Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 11-30-2007, 10:48 PM   #21
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 2,401
285.21%.

But I'm not retired yet ;-P

2Cor521
__________________

__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 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!

Old 12-01-2007, 07:22 AM   #22
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,851
I'm not retired yet, but I am planning for my withdrawal rate to depend on the market.

During prolonged market "down" periods of ten years or less, I won't have to withdraw at all since I will depend on cash reserves and LBYM.

When the market recovers and is "up", I will replenish the cash reserves and then probably withdraw up to around 4% or so and cut back on the LBYM'ing! At no time would I withdraw enough for the inflation-adjusted principal to diminish.

That is the plan, anyway!! In 707 days I can ER, and at that time 'll find out how well it works for me.
__________________

__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is online now   Reply With Quote
Old 12-01-2007, 10:46 AM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Moemg's Avatar
 
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 10,032
Quote:
Originally Posted by audreyh1 View Post
Is it really "safe" in your portfolio? It might be better to put the excess in a cash hoard for when you are ready to spend it or have a sudden unexpected need for ready cash.

Audrey
Thanks , I'm already looking at trips for next year !
__________________
Moemg is offline   Reply With Quote
Old 12-01-2007, 10:49 AM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Ours is a not particularly scientific model.

Dividends, interest, capital gains and other income goes into the checking account. When the checking account drops below $20k, its time to slow down or stop major and unnecessary expenditures until it pops back up. When it hits $40k+ I start looking at doing major renovation projects/purchases or reinvesting the money.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 12-01-2007, 11:11 AM   #25
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,851
Quote:
Originally Posted by cute fuzzy bunny View Post
Ours is a not particularly scientific model.

Dividends, interest, capital gains and other income goes into the checking account. When the checking account drops below $20k, its time to slow down or stop major and unnecessary expenditures until it pops back up. When it hits $40k+ I start looking at doing major renovation projects/purchases or reinvesting the money.
Hey, I like that method! It sounds very practical. (filing for future reference)
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is online now   Reply With Quote
Only 2.4% overall
Old 12-01-2007, 11:40 AM   #26
Recycles dryer sheets
aenlighten's Avatar
 
Join Date: Apr 2007
Posts: 275
Only 2.4% overall

but much much more from my taxable account. I hope to avoid a 72(t) but if I need to, I will. My income will jump once I tap my deferred accounts, so I am not income leveling, but it simplifies things taxwise.
__________________
aenlighten is offline   Reply With Quote
Old 12-01-2007, 11:42 AM   #27
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 11,197
We're about $15K under what we're supposed to spend for this year. I'm committed to the 4% SWR so it's time to put my money where my mouth is.
__________________
Al
TromboneAl is offline   Reply With Quote
Old 12-01-2007, 12:12 PM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 5,176
Congrats Moemg for making it on 2.5%. As long as you weren't depriving yourself, I don't see any problem at all with staying under 4%. As you know, some years you will be at 4% or even higher if you have large capital expenses. Plus, you can always take the trip of a life time or a one time splurge on something special if you're consistently staying under 4%. To me, it's more of a treat to do something special once in a great while than it would be to force myself to withdraw 4% every year and get used to spending it on things of less value to me.

If last year's dividends and end of the year mutual fund distributions were typical, I should be able to live on that for my normal expenses, kind of like CFB's plan. I know some people here like using CD ladders, but personally I like this approach better.
__________________
RunningBum is offline   Reply With Quote
Old 12-01-2007, 12:17 PM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 11,197
Quote:
As long as you weren't depriving yourself, I don't see any problem at all with staying under 4%.
But there could be a problem: getting to an older age, having much more money than you could ever spend, and regretting that you didn't do more stuff back when you felt more like doing it.
__________________
Al
TromboneAl is offline   Reply With Quote
Old 12-01-2007, 12:24 PM   #30
Thinks s/he gets paid by the post
Bikerdude's Avatar
 
Join Date: Jul 2006
Posts: 1,901
Quote:
Originally Posted by cute fuzzy bunny View Post
Ours is a not particularly scientific model.

