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View Poll Results: What's the highest SWR you're comfortable with?
2% or lower 7 4.32%
2.5% 7 4.32%
3% 31 19.14%
3.5% 34 20.99%
4% 51 31.48%
4.5% 16 9.88%
5% or higher 16 9.88%
Voters: 162. You may not vote on this poll

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Old 02-09-2010, 10:45 AM   #21
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I voted 3% as the highest SWR I would feel comfortable with. That's based on FIRECalc and other sources given our particular situation.
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Old 02-09-2010, 10:45 AM   #22
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For the last 11 months (my only data in my short-term ER) we have averaged just under 3%, and that included some months with the lowest portfolio values we have ever had.

I'm 45 with young kids, so alarm bells start going off when my SWR gets over 3%. Right now with all the rentals full, DW contributing a little bit to the budget from her j*b, and with the portfolio pretty much recovered we are right at a 2% SWR.

If DW quits working, and if all rentals were empty and portfolio dropped back to the depressed leves from earlier this year we would be at about 3.7%.
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Old 02-09-2010, 11:03 AM   #23
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As Nords says, it's complex situation. I voted 5%+, as I have a single income stream at this point with more to come later. ORP tells me I could go as high as 6% early in my retirement until Social Security kicks in.

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Old 02-09-2010, 04:38 PM   #24
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Looking at the responses so far, it looks like elgibility for SS or other income streams is highly relevant to determining the SWR from retirement savings.
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Old 02-09-2010, 04:46 PM   #25
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Originally Posted by traineeinvestor View Post
Looking at the responses so far, it looks like elgibility for SS or other income streams is highly relevant to determining the SWR from retirement savings.
It really isn't. However if you have enough income from sources other than your retirement savings to live on, then you could take a more aggressive withdrawal at the risk of running out of money.

Don't confuse a safe withdrawal rate with (somewhat) unsafe withdrawal rates coupled with other secured income.
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Old 02-09-2010, 04:47 PM   #26
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I didn't respond because it will 11 years before I'm minimally eligibile for SS, and yours truly doesn't have a warm fuzzy about any good correlation between what my current annual SS statements say my benefits will be and reality in 11 years.
My glass is half empty on this one.
The good news is I have 2 income streams and a smaller size portfolio as backup.
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Old 02-09-2010, 04:58 PM   #27
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Well, the question was, "What's the highest SWR you're comfortable with?"

So, I put the value that I will be taking from now until I claim SS at age 66 because I figured (perhaps incorrectly) that was what was being requested.

As soon as I get SS, my SWR will go down.

Maybe I should have put aside the money needed to make up for not having SS yet. Then I could have based my SWR on the remaining nestegg. It would come out about the same.
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Old 02-09-2010, 07:11 PM   #28
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I suppose the highest SWR I would be comfortable with is 4%. However, we (52,55) take 3% along with a non-cola pension and do just fine.

There are three reasons I take 3%...

If something comes up that requires more money, I won't have as much anxiety since I have not been topping out my WR.

If I find myself alone in later years, less money will be coming in from social security and the pension benefit will go down.

...and last but not least...a rotten economy.
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Old 02-09-2010, 07:34 PM   #29
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I think SWR as a % of a portfolio is a flawed concept. What really counts is the income and the flow through income that the portfolio can throw off. And at least some of that must be current income, else you can get erased with a portfolio full of great values in a very bad bear market.

The only way that this is not true is if markets go into a boom that lasts as long as you do. Of course really small rakes will almost always work, no matter what at what valuations the process starts out.

Face it- does it make any sense that you could retire one day with a 4% SWR, and a short while later retire with the very same porfolio, but now valued 160% higher, and also take a 4% SWR? Using a $1mm base, in March 09 you could retire on a "safe" $40,000, but by November that very same portfolio would allow you to safely withdraw $64,000?

It doesn't make any sense to me.

Ha
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Old 02-09-2010, 07:43 PM   #30
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That's why people like Rich, Moemg, and myself take a percentage of the current portfolio. We splurge during good years and hunker down in bad ones.

For it to work, I must make sure that my fixed cost is lower than 4% of the lowest that my stash can be after a severe haircut. So far, that haircut for me was a 35% loss from Oct 07 to March 09. Yes, I survived such haircut due to no major purchases, no fancy vacations. And no major illness.
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Old 02-09-2010, 07:44 PM   #31
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Quote:
Originally Posted by haha View Post
4% SWR, and a short while later retire with the very same porfolio, but now valued 160% higher, and also take a 4% SWR? Using a $1mm base, in March 09 you could retire on a "safe" $40,000, but by November that very same portfolio would allow you to safely withdraw $64,000?

