Join Early Retirement Today
View Poll Results: What % of your initial nest egg do you use/plan to use for ER expenses?
greater than 4% 20 21.74%
about 4% 26 28.26%
around 3.6 - 4.0% 8 8.70%
around 3 - 3.6% 11 11.96%
less than 3% 27 29.35%
Voters: 92. You may not vote on this poll

Reply
 
Thread Tools Search this Thread Display Modes
Poll on initial withdrawal rates
Old 10-21-2006, 06:41 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,634
Poll on initial withdrawal rates

The question is what percentage of your INITIAL nest egg did start spending when you ERd? I am assuming most retirees on this board calculate their WR in that fashion with the expectation that the amount will increase as needed up to the inflation rate. If you have a pension or SS, the question is the same - what percentage of your initial portfolio (when withdrawals started) did you plan to withdraw to fund expenses beyond your pension/SS.

If you are relying on part time income, either don't answer or estimate the WR if you stopped the work income stream.
__________________

__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff 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 Early-Retirement.org 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: Poll on initial withdrawal rates
Old 10-21-2006, 08:09 PM   #2
Moderator Emeritus
Khan's Avatar
 
Join Date: Aug 2006
Location: Pine Island, Florida
Posts: 6,868
Send a message via AIM to Khan
Re: Poll on initial withdrawal rates

So far, I've been living on my pension. My withdrawal rate from TSP and IRA is zero.
__________________

__________________
"Knowin' no one nowhere's gonna miss us when we're gone..."
Khan is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-21-2006, 08:14 PM   #3
Full time employment: Posting here.
 
Join Date: Feb 2004
Location: Okanagan Valley
Posts: 805
Re: Poll on initial withdrawal rates

Believe it will be zero for me as well this year (retired end of Apr 06). Non-COLA'd pension has covered living expenses so far (2 new auto purchases excepted). The auto purchases were pre-planned as retirement gifts to ourselves and the funds were not included in the stash amount.

The expectation is that our WR will be less than 1% for at least first 5 years. Since pension is not COLA'd, the time when we have to tap more significantly into our stash will depend on inflation.
__________________
AltaRed is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-21-2006, 08:18 PM   #4
 
Posts: n/a
Re: Poll on initial withdrawal rates

Quote:
Originally Posted by Khan
So far, I've been living on my pension. My withdrawal rate from TSP and IRA is zero.
So is the plan not to spend anything and leave it to your heirs or to live it up at a later date?
__________________
  Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-21-2006, 08:29 PM   #5
Thinks s/he gets paid by the post
FIRE'd@51's Avatar
 
Join Date: Aug 2006
Posts: 2,315
Re: Poll on initial withdrawal rates

As some of the above posts have indicated, I think this poll question needs to be refined to have any meaning because of pensions, SS, a working spouse, and other events such as moving to a less-expensive house shortly after ER'ing and adding the home equity to your portfolio.
__________________
I'd rather be governed by the first one hundred names in the telephone book than the Harvard faculty - William F. Buckley
FIRE'd@51 is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-21-2006, 08:39 PM   #6
Moderator Emeritus
Khan's Avatar
 
Join Date: Aug 2006
Location: Pine Island, Florida
Posts: 6,868
Send a message via AIM to Khan
Re: Poll on initial withdrawal rates

Quote:
Originally Posted by Cut-Throat
So is the plan not to spend anything and leave it to your heirs or to live it up at a later date?
I don't know.

I keep thinking I should be spending more, but tightwad is part of my DNA.

At some point I will have to replace the '89 vehicle; but I have $20K in the MM account and $100K in CDs at the credit union.

Am thinking of tapping the TSP next year (~230K), but what would I buy?


