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My S(?) WR
Old 01-09-2012, 05:44 PM   #1
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My S(?) WR

I don't think I'm the only one here who has run FIRECalc and looked at the 'spaghetti chart' showing the indecipherable tangle of year-by-year portfolio balances - and wondered "what will my chart look like in five, ten or 25 years?" Where will my lonely single line go and what story will it tell?

Spaghetti chart example using default FIRECalc numbers:



While I don't know what my individual line will look like in 10, 20, or 30 years, I do know what it looks like after six and a half years of retirement:



Adding fuel to the "what's a reasonable SWR?" debate, here's my somewhat shameful track record of withdrawals:

2006 - 4.9% (portfolio withdrawals were sole source of income)
2007 - 9.8% (portfolio withdrawals were sole source of income)
2008 - 7.9% (portfolio withdrawals were sole source of income)
2009 - 6.1% (I began receiving SS benefits in Feb.)
2010 - 5.4% (DW began receiving SS benefits in May)
2011 - 4.2%
2012 - 3.9% (projected - I go on Medicare)
2013 - 3.5% (projected - DW switches from high risk pool to Medicare in April and begins receiving small non-COLA pension)
2014 - 3.2% (projected)

EDIT: All percentages are based on the initial portfolio value.

The nosebleed percentages in 07 and 08 were primarily due to the purchase of a motor home and other RV related spending. I expect those were one-time events and are part of our front loaded, enjoy-it-while-you-still-can spending strategy (I'm 65).

Locked and loaded, hunkered down for incoming. Fire away...
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Old 01-09-2012, 05:52 PM   #2
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The trend of my projected withdrawals as a percentage of my beginning of year balance is similar - higher in the early years and lower once my pension kicks in at age 60 and lower still one SS kicks in at 70.
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Old 01-09-2012, 06:18 PM   #3
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Excellent summary! So the theory is that the worst is over and it's smooth sailing from here? Does FIRECalc like your next 30 years just as much now as it did six years ago?

I fear spouse and I headed into your 9.8% phase last year.

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Locked and loaded, hunkered down for incoming. Fire away...
1. But... but... did you pay off your mortgage?
2. Have you seen Raddr's update of his hapless hypothetical Y2K ER?
Raddr's Early Retirement and Financial Strategy Board • View topic - Hypothetical Y2K retiree update
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Old 01-09-2012, 06:34 PM   #4
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I appreciate anyone who shares actual experience, especially after more than a few years. More instructive than theory or speculation, though I understand that's often all we have. Thanks...
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Old 01-09-2012, 06:38 PM   #5
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It's remarkable. You withdrew about 38% of your initial portfolio value over the past 6 years and your portfolio value is barely down despite the worst economic crisis since the great depression!
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Old 01-09-2012, 06:39 PM   #6
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Quote:
Originally Posted by Nords View Post
So the theory is that the worst is over and it's smooth sailing from here?
Sure! I believe in fairy tales, too...

Quote:
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Does FIRECalc like your next 30 years just as much now as it did six years ago?
A run with today's numbers gives a 95.5% success rate over 30 years - almost identical to my original numbers.

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1. But... but... did you pay off your mortgage?
Of course - and I delayed retirement 'just one more year' to do it.

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As I mentioned above, I'm into fairy tales not horror stories...
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Old 01-09-2012, 06:46 PM   #7
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We chose a "per cent of total portfolio per year" plan but don't have enough history to share meaningfully. However, things look pretty much lateral, with our costs running a little less than anticipated so far. Managed 3.6% for calendar 2011 without penny-pinching.
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Old 01-09-2012, 06:50 PM   #8
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A run with today's numbers gives a 95.5% success rate over 30 years - almost identical to my original numbers.
On the bright side, most likely you won't need the full 30 years.
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Old 01-09-2012, 06:52 PM   #9
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We chose a "per cent of total portfolio per year" plan but don't have enough history to share meaningfully. However, things look pretty much lateral, with our costs running a little less than anticipated so far. Managed 3.6% for calendar 2011 without penny-pinching.
Did you take your SS yet Rich?
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Old 01-09-2012, 06:52 PM   #10
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It's remarkable. You withdrew about 38% of your initial portfolio value over the past 6 years and your portfolio value is barely down despite the worst economic crisis since the great depression!
What's even more remarkable frightening is running that calculation and including our SS income. In 6.5 years we've spent an amount equal to 45% of our initial portfolio.

