of that included, and I use my own program to calculate everything with taxes included, but my SWR varies nearly year-to-year. No way I can just get one number out of that. Wish I could! taking out a 4% each year would be much easier.

 

[W2R]

That's pretty complicated. Animorph!

Mine is not that bad, but it is a LITTLE more complicated than I indicated, really. I'll be selling my house here and buying a less expensive house up north - - a wild guess might be that I will have $50,000 left over to add to my nest egg. That would cover much of the cost of paying SS to myself from 61.5-66 (when I plan to claim it). But then, I will have to pay for the move, furnish the new house, and then I plan to use around $25K for a new vehicle at some point.

I think it will be a lot easier to determine sensible withdrawals once I am done with the "retirement start-up" costs! Then I will have a lot better idea of the true size of my nestegg.

 

[aaronc879]

I will add 20% to my "minimum living expenses" to determine my expenses in retirement. Based on that, I will not w*rk past the point when I reach 25X expenses. I will not have a pension but do expect some form of SS after age 70. I also am planning a life expectancy of less than 80 years old based on family history(no male has ever lived past 76)

 

[Shawn]

If I reduce my liquid assets by the amount necessary to pay off my mortgage, and then subtract my mortgage from my current annual expenses, I'm at about 100X. Most of that is from investments (retirement and non-retirement accounts), although a sizable fraction is the equivalent cash out value of my upcoming pension. Social security isn't included. I should be well above 100X when I retire sometime between next month (what a great feeling to say that) and two years (what a horrible feeling to say that) from now. I'd rather be safe than sorry, but mostly, I like the feeling of security.

 

[fisherman]

Since I still have a part time business that is doing better than I hoped our actual SWR is 0 again this year.

If I did not run the business we currently would be at 27 times based upon last years expenses with sinking funds and this years portfolio balance. When our pensions kick in and depending upon when we take them it will be 48 or 60 times and that assumes no SS.

Since we have kids its even harder to know the future so the part time business really helps. Of course we have taken 11 weeks of vacations so far this year so we are not working to hard.

The trick of course is health care and we currently assume a 15% premium increase where 12% has been the normal. Hopefully that will improve.

LBYM sure helps with the numbers.

 

[traineeinvestor]

Target is 40x annual expenses (excluding the value of our home). When I quit, we will have no pension, no meaningful SS etc and two children still in school, hence the high number.

At 40x the required real return to maintain the real value of our nest egg without drawing down anything is 2.5%. Stocks, property and some bonds all yield above 2.5% (and are either tax free or taxed at very low rates), leaving a margin to reinvest to deal with inflation (famous last words) and a year or two of living expenses in liquid form (deposits etc).

 

[Budman]

I'm budgeted at 25X. But I have cushion built into that number. I could still live comfortably on 33X, but I'm not going to do it unless the economy takes a turn downward. In that case, I can get very conservative. The key is LBYM!

 

[Ronstar]

Target is 33x - which is in place now with full retirement almost 2 years away. Waiting for DW's medical and pension.

 

[Dawg52]

Well, I wasn't really totally comfortable with the idea until 33X given our young ages.

But congrats to you at being at 35X now even after all this carnage! What a great cushion you have!

Audrey

I'm basically in this camp too but my living expenses are very low compared to others here so you have to take that into consideration.

 

[IBWino]

I'm budgeted at 25X. But I have cushion built into that number. I could still live comfortably on 33X, but I'm not going to do it unless the economy takes a turn downward. In that case, I can get very conservative. The key is LBYM!

Same here. We should be at 25x when we I retire in seven years. We'll both be 55 and my wife will be able to start drawing a small pension at that point, which should cover our healthcare costs. We've also looked at the numbers carefully and can cut back to 33x if necessary.

 

[WB52]

We have targeted 22x to 26x when we retire in 3 years.
Low end if work becomes intollerable, higher if the market and job cooperate.
These numbers do not include the impact of SS or a small non-cola pension. Obviously, the saftey factor is higher, If I include either.

 

[audreyh1]

I'm basically in this camp too but my living expenses are very low compared to others here so you have to take that into consideration.

Doesn't matter. As long as you are enjoying your lifestyle, you only need enough!

Audrey