__________________
"Knowin' no one nowhere's gonna miss us when we're gone..."
Khan is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-21-2006, 09:20 PM   #7
 
Posts: n/a
Re: Poll on initial withdrawal rates

Quote:
Originally Posted by Khan
I don't know.
No worry. No decision is a decision. 8)
__________________
  Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-21-2006, 11:24 PM   #8
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,616
Re: Poll on initial withdrawal rates

Well, 1 June 2002 was kind of a sucky time to retire-- in between one market low of 17 Sep 2001 and another low of 9 Oct 2002. Our portfolio was as low as it could get and still support an ER decision that had already been made. And we'd decided to keep the mortgage too, although we later refinanced for a lower interest rate.

So the "S"WR started out at 7.5%. But backing out the mortgage and the IRAs dropped that down below 4%. Our spending has dropped considerably since then (especially through refinancings), and our portfolio has recovered much faster than the spending has dropped.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-22-2006, 12:11 AM   #9
Recycles dryer sheets
 
Join Date: Oct 2004
Posts: 214
Re: Poll on initial withdrawal rates

Along with anticipated withdrawal rate, another good question would be inflation adjusted vs straight percentage draw, etc.
__________________
RockMiner is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-22-2006, 05:26 AM   #10
Full time employment: Posting here.
 
Join Date: Nov 2003
Posts: 926
Re: Poll on initial withdrawal rates

You forgot "-0-". I don't plan for my net worth
(initial nest egg) to ever go down, or do I misread the question?
Anyway, I can't vote (on principle?) because I never have had any idea
what my SWR is/was. Don't care (My God! Heresy!).

JG
__________________
Some of us have pretty stories, about good friends, good times and noodle salad.
Mr._johngalt is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-22-2006, 08:23 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,634
Re: Poll on initial withdrawal rates

Quote:
Originally Posted by FIRE'd@51
As some of the above posts have indicated, I think this poll question needs to be refined to have any meaning because of pensions, SS, a working spouse, and other events such as moving to a less-expensive house shortly after ER'ing and adding the home equity to your portfolio.
Actually, I think it answers my underlying question and returns a negative on my hypothesis. I assumed people spend what they can with respect to retirement. So, I expected the WR to cluster tightly around 4%. If I was correct a pension wouldn't matter - a pensioneer would still spend 4% of the portfolio to expand his or her retirement lifestyle. People waiting to retire would pull the plug when they get to 4% of a frugal but meaningful lifestyle.

But the results show that the pre-retirement LBYM bias holds after retirement. A full 50% are spending below the magic 4% number. Many, substantially lower. That means there are bound to be quite a few people in the $60-$70K spending range who could easily spend more -- maybe even that $100K level we fanticized about in another post - that they don't is a metter of choice, not neccessity.

I would agree that a working spouse would throw off the numbers -- you (the joint spending unit) are not reporting your retirement spending if you are not retired.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-22-2006, 09:04 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Location: North of Montana
Posts: 2,753
Re: Poll on initial withdrawal rates

We expect to be a bit north of 4%, may 4.5 initially. This will include some travel & other treats. FC gives us a 100% survival rate as we expect our expenses to go down as we age. Even then we can cut back if necessary, eat the generic cat food rather than premium brands.

Ask me how it goes in a year or so when we are ER as well as FI.
__________________
There are two kinds of people in the world: those who can extrapolate conclusions from insufficient data and ..
kumquat is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-22-2006, 02:26 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Re: Poll on initial withdrawal rates

Quote:
Originally Posted by donheff
Actually, I think it answers my underlying question and returns a negative on my hypothesis. I assumed people spend what they can with respect to retirement. So, I expected the WR to cluster tightly around 4%.
I thought that was what you were getting at and I expected the same outcome as you Don. I agree that this outcome means there are a lot of posters here who either have so much wealth that they're doing everything they want with a below 4% WR or are so conservative financially that they're still LBYM despite being FIRE. Interesting.

