Withdrawal Schemes

wabmester · 01-23-2007, 12:33 PM

Dory, I know you're retired, but have you looked at this poll on withdrawal strategies used by ERs?

link

Interested in modeling any of these?

The big one seems to be capping expenses by roughly 4% of current nest egg.

You sort of do this as part of the 95% rule, but it's coupled to some funky "success" test that can't be uncoupled as far as I can tell.

BTW, I heard a great description of using 4% of current nest egg until you hit a bad stretch and then switching to inflation-adjusted withdrawals: "hunting for the failure sequence."

Also, what exactly do you do with the inflation rate/data? Is it only used to adjust the annual withdrawal or does it have some other impact?

dory36 · 01-23-2007, 03:50 PM

One of these days I will probably do some additional strategies, and would include any that made sense that could be condensed down to objective rules that can be implemented. ("Buy stocks that go up. If they don't go up, then don't buy them" is my favorite.)

The inflation is primarily used to calculate the withdrawal amount. For reporting, there are a few places where everything is adjusted to show the results in uninflated dollars.

wabmester · 01-23-2007, 04:37 PM

Quote:

Originally Posted by dory36

The inflation is primarily used to calculate the withdrawal amount. For reporting, there are a few places where everything is adjusted to show the results in uninflated dollars.

Thought so. So, if somebody wanted to model the effect of giving themselves a 6% raise each year, you would also use that rate to show results in terms of "uninflated dollars."

You might consider uncoupling those two, so one could play around with withdrawal raises but still use CPI for resulting buying power.

cute fuzzy bunny · 01-23-2007, 04:46 PM

You already know what i'm going to say...

wabmester · 01-23-2007, 04:49 PM

Quote:

Originally Posted by Cute Fuzzy Bunny

You already know what i'm going to say...

That you entered your personal rate of inflation into FIREcalc, and it told you to keep working?

cute fuzzy bunny · 01-23-2007, 04:50 PM

Whats a "personal rate of inflation"?

unclemick · 01-23-2007, 05:00 PM

Ahem - the Norwegian widow would like to put in a vote for current yield of a given stock/bond portfolio.

Not necessarilly - psst Wellesley but

? something nice.

heh heh heh

01-23-2007, 12:33 PM	#1
wabmester Thinks s/he gets paid by the post Join Date: Dec 2003 Posts: 4,461	Withdrawal Schemes Dory, I know you're retired, but have you looked at this poll on withdrawal strategies used by ERs? link Interested in modeling any of these? The big one seems to be capping expenses by roughly 4% of current nest egg. You sort of do this as part of the 95% rule, but it's coupled to some funky "success" test that can't be uncoupled as far as I can tell. BTW, I heard a great description of using 4% of current nest egg until you hit a bad stretch and then switching to inflation-adjusted withdrawals: "hunting for the failure sequence." Also, what exactly do you do with the inflation rate/data? Is it only used to adjust the annual withdrawal or does it have some other impact?

01-23-2007, 03:50 PM	#2
dory36 Early-Retirement.org Founder Developer of FIRECalc Join Date: Jun 2002 Posts: 1,823	Re: Withdrawal Schemes One of these days I will probably do some additional strategies, and would include any that made sense that could be condensed down to objective rules that can be implemented. ("Buy stocks that go up. If they don't go up, then don't buy them" is my favorite.) The inflation is primarily used to calculate the withdrawal amount. For reporting, there are a few places where everything is adjusted to show the results in uninflated dollars. __________________ Often uninformed, seldom undecided. Twenty years from now you will be more disappointed by the things you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover. Mark Twain

01-23-2007, 04:46 PM	#4
cute fuzzy bunny Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Dec 2003 Location: Losing my whump Posts: 22,540	Re: Withdrawal Schemes You already know what i'm going to say... __________________ Many an optimist has become rich by buying out a pessimist

01-23-2007, 04:50 PM	#6
cute fuzzy bunny Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Dec 2003 Location: Losing my whump Posts: 22,540	Re: Withdrawal Schemes Whats a "personal rate of inflation"? __________________ Many an optimist has become rich by buying out a pessimist

01-23-2007, 05:00 PM	#7
unclemick Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Jul 2003 Posts: 5,350	Re: Withdrawal Schemes Ahem - the Norwegian widow would like to put in a vote for current yield of a given stock/bond portfolio. Not necessarilly - psst Wellesley but? something nice. heh heh heh

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)

Thread Tools	Search this Thread
Show Printable Version Email this Page	Search this Thread: Advanced Search
Display Modes
Linear Mode Switch to Hybrid Mode Switch to Threaded Mode

Similar Threads
Thread	Thread Starter	Forum	Replies	Last Post
Do you agree with Bengen's "Layer Cake" withdrawal rate	MikeK	FIRE and Money	23	12-16-2006 10:50 AM
Withdrawal Rates in Paul Merrimans Book	Hydroman	FIRE and Money	17	05-10-2006 04:14 PM
Withdrawal rates - theory vs practice	Roger_R	FIRE and Money	56	01-17-2005 06:45 AM
"Is the Safe Withdrawal Rate TOO Safe?"	Nords	FIRE and Money	13	10-20-2004 10:36 AM
Withdrawal Rate Increases with Time?	mccl	FIRE and Money	26	05-22-2004 03:51 AM