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SWR, Don't Have One
Old 02-22-2011, 07:03 PM   #1
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SWR, Don't Have One

Short story: I don't have one.

Long story: I just eyeball the asset spread sheet every month and if it looks OK then we get on with retired life. DW thinks I check it too often. I retired in March 08 and DW two years earlier. We have pensions that cover about 80% of our spending and about 100% of our critical living costs. We own our house mortgage free. We have funds in IRAs, taxable and cash in the credit union. Income and expenses are too variable. Younger son has 1 1/2 years of college to go, that should free up some fun funds. MIL is elderly, don't know if DW will inherit a nice chunk of change or if we will be writing checks to cover MIL someday. DW is 63 and not yet applied for SS, would not get much due to her small ($25K) teacher pension. Some years she works a little, adds all of $2K which gets dumped in the Roth. Last year we had two big trips (Bali & rafting the Colorado through the Grand Canyon!), this year nothing so exciting, family trip to Chicago. Occasional bursts of home improvement activities. Life is what happens while you are busy calculating the SWR.
The portfolio keeps growing, well, actually it just went past its 2007 high, but we think that is pretty nice. We take out anywhere from 3% to 5%, would take out for needs/activities rather than to a specific budget. Nothing like a fixed budget. If a car went out we might sell some taxable stocks, withdraw from IRAs or borrow from the home line of credit just to keep cash flow flowing. If its important we find the money.
All the attention to calculating the SWR to many decimal places is just crazy making. Life is what happens while you are busy calculating the SWR.
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Old 02-22-2011, 07:09 PM   #2
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...We have pensions that cover about 80% of our spending and about 100% of our critical living costs.

... Life is what happens while you are busy calculating the SWR.
Well, if 80% of my expenses comes from pensions, I would throw SWR to the wind too.
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Old 02-22-2011, 07:33 PM   #3
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It sounds like you are in good shape with your finances and probably don't need to worry much about your SWR.

I also have a pension and it currently covers my living expenses. SWR is not something I've given much thought about yet since I won't draw from my TSP and Roth IRA until required (TSP) or the money is needed. It's a nice position to be in and I am thankful for my COLA'd pension.
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Old 02-22-2011, 08:14 PM   #4
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Write it up and submit to the Wall Street Journal. They need some positive retirement stories.
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Old 02-22-2011, 08:22 PM   #5
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Why I admire you for being so carefree that would make me crazy . I like having a budget so I know the limits I can spend .
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Old 02-22-2011, 08:48 PM   #6
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Well, if 80% of my expenses comes from pensions, I would throw SWR to the wind too.
No doubt. Why even worry about a SWR?
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Old 02-22-2011, 09:39 PM   #7
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Well, if 80% of my expenses comes from pensions, I would throw SWR to the wind too.
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No doubt. Why even worry about a SWR?
Really. I may as well start a thread saying I don't worry about not having any Hurricane coverage.

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Old 02-22-2011, 10:34 PM   #8
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Really. I may as well start a thread saying I don't worry about not having any Hurricane coverage.

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Well here you go, how about your local tornados to worry about?

Midwest hit hard by extreme winds, flash floods - CNN
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Old 02-23-2011, 03:20 AM   #9
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Agree You don't have to worry much about SWR at this stage. I think it's more useful as a planning tool during the accumulation phase especially for those without a significant pension. Ie How will you know when you have enough to support the desired lifestyle?
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Old 02-23-2011, 06:11 AM   #10
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I don't have one either. Within six months of quitting my civil service job, we used virtually all of our non retirement funds in paying down on the purchase of a vacation rental property and making needed repairs. That left us with no cash cushion and a busted budget. We got by for about six months and then rental income started flowing in. Our pensions cover our living expenses and the cost of both of our homes, but adding the vacation rental almost broke us at the time. Now, the vacation rental will pay for itself and cover the mortgage and taxes. We were fortunate to have a retired couple rent our home in Atlanta while they help their daughter with her medical condition, so no we are rebuilding our savings and.
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Old 02-23-2011, 06:30 AM   #11
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I have a WR, but I'm not sure if it is S...
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Old 02-23-2011, 10:43 AM   #12
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I have a WR, but I'm not sure if it is S...
I think mine is pretty S. At least, I hope so.

I won't need to rely on my portfolio nearly as much after I claim SS. I just figured out that at my FRA at age 66, the total of my SS plus my tiny pension will provide 81% of my present expenditures (or 100% of a bare bones budget). So, I might be in as sweet a spot as yakers by then.
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Old 02-23-2011, 01:54 PM   #13
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I think mine is pretty S. At least, I hope so.

I won't need to rely on my portfolio nearly as much after I claim SS. I just figured out that at my FRA at age 66, the total of my SS plus my tiny pension will provide 81% of my present expenditures (or 100% of a bare bones budget). So, I might be in as sweet a spot as yakers by then.
if you wait till age 70 to start SS will the total of your SS plus your pension provide 100% (or greater) of your present expenditures?
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Old 02-23-2011, 03:59 PM   #14
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if you wait till age 70 to start SS will the total of your SS plus your pension provide 100% (or greater) of your present expenditures?
I'm not at home right now, but if I remember my numbers correctly then yes, if I wait until 70 that would be true - - but this is based on two assumptions:

(1) Both would provide the expected amount including full inflation adjustment. This is an erroneous assumption, though. My pension has a "diet COLA" plus who knows how they will adjust SS for inflation. Or SS might not provide the expected amount by that time.

(2) I won't experience any lifestyle inflation between now and then. My standard of living could creep upwards if I don't watch it.

So, really I do need my portfolio income including my monthly payments from the TSP. But it is nice to dream and imagine that maybe someday I won't. I like having a number of different income streams backing up one another.
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Old 02-23-2011, 05:30 PM   #15
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Don't have a SWR either. Pensions provide about 50% and, hopefully, both DH and I will have the option of taking social security in about 6 years. Portfolio easily provides the other 50% to bridge us to social security and beyond....we hope. ER is a test of faith.

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Old 02-23-2011, 09:16 PM   #16
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Hopefully, the SWR exploration and decision takes place before ER. After that, it is no different than what you're doing - reviewing the portfolio value at regular intervals.
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Old 02-23-2011, 09:29 PM   #17
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My situation is closer to Yakers, and we spend what we want when we want it, however, we don't want what we can't afford.
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Old 02-23-2011, 09:36 PM   #18
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I have pensions that cover 100% of essentials, but we want to live it up a little while we still have our health, so we are now drawing on our savings and have set a maximum WR of 4% in any given year, although we hope we will only need half of that most years. The pensions are non-COLA so the savings also have to provide inflation coverage.
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Old 02-23-2011, 10:10 PM   #19
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I have a WR, but I'm not sure if it is S...
And here was me thinking that the "S" stood for "speculative".
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Old 02-24-2011, 12:05 AM   #20
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if you wait till age 70 to start SS will the total of your SS plus your pension provide 100% (or greater) of your present expenditures?
This isn't direceted at me, but I'll still answer.

After we paid off the mortgage and got the kids out of the house, we were spending $36k on our "regular, LBYM" lifestyle (with subsidized group health ins).

If we both wait to 70, our combined SS benefits will be $56k. Under current law, none of that would be taxable. The $20k cushion certainly looks like it would cover our Medicare premiums and deductibles.
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