What was your SWR?

[David1961]

For those who have ERd, if you calculated your safe withdrawal rate beforehand, what was it when you retired?

 

[unclemick]

6% We thought strange thoughts in 1993 - had a Vanguard workbook and a no.2 pencil.

Times have changed. 2008(15th yr of ER) I took out a tad less than my SEC yield of portfolio - under 4% but close.

1993 - 2008 all over the map but I use 4% as a rough guide post AND the Norwegian widow keeps the key to the back door - and try to keep the SEC yield at 3% or above. In the past even bought some amounts of High Yield Corp and REIT Index to bump up yield - in Taxable yet - most say Dat's a no no but I wanted to boost income stream a tad. Along with such barnburners as Con Ed, AT&T, Chevron, National Fuel Gas, etc.

And the the dang banks - which burned me in 2008/early this year - down 24% in dividends/interest as $ 2008 vs 2007 including my MM cash.

heh heh heh - As a planning guide 4% seems to be 'the number' as a number of studies seem to support this. However if the current unpleasantness continues 'the number' could begin to creep up toward my 1993 6% if valuations stay down for a long period. As an old school cat - I watch SEC yield as well.

 

[Rambler]

I have not ERd yet, but with what I have set aside right now, and after buying our toy (we want an RV for when we FIRE), and given the budget we have created (realistic, generous - but not overly), we would be at about a 3.7% WR. I'm 47, so I am not comfortable with that. I am targeting a starting SWR of between 3.25% and 3.34%. FIREcalc tells me I have a 100% chance of success at 3.34%. Note that I do not have a pension or medical from megacorp when I punch out.

Since I am testing the budget a bit, and would like the budget to have a 10-15% cushion beyond what it has now, plus the 3.25-3.34% WR, (and the shiny new golden handcuffs megacorp is trying to get me to wear), I have to hang in there for a while longer...maybe 3 years, maybe 4.

For those of you who have seen my early posts, you may remember that I expected to be punching sometime this year. Well, my replacement is not ready yet, but is coming along nicely...and the market happened. So, while I could punch out now with a less than 4% starting WR, I am loathe to do so, considering that we may see a bout of high inflation. All of this said, I do not enjoy my job as much as I used to, I just got a new boss (who I will not even meet for a few months), and I do not trust our board of directors. So, who knows what will happen.

I'm counting myself lucky that I have a job, because I also havve 2 kids in college, and there is still uncertainty about the market and the economy.

R

 

[Alan]

I didn't vote but I am interested in the results. I should RE in January and had planned a 2% initial SWR because I will have a non-COLA pension and so the inflation increases each year have to cover pension loss of buying power as well as inflation on the initial withdrawal sum.

However, it now looks like I'll need 3% in the first year.

 

[M Paquette]

Heh. My calculated rate was 3.6%, and my actual rate was a good bit lower. As of last month, though, my actual rate was up to 3.6%. :-(

 

[W2R]

I plan to ER in November (so I didn't vote). I am not yet certain of exactly what my SWR will be, except that it will not be more then 4%. I am still thinking about it. My best guess right now would be an SWR of 3%.

 

[kumquat]

When I ER'd, my 'SWR' was about 2.6%. Since then I've realized that no one has a SWR, they have a WR. My WR is above 3% now and I hope it is S.

 

[Meadbh]

I am not retired. Before the crash I was making plans for 2012-2013 based on an SWR of 2%. I do not have a pension and I may want to upgrade my lifestyle, so I would not feel comfortable with being on the edge. When all the information is in for the end of the fiscal year, I will do the math again. But who can tell, when we may be facing hyperinflation, deflation, L shaped recessions, and Armageddon?

 

[Gotadimple]

When I was planning for this year, I expected a WR of 5% -- mostly because it will be several years before I can claim social security. However, with refinancing the mortgage it looks like 4% for this year.

I expect my WR to be more than 4% until I claim social security, but as Uncle Mick says, keeping the SEC yield above 3% is helpful.

-- Rita

 

[W2R]

But who can tell, when we may be facing hyperinflation, deflation, L shaped recessions, and Armageddon?

Retiring is pretty scary these days! Reminds me of my first high dive back in 1957. The pool looked like it was a million miles below me. I was absolutely terrified but took a leap of faith (literally) and made the dive anyway.

I hear the water's fine, though.

 

[Rambler]

Retiring is pretty scary these days! Reminds me of my first high dive back in 1957. The pool looked like it was a million miles below me. I was absolutely terrified but took a leap of faith (literally) and made the dive anyway.

I hear the water's fine, though.

I'm a wuss and could never dive off the high-dive...will a cannon-ball do as well?