Dividends, interest, capital gains and other income goes into the checking account. When the checking account drops below $20k, its time to slow down or stop major and unnecessary expenditures until it pops back up. When it hits $40k+ I start looking at doing major renovation projects/purchases or reinvesting the money.
CFB. If you spend your capital gains how do you grow your portfolio?
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
Bikerdude is offline   Reply With Quote
Old 12-01-2007, 01:09 PM   #31
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Moemg's Avatar
 
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 10,032
Quote:
Originally Posted by RunningBum View Post
Congrats Moemg for making it on 2.5%. As long as you weren't depriving yourself,.

Thanks , I'm definetely not into deprivation .
__________________
Moemg is offline   Reply With Quote
Old 12-01-2007, 03:15 PM   #32
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,459
Quote:
Originally Posted by Bikerdude View Post
CFB. If you spend your capital gains how do you grow your portfolio?
I think he just means he spends his capital gains distributions. He still has unrealized capital gains accumulating in his portfolio (one hopes).

Audrey
__________________
audreyh1 is online now   Reply With Quote
Old 12-01-2007, 03:15 PM   #33
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 5,176
Quote:
Originally Posted by Bikerdude View Post
CFB. If you spend your capital gains how do you grow your portfolio?
If you don't mind me answering this, I'll take a shot.

If your mutual fund holds 1000 stocks, and sells 200 of them (partial or full sale) during a year, you only have capital gains (or losses) on those 200 sales. I think a mutual fund must distribute at least 90% of those capital gains, as well as dividends.

The other 800 stocks can increase (or decrease) in value, but if they haven't sold them there is no cap gain and no cap gains distribution. So the mutual fund can increase in value (growing your portfolio) through the stocks it continues to hold AND also provide a flow of income through distributions on the stocks it sells and dividends the stocks pay.

It's all variable based on how much trading there is in the fund, and how profitable the trading was. Dividend distribution tends to be more steady but there's no guarantee the fund manager will stay with some of those dividend producing stocks. And a lot depends on the type of fund. Actively managed funds tend to have more turnover and generate larger distributions than index funds.

That's why I don't think I'll plan on those alone as my cash flow and won't necessarily adjust my spending based on having larger or smaller distributions.

But it is a way of getting a cash flow that seems to be more or less what I think I will need. Some years I may need to liquidate more assets, others I may need to reinvest some of the distributions based on how much I get, and I may need to rebalance assets, but I think it will take some of the decision making on which assets to sell out of my hands. Or rather, when I make those decisions, most of the time it will be because of rebalancing or doing it on the merits of the investments, rather than having to make a decision to sell because I need the cash, either immediately or to fund a CD ladder for the future.

Put another way, reinvesting distributions is literally buying more shares of the mutual fund. It's a good forced savings while you are accumulating a nest egg. But when you are needing income from your investments, it doesn't make sense to me to automatically buy more of the mutual fund and have to sell something else. I'll take the money from the distibutions and then decide whether I want to use the money as income, invest in something else, or invest it back into the same fund.

As far as rebalancing goes, generally in a good year a stock fund will both have more distributions and also grow in value, so it makes sense take the distributions away from it. And in a bad year it generally has a smaller distribution and may go down in value, so it makes sense to get income from another source that had been doing better. Lots of exceptions there, of course, but I think the strategy is consistent with trying to keep a portfolio balanced without have to exchange assets too much.

There's probably a flaw in there that distributions and dividends from bond and money funds may be higher and throw off the balance. I still need to study that and see if I need to adjust my strategy.
__________________
RunningBum is offline   Reply With Quote
Old 12-01-2007, 04:21 PM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Moemg's Avatar
 
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 10,032
Quote:
Originally Posted by TromboneAl View Post
We're about $15K under what we're supposed to spend for this year. I'm committed to the 4% SWR so it's time to put my money where my mouth is.
So Al what are you going to spend your money on ?
__________________
Moemg is offline   Reply With Quote
Old 12-01-2007, 04:27 PM   #35
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Quote:
Originally Posted by TromboneAl View Post
But there could be a problem: getting to an older age, having much more money than you could ever spend, and regretting that you didn't do more stuff back when you felt more like doing it.
Thats the thing. Except for rare occasions when our cash flow drops severely negative (let see...like buying a new house and pumping a bunch of money into it?) we do exactly what we want without artificial limits that force us to not do something we want or feel like we didnt spend enough. Although we usually underspend by about 20-30k per year on what the funds throw off, but I dont mind reinvesting that.

