Growing Net Worth In Retirement

[Elbata]

There's so much discussion about having enough money in retirement, SSI, etc., I wonder what the reality is for most on this board.

There's talk about drawing down but at a reasonable rate so you won't be left with much when you die, but you won't be impoverished.

How many of you are actually still saving and increasing your net worth, and how many are drawing from their savings to fund retirement?

I had a friend who's step dad had a few months to live. He bragged how he saved all his pension checks and his big expense was going out to eat once a week while having his caddy washed/waxed.

So, is your portfolio growing or declining?

 

[pb4uski]

Mine has grown over the last two years because investment results have been much higher than I expected and much more than my withdrawals. But I don't necessarily expect that to continue but if it does I won't complain.

 

[Katsmeow]

DH retired 3 1/2 years ago and I semi-retired. We expected our portfolio to go down over the 5 -6 years after that because we would have some high expenses related to adolescent kids and sending them to college and in connection with buying a different house and moving. So, the portfolio is down from when we started. However, it is down less than I would have expected 3 1/2 years ago and it is currently up for the year even though we are in a period of high withdrawals (kids in college). We expect over the next 3 years to withdraw about 30% of the portfolio, but then withdrawals will fall to much lower.

 

[Onward]

Mine has grown about 25% since I FIREd in 2010, even though I have been withdrawing all my expenses from it. I'm about 70% stocks.

Almost all the increase is investment gain. A tiny bit is due to part-time work.

 

[chilkoot]

The portfolio will probably continue to grow, since I have no intention of ever touching it. Started receiving a pension which provides more than enough to live on.

The biggest factors in this happy circumstance:
-Didn't hate my job. If I had, I'm sure I would have run some numbers and left years ago. Since I didn't, I just figured I might as well keep on working.
- Paid off the mortgage. Several months ago the single biggest expense just disappeared.

Highly recommended if you can swing it.

 

[W2R]

I retired in 2009, so you can probably guess what my answer will be!

Yes, my (very conservative) portfolio has grown 21%, even though I have been living off of it and have not even claimed my social security benefits yet.

I would be a fool to expect the market to always head upwards as it pretty much has since the crash, though. If/when we have another market crash, I plan to claim SS immediately and wait it out.

 

[Midpack]

Our net worth has increased since I retired, probably like most retirees (except those with ridiculously high withdrawal rates), but it's more a function of favorable market performance over the past 5 years than anything else. If you'd asked in 2009, I'm sure most people would give a completely different response than today. And you can bet there will be unfavorable answers again at some point in the future. So not sure what conclusion you could draw from today's responses.

Anyone whose portfolio has not grown after withdrawals over the past five years, might do well to reconsider their withdrawal rate plan...

 

[sanfanciscotreat]

Our net worth has grown much more than I expected since retirement in 2010. Have not taken SS or IRA distributions yet, so we have a good cushion to work from.

 

[veremchuka]

My goal is to grow the nest egg and so far I am. It is not easy though, without a paycheck and matching employer contributions all you have is growth of the funds you hold. I have a pension and SS which allows me to bank about $1000 to $1800 a month, average is about $1500 but once in a while it may be low hundreds or negative when big bills come. I haven't touched investments other than a small distribution to help pay off the mortgage. retired 8/2007. Took a wicked hit in 2008 and 2009, moved too much too late to Stable Value fund and watched as the market recovered it all. Amazingly while I was not in equities for 1/2 of that recovery I'm almost back to my all time high amount but figuring I paid off the house and liquidated assets to do so I think I must be ahead just at a slightly lower amount.

 

[pb4uski]

IOW, whee....................

 

[Birchwood]

It all depends on the % one withdraws every year. It has increase for most because of the stock market rise. It of course also depends most on how much you have there in the first place.

 

[frayne]

Have been retired eight years now and net worth has grown by 35%, in spite of spending approx. $50K per year. Portfolio has roughly been a 60/40-stock/fixed income split. The stock portion has been primarily index funds.