R

 

[Moemg]

Mine is between 3 % and 3.5% . I actually write down my 4% amount on Jan.1st but I've yet to use the full amount and believe me I try .

 

[MichaelB]

I didn't even know what a SWR was when I FIRE'd. Not including college expenses it was easily in the 5-6% range.

Now, in my 10th year, it is 4%. We are fortunate because our high spending early on, combined with repeated ugly capital markets, could have brought us to financial ruin. As is, we live well and I feel 4% is risky but sustainable.

If I was working today thinking about doing this, I would target 3%.

 

[NW-Bound]

I did not vote, as I still have some part-time income and have not drawn on my portfolio for more than a few months last year. But all this talk about SWR has taught me to be really really careful if and when my work dries up.

Our expenses over the last 5 years have been varying 250%. The most recent years have been high due to kids in college and us goofing off on European trips 2 or 3 times a year, on top of domestic trips. Life was good during the market bull run.

At the current portfolio value, our cheapskate year expense would mean 3% withdrawal, while our highest yearly expense would mean 7.5%, and we would end up in a poor house fairly quick.r

 

[NW-Bound]

I found my old post showing actual expenses. Whoa! It's a lot worse than I remembered. How much of it could I blame on the kids' college expenses? Until they become really independent, seems like my part-time work is not really optional or discretionary after all.

...
Anyway, here are our actual past expenses.
...

 

[cardude]

Mine WR was 3.32% last month, but when I get my house loan reworked to a longer term and a lower rate it will drop to 3%. I just retired last month, so I hope I'm including all my expenses. I'm doing a self-escrow for taxes, insurance and vacation expenses so I hope I estimated those correctly.

I wanted to be under 3% since I am only 44 and have a wife and 2 boys (9 and 11), so I'm a little worried but still excited we actually doing it.

 

[Rustic23]

Mine was between 4 and 5%. However it should go down in the future, 3 years, when we start drawing SS.

 

[CuppaJoe]

I started at 4%. This will be the first full year of retirement and at the rate I'm going, it may come in at around 3.5%. At the moment I don't need to buy much of anything beyond the basics, I've been selling off some of my unused stuff (dial-up modem cleared $35.00!), got tax refunds that will cover about a month's expenses, have had time to find less expensive food, eat out less often, and found less expensive entertainment.

 

[SecondCor521]

I'm targeting 4.000%.

A few years ago I sort of thought "mechanically" -- that I would retire the day my SWR hit 4.000%. Lately I've more just wanted to reach FI and am interested in roughly when that is likely to occur so I can make informed decisions now.

As of today it looks like I will hit a 4% WR at age 46.55 around Christmas 2015, and my kids will be 21, 16, and 14 then. A few years ago I was pretty burned out in my job but at the moment I think that timeframe is pretty doable.

I just want to reach FI so I can RE if I want to. At this point I don't mind work too much; what I mind is *having* to work and having bills that I am not 100% sure I can cover.

2Cor521

 

[shotgunner]

Serious question, how should one calculate this? I just finished my first year of Semi-Retirement. When calculating SWR do I use the amount of my portfolio at the start of my first year-Semi FIRE or the amount at the end of the year? Or do I average the SWR by the amount of draw against principle for each month of the year?

 

[audreyh1]

Start of the first year for the year. In the classic scenario, the SWR is computed only once at the start and then inflation adjusted each year following. That's the scenario used by all the studies. It's never recalculated based on some later value of the portfolio.

Audrey

 

[REWahoo]

What Audrey said.

 

[CuppaJoe]

What Audrey said.

I think that way too. The question becomes what to do about extra money or amounts not spent. I'm keeping a record and will use them for emergencies or credit/carry over into the next year so that the idea of 4% plus inflation continues. If I don't need something like expensive dental work or a budget-busting vacation this year, about .5% may be left on the books.

 

[shotgunner]

OK thanks, your explanations are what I thought. What bothers me is I started my withdrawal phase in 4/08. Using 4% of my portfolio value at that time as a guideline is nice, however had I started my withdrawal phase in 4/09 and use 4% I would be withdrawing less money annually due to a 18% drop in portfolio. Am I fooling myself by going forward and using the 4% number plus inflation from last years portfolio value for each coming year?

 

[yakers]

When I ER'd, my 'SWR' was about 2.6%. Since then I've realized that no one has a SWR, they have a WR. My WR is above 3% now and I hope it is S.

X2

I retired in March 08 so I do not have a calculation for 08 but my total portfolio is down 18.8% from Jan 1 08 to Jan 1 09 but that included funds added to accounts in Jan & Feb of 08. For 09 the WR is 3%, most expenses are covered by our pensions. This year we are drawing down cash from a stock sale last year. Next year we began drawing down our IRAs. Hope is it S.