Quick survey

[papadad111]

For those that are fired early, say in your 40's or early 50's... before access to SS or tax deferred investments, do you base your withdrawal rate on only the investible assets that you can access now or on total investible assets? ( and am I correct to assume in both cases that your primary residence is excluded) ?

Just curious ... Polling..

 

[Mo Money]

I am basing my withdrawal rate on total investible assets and do not count my primary residence.

 

[Amethyst]

We don't qualify for SS, so don't plan for it. In addition, although I am under 59.5, I believe I could withdraw from my Thrift Savings and deferred annuities without penalty, if I wanted to.

For 2014 (first year I was retired), rather than use a withdrawal rate, we took dividends/capital gains in cash on investable assets.

We do not count our home equity, as to "withdraw" any of it would constitute debt.

Amethyst

 

[Alan]

Not sure if 55 meets your definition of ER but I'm now into my 6th year and I always calculate my withdrawal % on my entire portfolio, even though for the first 4.5 years I was only allowed to withdraw penalty-free from after tax investments.

ETA
No primary residence included.

 

[ziggy29]

I consider my cash (and cash equivalents such as my I-bonds) above and beyond my emergency fund to be part of my portfolio. If I have it, it's because I don't feel comfortable investing all of it based on current economic and market conditions. And though I'm not 59.5 yet, I keep 72T in the back of my mind.

My emergency fund is not a part of my portfolio. My excess cash is. And all of my retirement funds are.

 

[REWahoo]

I based our withdrawals on what FIRECalc said was "safe", regardless of whether our assets could be accessed now or later.

 

[SomedaySoon]

Not sure if 55 meets your definition of ER but I'm now into my 6̶t̶h̶ 3rd year and I always calculate my withdrawal % on my entire portfolio, even though for the first 4.5 years I w̶a̶s̶ am only allowed to withdraw penalty-free from after tax investments.

ETA
No primary residence included. __________________

 

[papadad111]

Thanks for feedback. I was really targeting those in their 40's....

For me it's a mental exercise. Tax deferred accounts at 59.5 and SS somewhere between 63 and 70 are both far enough out in the future that I was unsure of whether or not to include in initial asset base to calculate WD rate ...

I guess I am just being too conservative.

 

[papadad111]

55 in my opinion is on the edge between early retirement and normal retirement. Still early but it's close enough to being able to access tax deferred accounts and SS in my opinion (versus a decade + for those in their 40's) that those retirees here probably would consider both because the tax deferred stuff is on close reach - Others have mentioned 72t as an option which is a reasonable means of tapping tax deferred accounts.

So. Sounds like consensus is to include all investible assets regardless of taxable or tax deferred even when Retiring in 40's..

Don't include primary residence in WD rate calls is also clearly the consensus.

Thanks.

 

[MichaelB]

Total portfolio here as well. Not sure why you would exclude a tax deferred account, it's still part of the portfolio.

 

[rbmrtn]

I left megacorp @ 48. When planning I used total investible assets ( excluding house ).

I had about 60% in taxable accounts and live on the interest/dividends, I still have "reinforcements" coming down the road in a small pension then SS.

 

[pb4uski]

For those that are fired early, say in your 40's or early 50's... before access to SS or tax deferred investments, do you base your withdrawal rate on only the investible assets that you can access now or on total investible assets? ( and am I correct to assume in both cases that your primary residence is excluded) ?

Just curious ... Polling..

I was in my mid 50s but my withdrawals are based on what we needed to live given our lifestyle in retirement.

Whether our withdrawals were prudent or "safe" was based the relationship of our withdrawals to our total retirement assets and also factored in pensions and SS that came online later in retirement.

However, if you retire before 59 1/2 (whether at 40 or at 55) you need to add in another layer of analysis as to whether you have sufficient sources of penalty free accounts (such as taxable accounts or Roth contributions) that you can use to live on between ER and when you can access those tax-deferred funds (usually at 50 1/2 unless you do a 72t) or if you are willing to pay the penalty (I wouldn't).

I think most forum members do not include their primary residence unless they plan to sell or sell/downsize and effectively monetize some of that value. The benefit of owning you residence is reflected in your expenses and not having a rent payment.

 

[travelover]

I base my safe withdrawal rate on current total portfolio plus any possible inheritances or anticipated lottery winnings.

