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SWR / % of current balance hybrid
Old 08-17-2004, 05:57 AM   #1
 
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SWR / % of current balance hybrid

Before I found this forum and FireCalc I used to think that the ideal SW system would be to withdraw a constant percentage of the current port balance. I now recognize that although this method would guarantee that I would never run out of money, there could be no assurance that the remaining balance would not shrink to an insignificantly small amount.
However, perhaps there is a place for a hybrid approach to SWR, if a program could be developed that would calculate the fixed percentage of the balance that could be be withdrawn each year, after providing that this withdrawal would never be less than a defined bare minimum amount.
In this way I could "enjoy the good times" without feeling too guilty that I might be squandering tomorrow's milk money.
John Lee
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Re: SWR / % of current balance hybrid
Old 08-17-2004, 06:13 AM   #2
 
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Re: SWR / % of current balance hybrid

John,

You can do something like this in FIRECalc.

Just set up another withdrawal amount for (say - your first 15 years of retirment for X Amount). This will give you more money in your first few years and then rachet it down when you prefer to sit in the rocker.
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Re: SWR / % of current balance hybrid
Old 08-17-2004, 06:50 AM   #3
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Re: SWR / % of current balance hybrid


You can try Gummy's sensible withdrawal method
http://www.gummy-stuff.org/sensible_withdrawals.htm

He investigates withdrawing a fixed percentage, less than
the 4% SWR, and adding to it some large percentage of the 'excess' each year. This way you get more money earlier, assuming the market does OK. He's got an Excel model of
his plan that you can download and play with.
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Re: SWR / % of current balance hybrid
Old 08-17-2004, 06:56 AM   #4
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Re: SWR / % of current balance hybrid

Be sure to check out this thread on page 3 of this forum (Safe Withdrawal Rates).

SWR should not be constant over a Retirement Life
http://early-retirement.org/cgi-bin/...049785;start=0

Have fun.

John R.
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Re: SWR / % of current balance hybrid
Old 08-17-2004, 07:16 AM   #5
 
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Re: SWR / % of current balance hybrid

John,

I just reviewed that thread and your suggestion on making the expense contain your actual withdrawal percentage.

This is great stuff and it turns out that it will do exactly what the original poster wanted. That is: Putting in a fixed amount in the withdrawal area and then adding a percentage to the expense area will do the Hybrid withdrawl rate.

Thanks again for this tip

Now if I could only remember it
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Re: SWR / % of current balance hybrid
Old 08-17-2004, 08:30 AM   #6
 
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Re: SWR / % of current balance hybrid

John,
Thanks - I had no idea that FireCalc was so versatile!
John Lee
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Re: SWR / % of current balance hybrid
Old 08-17-2004, 11:09 AM   #7
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Re: SWR / % of current balance hybrid

Now that is excellent and useful information. I'm sure I read JWR's post on the day he did it, but I wasn't focused on that issue at the time and forgot about it. It's like seeing it for the first time today. I need a way to sort/tag especially useful posts (or portions of posts) for future reference. I have copied and pasted many such posts into text files for future reference and I have them in a zip file on my desktop. Problem is there are so many posts in there that it's becoming unmanageable.
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Bud Hebeler uses a similar approach...
Old 08-17-2004, 11:24 AM   #8
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Bud Hebeler uses a similar approach...

... in the back of his "J.K. Lasser's Your Winning Retirement Plan" book.

Try a library copy and see if it's worth just using a spreadsheet. It can even be done with John Galt's pencil, envelope, & calculator.
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