marko
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- Joined
- Mar 16, 2011
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This may have been discussed at some point at an earlier time or the question may have been asked differently. Apologies if so. And I hope this question makes sense!
Note: this is an academic question.
Starting point: For simplicity: You’ve run all the calcs for starting SWR at 65 and for 30 years; your full SWR comes out at 4%. You understand that once you start taking that 4% you will withdraw that same amount each year adjusted for inflation.
Scenario: You’ve retired at 65 and taking SS. For any number of reasons you won’t be taking your full 4% for a few more years (temporary rental income, spouse still working for 2-3 more years, long term severance, residual business royalties, whatever).
As a result you're withdrawing maybe 1% of your portfolio every year to make up for the income shortfall. Actually, you’re withdrawing about the same amount out of your portfolio per year that you might have withdrawn during your working life--maybe 0.5%-1% to cover a vacation, large purchase or home repair--back then you called it ‘savings’.
But once that temporary income stops you know you’ll be taking the full 4% to cover expenses.
Questions:
Under that scenario, when does your SWR “30 year clock” start? When you first start taking that 1% or only once you get to 4%? What about 3%...or 2.5%? When does that clock start ticking?
More accurately, when does your retirement really start? 65? 68?
OTOH, if that clock starts ticking at the 1% point--when you turn 65--are you banking the other 3% so that once you do hit “full requirement”, you could dip into that bank for an extra 3% (total of 7%) for the same number of years that you banked it?
Note: this is an academic question.
Starting point: For simplicity: You’ve run all the calcs for starting SWR at 65 and for 30 years; your full SWR comes out at 4%. You understand that once you start taking that 4% you will withdraw that same amount each year adjusted for inflation.
Scenario: You’ve retired at 65 and taking SS. For any number of reasons you won’t be taking your full 4% for a few more years (temporary rental income, spouse still working for 2-3 more years, long term severance, residual business royalties, whatever).
As a result you're withdrawing maybe 1% of your portfolio every year to make up for the income shortfall. Actually, you’re withdrawing about the same amount out of your portfolio per year that you might have withdrawn during your working life--maybe 0.5%-1% to cover a vacation, large purchase or home repair--back then you called it ‘savings’.
But once that temporary income stops you know you’ll be taking the full 4% to cover expenses.
Questions:
Under that scenario, when does your SWR “30 year clock” start? When you first start taking that 1% or only once you get to 4%? What about 3%...or 2.5%? When does that clock start ticking?
More accurately, when does your retirement really start? 65? 68?
OTOH, if that clock starts ticking at the 1% point--when you turn 65--are you banking the other 3% so that once you do hit “full requirement”, you could dip into that bank for an extra 3% (total of 7%) for the same number of years that you banked it?
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