 

[NW-Bound]

In this bull market, everybody is a brilliant portfolio grower whether he's withdrawing for ER or not. We will have to check back in a few years.

 

[calmloki]

In 2010 we bought a winter place in SoCal and started staying there about 6 months of the year, leaving the rental properties in other's care. Our net worth has continued to rise, though not by 3% every year (roughly what I figure inflation accounts for). On the other hand, each year we live knocks maybe 5% off the size of the nest egg we need to live on till we shuffle off to Valhalla, so we have that going for us....

 

[Moemg]

I retired in January 2008 and took a huge hit almost immediately . My portfolio has fully recovered and then some despite taking withdrawals for five years .

 

[NW-Bound]

On the other hand, each year we live knocks maybe 5% off the size of the nest egg we need to live on till we shuffle off to Valhalla, so we have that going for us....

If our time is constantly expended, why worry about growing the stash? Well, one needs to build surplus in good years to prepare for possible future famine years. This is more important for young early retirees in their 40s than for geezers.

I have a feeling that I myself will run out of time before money. But I like to see my stash grow because I am a scrooge, and that is hard to change.

 

[Animorph]

We won't be "saving" anything, but I fully expect our portfolio to grow after our last few years of heavy spending. Though it's kind of hard to account for Roth conversions, which technically draw down the portfolio to pay the taxes but in reality leave the after-tax value unchanged.

The 4% FIRECalc SWR "normally" grows portfolio net worth throughout retirement. It's only the bad scenarios that require a portfolio drawdown.

 

[Katsmeow]

Anyone whose portfolio has not grown after withdrawals over the past five years, might do well to reconsider their withdrawal rate plan...

Not necessarily. Yes, if someone is planning a 30 year retirement is withdrawing 10% a year then maybe they need to rethink it. On the other hand, if someone is spending down some of the portfolio for specific expenses that won't continue forever or to bridge the gap to SS then maybe that is just part of the plan.

Our portfolio has not grown over the past 3 1/2 years (measuring from when DH retired since he took a lump sum at retirement which he rolled into an IRA so we didn't have a good part of the portfolio 5 years ago). However - this was planned and our withdrawal rate plan is variable. We knew that the portfolio would go down during a period of 5 years of high expenses primarily having adolescents still in the household, college expenses and we also used some money to buy our current home (that money is no longer in the portfolio but is still part of our net worth).

The point is that once our kids are out of school we project that we will thereafter being withdrawing only a little over 3% from what will then be our smaller portfolio.

As it turns out, however, due to to market performance since DH retired the portfolio has not gone down very much and much less than I had originally projected it would go down by this point.

 

[Donzo]

Jumped out 06/06 and am up about 20%

but I remember being down about 47% at one point in 09. I waited til the market got to 14,000 and changed my portfolio to 50/50 - don't want to have losses like that again even if it is just paper/temporary...

 

[sheehs1]

I will be "retiring" Dec 31st, meaning my income check will stop but my husband will not be retiring. That said, I will still be bringing in income from two other sources other than my investments, enough to cover all monthly costs. Will also have the ability to bank/save the majority of yearly K1 distribution as well as letting dividends compound and investments grow. At the same time, my husband will also save in his accounts.

My plan is to continue to grow net worth/investable assets for at least 5 more years and hopefully reach another milestone. By then both my husband and I will be 63. Will he retire then? Who knows. But I don't think I or we will start spending down investable assets until he does.

Like others here, I will probably delay social security, although I want to take a closer look at something Midpack posted regarding the taxation of those benefits and that it may be more advantageous to take those benefits before the RMD of retirement accounts kick in at age 70.