It doesn't make any sense to me.

Ha

How about the opposite ? A lot of us retired in 2007 with a million or so and by the mid 2009 's we were down 33% or more . If we had gone with the original amount and just kept on increasing it every year for inflation how would that turn out ? I would probably be renting out dock space .
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Old 02-09-2010, 07:45 PM   #32
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Ill let you know when I die. But my secret answer Im taking to the grave. Sorry no fun la.
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Old 02-09-2010, 07:51 PM   #33
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If I find myself alone in later years, less money will be coming in from social security and the pension benefit will go down.

...and last but not least...a rotten economy.
If I understand what I read in Ed Slott's book (yes, I read the books), should your DH leave the earth before you do, your SS survivor benefit is the larger of your benefit or your DH's (assuming you both have earnings covered by SS and are eligible for SS benefits, which, from your post, is the case). Don't know anything about the pension, though -- and, sorry, I can't do anything about the economy.

I'm with you. Money that you have today, if you spend it, it is spent. If you don't spend it, it can be spent later (unless it is invested in something that evaporates). 3%
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Old 02-09-2010, 07:51 PM   #34
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After the crash of 08 it's good to remember the "percent of total portfolio" strategy (Clyatt likes 4.3%) has a stop loss at 95% of your previous year's withdrawal.

So if you took out $43K in 08 from a million dollar portfolio and in 09 your portfoliio was only $700k you don't need to drop your distribution to 4.3% of $700k ($30,100). Rather, you get to take 95% of $43K, or $40,850. That's a serious belt-tightener but not a calamity for most. Clyatt back-tested that rule.
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Old 02-09-2010, 07:55 PM   #35
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Yes, any cutback at all helps. But I like big variations in year-to-year spendings. It makes life exciting!

PS. Perhaps I have been conditioned by huge variations of earnings from year to year, with my sporadic free-lance and part-time work. Heh heh heh... Feast or famine. After a period of hunger, your appetite sharpens your taste bud. Heh heh heh...
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Old 02-09-2010, 08:08 PM   #36
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Quote:
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If I understand what I read in Ed Slott's book (yes, I read the books), should your DH leave the earth before you do, your SS survivor benefit is the larger of your benefit or your DH's (assuming you both have earnings covered by SS and are eligible for SS benefits, which, from your post, is the case). Don't know anything about the pension, though -- and, sorry, I can't do anything about the economy.

I'm with you. Money that you have today, if you spend it, it is spent. If you don't spend it, it can be spent later (unless it is invested in something that evaporates). 3%
Yes, I will be able to get his larger benefit. I was talking about the fact that two checks would not be coming in anymore. Heaven only knows what the social security system will be like then. I would receive 75% of his pension if he died. I would have less money coming in, however my expenses would go down if I find myself alone. I should be ok.

Now, c'mon Rustward...can't you do somethin' about the economy?
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Old 02-09-2010, 08:30 PM   #37
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After the huge drop in the market I thought my budget would be pathetic because of the 4% but amazingly I ended up with a surplus of $10,000 even after a few very large expenditures .
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Old 02-09-2010, 08:35 PM   #38
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After the huge drop in the market I thought my budget would be pathetic because of the 4% but amazingly I ended up with a surplus on $10,000 even after a few very large expenditures .
Wow...that's great Moe! That's the kind of story I like to hear.
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Old 02-09-2010, 09:08 PM   #39
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I voted 3.5% but that is now, with a planning horizon of 40 years. Also, I don't plan on taking 3.5% if I don't need it, 3.5% is the max for now and we'll cut back if we are going to exceed it. We have a target gross income that should allow us to do all we want and for the first year that requires less than 3% withdrawal in year 1. I have a non-COLA pension, so inflation could have a big impact in future years.

In 10 years more all sorts of things may have changed and my view of the future may well be changed, plus my response to what a SWR will be for me may also have changed in 10+ years.

Like Rich and W2R I also have an emergency account outside of the RE savings equal to about 6 months expenses so that when the unexpected big expense happens I can draw from it and replenish over the coming year(s).
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Old 02-09-2010, 09:26 PM   #40
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This is probably more important than any SWR


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