I don't notice very many RE's here who are over 65. I wonder if as a group we get older and realize it's spend it now or it's just a line item in our wills, that perhaps spending will pick up a little
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-22-2006, 03:14 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 5,705
Send a message via Skype™ to kcowan
Re: Poll on initial withdrawal rates

We are doing extensive travelling now and we expect that to decline once we have seen so many of our destinations. When MIL passes on, we will have more flexibility for longer trips which should reduce costs of travel (fewer trips but longer).
__________________
For the fun of it...Keith
kcowan is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-22-2006, 03:18 PM   #15
Thinks s/he gets paid by the post
FIRE'd@51's Avatar
 
Join Date: Aug 2006
Posts: 2,315
Re: Poll on initial withdrawal rates

I have somewhat different take on the results.

How do you know people aren't striving for a better FIRECALC success rate? A 75/25 mix "only" gives a 94.3% success rate at a 4% SWR. Many people might feel that a 6% failure rate is too high. You only get to do this once, after all. According to FIRECALC, dropping the SWR to 3.59% gives a 100% success rate. I think, especially at the outset, there might be a tendency to be more conservative.
__________________
I'd rather be governed by the first one hundred names in the telephone book than the Harvard faculty - William F. Buckley
FIRE'd@51 is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-22-2006, 03:44 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
mickeyd's Avatar
 
Join Date: Apr 2004
Location: South Texas~29N/98W
Posts: 5,880
Re: Poll on initial withdrawal rates

Like most folks here and elsewhere, I have made all of my calculations based on a SWR of 4% plus inflation. If I had to start today on a full 4%, I don't know what I would do with all of the money.

I will probably start with 2% SWR and feel free to bump it up any ole time I feel like it!
__________________
Part-Owner of Texas

Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx

In dire need of: faster horses, younger woman, older whiskey, more money.
mickeyd is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-22-2006, 04:15 PM   #17
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
Re: Poll on initial withdrawal rates

Quote:
Originally Posted by mickeyd
Like most folks here and elsewhere, I have made all of my calculations based on a SWR of 4% plus inflation. If I had to start today on a full 4%, I don't know what I would do with all of the money.

I will probably start with 2% SWR and feel free to bump it up any ole time I feel like it!
Oh no Mickeyd, you retired too late!
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-22-2006, 04:20 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Re: Poll on initial withdrawal rates

Quote:
Originally Posted by Martha
Oh no Mickeyd, you retired too late!
Hee, hee.....first thing I thought of Martha! But who knows how things will work out for any of us? Mickeyd may develop some expensive tastes or live to be 110 or both and will be all set.......!
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-22-2006, 04:30 PM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
mickeyd's Avatar
 
Join Date: Apr 2004
Location: South Texas~29N/98W
Posts: 5,880
Re: Poll on initial withdrawal rates

Quote:
Mickeyd may develop some expensive tastes or live to be 110 or both and will be all set.......!
...that is indeed part of my master plan. Feel free to use it.
__________________
Part-Owner of Texas

Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx

In dire need of: faster horses, younger woman, older whiskey, more money.
mickeyd is offline   Reply With Quote
Re: Poll on initial withdrawal rates
Old 10-22-2006, 05:21 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Re: Poll on initial withdrawal rates

Quote:
Originally Posted by mickeyd
...that is indeed part of my master plan. Feel free to use it.
I just hope I get the chance!!
__________________

__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Reply


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
Safe withdrawal rates....up to 6.2% tkp FIRE and Money 15 03-07-2007 07:27 PM
Withdrawal Rates in Paul Merrimans Book Hydroman FIRE and Money 17 05-10-2006 05:14 PM
Withdrawal rates - theory vs practice Roger_R FIRE and Money 56 01-17-2005 07:45 AM
What about this for higher withdrawal rates? Roger_R FIRE and Money 11 11-21-2004 01:29 PM
Initial Withdrawal Percent? moguls FIRE and Money 7 12-20-2003 04:59 PM

 

 
All times are GMT -6. The time now is 03:04 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.