It is entirely possible I may never have to draw down my assets. This is a catch 22 for me. If I don't do something...like spend part of it on something like a beach cottage...I know I will simply be handing it over to our children. By that time it will probably have doubled or tripled because I will simply keep saving (nature of the beast). On the other hand, if I buy a beach cottage now, I worry that something will happen to my husband, or that one or both of us will be diagnosed with some long protracted illness requiring my assets or that something will happen to the family business and that K1 income will dry up.

So for now, even though I am retiring nothing much changes. Keep saving, investing and living more than within our means...because we can and because there is no earth shattering reason or desire we have at the moment to change it.

 

[NW-Bound]

...
On the other hand, if I buy a beach cottage now, I worry that something will happen to my husband, or that one or both of us will be diagnosed with some long protracted illness requiring my assets or that something will happen to the family business and that K1 income will dry up...

What I would ask myself is whether I would really enjoy that cottage, or is it something just to have?

My only real indulgence was to buy a 2nd home in the high country to escape the summer heat, which had a higher value than our main home. That was 8 years ago. I bought it early enough that my younger son who's 24 now was in his teen years back then, and we spent a lot of time together riding our dirt bikes exploring the surrounding national forest. Now that he is a young adult and working on his career, that time is past.

So, if and when we are no longer able to enjoy that 2nd home due to illness, I would sell it even at a loss with no regret. We had plenty of use out of it. And by the way, I just looked at my records, and our portfolio sans RE values has increased 54% since then, despite that purchase.

 

[scrabbler1]

I ERed in late 2008 when the markets were tanking. But despite that and having taken about $21k per year to cover my expenses, I am still up about 42% in the last 5 years with a 60/40 bond/stock portfolio. My Rollover IRA, which is about 55/45 stock/bond, is up 85% since I took the rollover from my 401k 5 years ago and I have not added one dime in outside money in that time although I have rebalanced a few times.

 

[clifp]

I am one of those Y2K retiree who should be growing broke if I took a 4% SWR.
According Raddr's calculation, a $1 million portfolio would have started 2013 worth $493,000 (358,000 Y2K dollars and my inflation adjusted withdrawal would be about $56,000. This year the portfolio would actually make money for the first time in a long time.

I avoid many of the worse problems of the Y2K portfolio (primarily by withdrawing only between 2.5-3% most years.). However, my portfolio didn't get back to its nominal level until 2007 and then again the end of 2010. In real terms I start 2013 about 10% behind what retired with in 99/2000 and am comfortably ahead of it in real dollars today.

Still having two ugly bear markets at the first 8 years of your retirement is not recommended.

 

[Midpack]

Not necessarily. Yes, if someone is planning a 30 year retirement is withdrawing 10% a year then maybe they need to rethink it. On the other hand, if someone is spending down some of the portfolio for specific expenses that won't continue forever or to bridge the gap to SS then maybe that is just part of the plan.

Our portfolio has not grown over the past 3 1/2 years (measuring from when DH retired since he took a lump sum at retirement which he rolled into an IRA so we didn't have a good part of the portfolio 5 years ago). However - this was planned and our withdrawal rate plan is variable. We knew that the portfolio would go down during a period of 5 years of high expenses primarily having adolescents still in the household, college expenses and we also used some money to buy our current home (that money is no longer in the portfolio but is still part of our net worth).

The point is that once our kids are out of school we project that we will thereafter being withdrawing only a little over 3% from what will then be our smaller portfolio.

As it turns out, however, due to to market performance since DH retired the portfolio has not gone down very much and much less than I had originally projected it would go down by this point.

Fair enough, though I said "reconsider", not reduce outright. It was meant to apply for those planning a somewhat constant %WR inflation adjusted, not someone who's knowingly planning larger withdrawals in the earlier years.

 

[donheff]

Ours has continued to grow because of the equities market. On most Firecalc scenarios that should be the case but that can change in a heartbeat if a black swan swims by. At a certain point, if it becomes clear that we remain on a typical good glide path we may be able to revisit our SWR and spend more on ourselves or increase giving.