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View Poll Results: Do you know your withdrawal rate?
yes 25 50.00%
no idea 5 10.00%
I can give you a pretty good guesstimate 20 40.00%
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Re: Poll on I don't know my withdrawal rate
Old 10-24-2006, 11:46 AM   #21
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Re: Poll on I don't know my withdrawal rate

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Re: Poll on I don't know my withdrawal rate
Old 10-24-2006, 11:59 AM   #22
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Re: Poll on I don't know my withdrawal rate

I feel like we are planning for what riskadverse calls "ostrich" method and Ha's "neurotics" method combined. How can that be??

We'll look at the net worth (not including house) and as long as it is in line with projections we won't worry about set percentages, but if it gets out of line we'll act. Of course if it is lower than projected we'll think about cutting spending, if higher (like that betting analogy) we'll convert to cash an amount to keep it in line. All that will still not result in a fixed percentage.

For us there are just going to be too many different things going on to be able to project spending/inflation every year. Right now we rent, sometime in the next few years we plan to travel even more - maybe even to the point of PT, then we'll buy a house and settle down - maybe at that point we'll work on a SWR plan.
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Re: Poll on I don't know my withdrawal rate
Old 10-24-2006, 12:06 PM   #23
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Re: Poll on I don't know my withdrawal rate

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Originally Posted by audreyh1
How many people include their house value when they compute their withdrawal rate?

Audrey
Well, maybe I should have said - It's all very well to include your house net value at part of your net worth, but if you include it when you calculate your SWR - maybe not such a good idea since you can't actually "withdraw" from your house.

Once a house is paid off, owning one lowers your living expenses since you don't pay rent (just property taxes) and thus lets you get by with a smaller withdrawal. So owning a home outright does help the big picture.

Audret
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Re: Poll on I don't know my withdrawal rate
Old 10-24-2006, 01:04 PM   #24
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Re: Poll on I don't know my withdrawal rate

I'm finding there are two different ways of computing spending rates: actual and "smoothed". Actual spending is lumpy... if one year I buy a new car, pay to move to a new location, and buy new furniture, my spending for that year could be double what it was the last year, and therefore my actual withdrawal rate could be say 7% versus say 3% in other years. But a more useful (to me) way to look at it is to smooth those expenses out by ammortizing them over the relevant number of years. So if the car and furniture last 10 years and I move every 10 years then I might say my spending is more like 4% per year.

The reason I bring this up is that I feel like I have a pretty good idea of what my actual spending is, but converting that to a "smoothed" withdrawal rate requires me to do some future projections of how often I will buy cars, move, etc, and I haven't nailed those things down enough to have confidence in a "smoothed" number.
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Re: Poll on I don't know my withdrawal rate
Old 10-24-2006, 02:33 PM   #25
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Re: Poll on I don't know my withdrawal rate

Sample spreadsheet for expenses that do not occur annually:
http://www.golio.net/My_Homepage_Files/Page3.html

You can download the Excel spreadsheet of this file and apply the numbers that apply to your case at:
http://www.golio.net/My_Homepage_Files/Page11.html
Go to Section 3.3 and click on "download all excel spreadsheets".

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Re: Poll on I don't know my withdrawal rate
Old 10-24-2006, 03:22 PM   #26
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Re: Poll on I don't know my withdrawal rate

Quote:
Originally Posted by audreyh1
Well, maybe I should have said - It's all very well to include your house net value at part of your net worth, but if you include it when you calculate your SWR - maybe not such a good idea since you can't actually "withdraw" from your house.
Sure you can withdraw from your house. You can sell it, rent it, or do a reverse mortgage, for example.

But, you should not include your home in your SWR assets if you do not plan on doing one of the above, just like you should not include your car as an SWR asset if you plan on owning it until it dies.
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