I suppose the only reason I'm not stocking up on cat food is the big run-up in the market during the first couple of years after I retired followed by the big recovery after the "unpleasantness" of 07/08.
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Old 01-09-2012, 06:53 PM   #11
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On the bright side, most likely you won't need the full 30 years.
Ya think not?
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Old 01-09-2012, 06:58 PM   #12
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I have only been retired a little over two years, but here is what I have so far.

I have no idea what my trend will be as I grow older. In a year and a half, I start Medicare (but in my case, my BCBS payments will remain the same, and I plan to add and pay for Medicare Part B so that is a net loss). Then at some point I will be getting SS for a gain in income. Just to add to the confusion, I am trying to let go of those pursestrings, and learn to expand my lifestyle.

As for how my portfolio is doing, by the end of 2011 it increased to 140% of its value at the end of 2008. As you can see in the chart below, most of that was during 2009, understandably since I was working and contributing to it for the first 10 months of 2009 and also the market was making great gains at that time. Since that time I have been withdrawing for living expenses. Still, I have seen modest increases in portfolio size every year so far.

My withdrawals so far:
2009: 0.0%
2010: 2.7% (= 1.8% plus 0.9% for house renovations for the move-that-never-happened)
2011: 2.2%

I am not looking forward to the (future) first time since retirement when my portfolio decreases from one year to the next. I know it will happen when we hit the next market slump.

FIRECalc thinks everything is rosier than rosy but reality is what you see below. Not bad, but not soaring either.
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Old 01-09-2012, 07:00 PM   #13
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It's remarkable. You withdrew about 38% of your initial portfolio value over the past 6 years and your portfolio value is barely down despite the worst economic crisis since the great depression.
+1.

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On the bright side, most likely you won't need the full 30 years.
Ah, Bernicke's spending model will take over anyway. How much will a geezer retired gentleman spend while rocking his chair in the front porch?

PS. In a haste, I misread FIREd's post, and made a bad "edit" which I have removed. Apologies!
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Old 01-09-2012, 07:04 PM   #14
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Ah, Bernicke's spending model will take over anyway. How much will a geezer retired gentleman spend while rocking his chair in the front porch?
It depends if he is on his front porch or the nursing homes front porch.
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Old 01-09-2012, 07:05 PM   #15
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The gummint will take care of all of us.

And if it won't, for me, it will be a blessing. I like it to be quick!
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Old 01-09-2012, 07:06 PM   #16
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The gummint will take care of all of us.
Yup, right after all your money is gone.
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Old 01-09-2012, 07:15 PM   #17
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Very good results, Wahoo.

I don't have any figures. I may not even have year end networth figures. But so far, my only real setback was divorce, and the financial damage from that was to some extent made up by having more complete control over my outflow. Alone, I have nailed down quite a few loose boards that would have kept tripping me if I still had to coordinate with her

God willing, if today's conditions do not abruptly deteriorate going forward, now that I am drawing ss and have bought a condo for cash, I believe I should be able to live on 2%. I have no expensive hobbies and likely will not develop any. I'll actually have surplus cash flow just from dividends, partnership distributions and interest. I'd guess my main risk in the financial sphere would be a boneheaded investment error.

It really doesn't cost that much to live in a city center, if one's home is handled. I have a car, but could do fine without it.

Depending on how volatile markets are, and how well I can manage my tax obligation I may need to increase that WR by 0.5% or so. I have never achieved the ultra-low tax rates of some here. With many of my assets outside retirement accounts combined with a cash flow orientation, RMDs, and SS I think that I may never get below the 25% marginal rate, but it could happen!

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Old 01-09-2012, 07:48 PM   #18
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My withdrawals so far:
2009: 0.0%
2010: 2.7% (= 1.8% plus 0.9% for house renovations for the move-that-never-happened)
2011: 2.2%
I doubt anyone is going to be able to beat my first five year withdrawal percentages.
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Old 01-09-2012, 07:54 PM   #19
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I doubt anyone is going to be able to beat my first five year withdrawal percentages.
I am in awe of your accomplishments!! But hey, I'm getting there - - I don't do so well with change, so I'm taking it slowly but it will happen.

Then, with my luck the Dow will fall to 150 and stay there for 25 years.
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Old 01-09-2012, 08:12 PM   #20
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I appreciate anyone who shares actual experience, especially after more than a few years. More instructive than theory or speculation, though I understand that's often all we have. Thanks...
+1

Thanks very much for sharing, it is very interesting.

I've just come to the end of my 2nd year, and my situation is non-COLA pensions supplying 70% of target spending on year 1.

My WR and portfolio moves for the first 2 years are :

2010 0.0% - unexpected bonus from 2009 work
2011 1.14% - unexpected legacy from deaths of parents
2012 2.0% - projected
2013 2.16% - projected

Savings
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