Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Is this a variable WR option?
Old 02-20-2007, 09:59 PM   #1
Dryer sheet aficionado
Join Date: May 2004
Posts: 44
Is this a variable WR option?

I have run a spreadsheet with all costs (including medical and taxes) and income sources, with what I think are appropriate COL adjustments for each (except for taxes that are based on actual income with current rates, etc) for 35 years and find that due to different timings of different spending & income events, the amount to be w/drawn from investments varies quite a bit from year to year.

Because it is impossible to input all these variables into FIRECalc, would it be an option (just for planning purposes) to take an average of the 35 years worth of withdrawals and use that average as the only withdrawal amount from investments to see how successful plan may be. In the plan, most of the first 20 years would require less than the "average".

Inflation has already been accounted for in adjustments to living expenses and income sources so the "average" withdrawal amount would not be inflation adjusted.

Just trying to find a way to better plan taking into account varying withdrawal amounts.

Am I missing something with this idea?

astroboy 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 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!

Re: Is this a variable WR option?
Old 02-21-2007, 08:29 AM   #2
Full time employment: Posting here.
kaudrey's Avatar
Join Date: Feb 2006
Location: Alexandria, Va
Posts: 857
Re: Is this a variable WR option?

I think it would be OK to take an average - I assume you mean to plug the numbers into Firecalc, right? Especially if the first bunch of years would actually have lower withdrawals - to me that would make it conservative, and I like that for projections.

My spreadsheet has all sorts of differing withdrawal amounts - higher travel budget in the first 15 years, lower withdrawals once my pension kicks in, etc. According to it (using conservative rates of return and high health care costs), I'll run out of money around 103. I'm OK with that.

In Firecalc I just plug in my starting expenses and adjust it up for inflation, whereas in reality, costs may go down when you slow down in old age (especially for me when I don't travel as much, because I basically plan to see the world in those early years).

Two roads diverged in a wood, and I - I took the one less travelled by...
kaudrey is offline   Reply With Quote
Re: Is this a variable WR option?
Old 02-21-2007, 08:32 AM   #3
Moderator Emeritus
Rich_by_the_Bay's Avatar
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Re: Is this a variable WR option?

I'd be cautious about choosing a fixed rate based on an average. The net impact can be very much related to the sequence of returns, not just the overall average.

A fixed percent of total assets is safer, if you can handle the volatility of income. ESRBob would add that you can limit down year withdrawals to 95% of the prior year's number and still be safe, given appropriate diversification.
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote

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
Defined Benifit Option yakers FIRE and Money 1 01-29-2007 11:37 PM
Allow changing the 4% parameter in "Work Less, Live More" option? wasdana FIRECalc support 0 08-12-2006 08:41 AM
Analyzing the mortgage payoff option sgeeeee FIRE and Money 43 06-22-2005 09:29 PM
Variable Annuities Craig FIRE and Money 8 01-13-2005 04:27 PM
Which Pension option to choose ? renferme FIRE and Money 12 03-17-2004 03:27 PM


All times are GMT -6. The time now is 05:43 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.