 

[fritz]

Retired at 58/56 (5+ years now). Decision to retire was based on total investments going forward (house excluded-no mortgage), and availability of taxable funds to cover time frame between RE and start of SS @ 62 (no pensions). Had set aside separate savings for years B/4 SS, but also accessed taxable accounts for dividend income.

 

[VaCollector]

I base my safe withdrawal rate on current total portfolio plus any possible inheritances or anticipated lottery winnings.

 

[Choices]

I base my safe withdrawal rate on current total portfolio plus any possible inheritances or anticipated lottery winnings.

Verrrry prudent! And you are somebody I should use as a mentor?
Just this week I heard a woman say she couldn't figure out how some people knew what numbers to pick in order to win the lottery.

 

[Animorph]

Not only total portfolio, but total lifetime. I'm perfectly happy to withdraw from the portfolio at higher than long-term, portfolio-only "safe" rates for the 15 years or so that it will take to bring extra SS and pension income online. After age 70, portfolio withdrawals will be much lower. I can still get good FIRECalc results, even though I'm taking >4% initially.


If you're starting really early, like 40, I would want to stay much closer to the long-term portfolio-only safe withdrawal rates. I was early 50's when I jumped.

 

[travelover]

............
Just this week I heard a woman say she couldn't figure out how some people knew what numbers to pick in order to win the lottery.

The day after the drawing it is usually fairly obvious.

 

[marko]

Not sure if 55 meets your definition of ER but I'm now into my 6th year and I always calculate my withdrawal % on my entire portfolio, even though for the first 4.5 years I was only allowed to withdraw penalty-free from after tax investments.

Right. My approach was to take a "make up for it later" mindset by juggling withdrawal buckets as more resources became available over time.

 

[marko]

I base my safe withdrawal rate on current total portfolio plus any possible inheritances or anticipated lottery winnings.

I'm suspect this was tongue in cheek, but, while I don't factor it into my planning, I do have a substantial inheritance coming my way at some (sad) point.

The assets are already in my name and I manage them -but the funds are only available to someone else- and I just have to wait for an ummm 'unfortunate trigger'...I'm beginning to wonder if I should start to consider it.

Serious question.

 

[GravitySucks]

I base my safe withdrawal rate on current total portfolio plus any possible inheritances or anticipated lottery winnings.

Sure hope you're not my cousin because I'm expecting to get uncles coin collection too.

I base my WDR on all assets minus the house and expecting SS money to lower the rate in my later years.


Sent from my iPhone using Early Retirement Forum

 

[scrabbler1]

However, if you retire before 59 1/2 (whether at 40 or at 55) you need to add in another layer of analysis as to whether you have sufficient sources of penalty free accounts (such as taxable accounts or Roth contributions) that you can use to live on between ER and when you can access those tax-deferred funds (usually at 50 1/2 unless you do a 72t) or if you are willing to pay the penalty (I wouldn't).

This is similar to what I did when I was putting together my ER plan in 2007-2008 before I ERed in 2008 at age 45 (excluding the 72t thing which I was unaware of at the time).

I split my overall ER plan into two parts - one part for age 45-~60 and the other part for after turning ~60. This second part is what I often refer to as my "reinforcements" which are SS, my frozen company pension, and unfettered access to my rollover IRA. But the first part is far more important because I am accessing only a subset, albeit a large subset, of my overall portfolio, making sure it creates a monthly cash flow more than enough to cover my expenses.

I don't include the value of my home residence which is a small, co-op apartment.

 

[pb4uski]

....However, if you retire before 59 1/2 (whether at 40 or at 55) you need to add in another layer of analysis as to whether you have sufficient sources of penalty free accounts (such as taxable accounts or Roth contributions) that you can use to live on between ER and when you can access those tax-deferred funds (usually at 50 1/2 unless you do a 72t) or if you are willing to pay the penalty (I wouldn't)....

Typo... the 50 1/2 should have been 59 1/2.

 

[523HRR]

Retired in 2012 at 49. Like others, withdrawal rate is based on total investment portfolio, excluding the house. Tax-advantaged accounts represent almost 60%, so we will rely on our taxable accounts and some deferred compensation payouts for the next several years until pensions kick in at age 60.

 

[Ozstache]

Retired at 45. I count all of my assets together for retirement calcs, excluding our home. I have made sure there is enough on the pre retirement fund access (age 60 in Oz) side of the fence to not run out, including a 5 year buffer in the likely case the money-starved Oz government will move that goal post to the right in the future.