Quote:
Originally Posted by Bikerdude View Post
CFB. If you spend your capital gains how do you grow your portfolio?
Good answer by RunningBum, but basically my two bucket approach lets me take all the "throwoff" paid out by the funds in the first bucket (hey, i'm paying taxes on it anyhow) and the small chunk of equities in that first bucket helps give me a bit of growth and capital appreciation. I'm not cashing out internal appreciation, just the capital gains paid out by the funds.

I only need that bucket to get me past another 15-20 years, at which time I'm okay with it being depleted...although it probably wont be. My second bucket is mostly equities of the high volatility/return type, if and when the first bucket gets skimpy we'll choose a good point to shift some funds from the second bucket to the first.

My wife still works a few days a week, so that helps give us a small but reliable cash flow through the checking account. Whatever wimpy amount we get from social security and a few pensions will replace that cash flow when we're 62.

My worst case scenario has us running out of money between 85-90. If we need more money at that point and we're still kicking, we'll either sell the house and rent or reverse mortgage the property.

And there goes those dang illiquid real estate thingies throwing off cash again!

My likely scenario has my son inheriting $1.5-2.5M in todays dollars when he's in his 40's.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 12-01-2007, 05:05 PM   #36
Full time employment: Posting here.
 
Join Date: Sep 2004
Posts: 607
Quote:
Originally Posted by TromboneAl View Post
We're about $15K under what we're supposed to spend for this year. I'm committed to the 4% SWR so it's time to put my money where my mouth is.
A new dishwasher perhaps?
__________________
WanderALot is offline   Reply With Quote
Old 12-01-2007, 05:21 PM   #37
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
That'd be one heck of a dishwasher.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 12-01-2007, 05:40 PM   #38
Full time employment: Posting here.
 
Join Date: Feb 2004
Location: Okanagan Valley
Posts: 805
Quote:
Originally Posted by cute fuzzy bunny View Post
That'd be one heck of a dishwasher.
Only if it is of the 2 legged variety......
__________________
AltaRed is offline   Reply With Quote
Old 12-01-2007, 10:18 PM   #39
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 5,176
Quote:
Originally Posted by AltaRed View Post
Only if it is of the 2 legged variety......
I hear Swedish dishwashers are very good!
__________________
RunningBum is offline   Reply With Quote
Old 12-02-2007, 11:58 AM   #40
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 11,197
Quote:
Quote:
We're about $15K under what we're supposed to spend for this year. I'm committed to the 4% SWR so it's time to put my money where my mouth is.
So Al what are you going to spend your money on?
We went out to a really nice restaurant last night, but we split the meal so we only blew through $39.

I'm about to schedule our Hawaii trip for next March. That trip cost $3,000 last year, and we'll try to get that up to $4,000 or more with lots of eating out at nice restaurants, maybe a helicopter trip? Maybe we should fly first class!

Maybe a super quiet, super efficient fridge.

I can't justify a quieter dishwasher, since we just run it when noise isn't important.

Run the space heater in the bathroom more.
__________________

__________________
Al
TromboneAl 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
Explain the 4% withdrawal rate virginia FIRE and Money 96 05-30-2007 02:08 PM
Another safe withdrawal rate question arandomwalk07 FIRE and Money 52 04-04-2007 10:46 AM
Greater than 4% Withdrawal Rate ScaredtoQuit FIRE and Money 100 01-20-2007 05:21 PM
Poll on I don't know my withdrawal rate Martha FIRE and Money 25 10-24-2006 03:22 PM
New Withdrawal Rate Study cyclone6 FIRE and Money 35 06-03-2006 10:02 PM

 

 
All times are GMT -6. The time now is 11:22 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.