A tool for maintaining your SWR?

[DavidD5er]

why would anyone subject themselves to grief from strangers over a free tool?

Well yes, but then the existence of numerous free tools of comparable complexity would seem to answer that question (eg I-ORP and FIRECalc to name a couple).

 

[MRG]

I'm not surprised at all. FAs and the financial sector want you to pay them to guide you (for a "small" fee), so they aren't going to give us a tool - if anything they will squelch or actively discredit any that appear. Such a tool would only come to us through another benevolent investor, but an actual tool that considered dividends, taxes, rebalancing, etc. would be fairly complex. There would inevitably be some angry users, why would anyone subject themselves to grief from strangers over a free tool? And anyone can write a simple spreadsheet that just suggests what to withdraw from which funds.

Again, there are always managed payout funds, all-in-one funds and other like investment options to simplify, at a small cost in fees.

+1

Fidelity has been advising(pushing) their services to aid in your strategy.

They(financial institutions) are not going to "build their own gallows" or assist in it. Many tools exist in back offices that never see daylight to the consumer.

 

[kgtest]

I-ORP is a great tool but it assumes that you want constant, inflation adjusted spending like SWR provides...

Both of the above will also help you manage if/when/how much Roth conversions to do.

Cheers,
Big-Papa

+1 I primarily used it to gut-check Roth conversions for DF. Running that vs TT and then the actuals as close to EOY as we can gets us "pretty close" w.o exceeding 'cliffs'.

Also use i-orp to project rough guess of SOME tax scenarios...between 2 generations of planning it gets complex for me and the peeps I plan with/for.

I built a very complex SS that can do any SWR for any year I want. I haven't built a constant spend-down to X or to 0 model yet, but I plan to once DF comes to the conclusion he "has enough". That way I can demonstrate the extreme, hey ole man here is WHAT you have IF you spend down EVERYTHING vs if you JUST take RMD...or RMD + a "SWR" or just RMD + whatever to X tax bracket. All of this is ready and available for me to model. Obviously rule 1 to getting rich is never touch principal, rule 2 never pay interest or tax, rule 3 LBYM.... maybe not in that order.

 

[pb4uski]

I'm not aware of any "tools"... I think most of us just withdraw from a convenient account and fund/position and then periodically rebalance, knowing that small variations in AA bear little relation to success rates and even to ending balances.

It's a bit of a silly question, because 3-4% withdrawls isn't going to move your AA a whole lot after considering on average, ~3-4% interest, ~1-2% dividends and ~5% appreciation occurring during the year.... the question is akin to the old saying about measuring with a micrometer, marking with chalk and cutting with an axe.... looking for a degree of precision that has negligible value or benefit.

In the past when I carried a healthy allocation of cash in an online savings account... target AA of 60/35/5... all withdrawals were a transfer from the online savings account (the 5% in cash) to the checking account that I use to pay bills... the checking account is not part of my retirement portfolio. Then I would replenish cash as part of my annual rebalancing.

I've abandoned that and am now targeting 65/35, but withdrawals are a monthly automatic redemption of a domestic equities fund from my Roth IRA. Any withdrawals are replenished by an annual Roth conversion from my tIRA... and I still rebalance annually, usually in December.

 

[Midpack]

Well yes, but then the existence of numerous free tools of comparable complexity would seem to answer that question (eg I-ORP and FIRECalc to name a couple).

Numerous? That’s the point, there are very few, i-ORP and FIRECALC are exceptions. IIRC both originated about 20 years ago, there hasn’t been anything like them more recently and there are concerns how much longer they will be maintained. There was a planner on Bogleheads that was really elaborate, but it’s so complex with many hidden calcs, you trust at your own risk.

Interesting (if not rather surprising) that there are no tools to do this. So it looks like we are all left to our own devices. I guess I need to try putting my own spreadsheet together then!

Yep. Many of us here, self included, have developed various elaborate spreadsheets for managing our finances. It’s the only way I know exactly what the underlying assumptions and limitations are, with the inputs I want. I’m an average knowledge member here and like many here I’ve been very open with “free advice” (most recently re: Roth conversions) but I’d never dream of sharing my spreadsheets with anyone because I don’t want to blank out all my info, modify to accommodate situations that don’t apply to us, or deal with the inevitable questions that would stem from it. I’ve had that experience here but not often. No good deed goes unpunished...

As far as I’m concerned the authors/admins for i-ORP and FIRECALC are saints!

And I’ve benefitted from “free advice” from many others here, I’m grateful for same.

 

[SumDay]

Interesting (if not rather surprising) that there are no tools to do this. So it looks like we are all left to our own devices. I guess I need to try putting my own spreadsheet together then!

Will you be sharing with us?

 

[NW-Bound]

... the question is akin to the old saying about measuring with a micrometer, marking with chalk and cutting with an axe.... looking for a degree of precision that has negligible value or benefit...

I measure using handspan, remember the spot by eyeballing, and hack with an axe.

 

[samclem]

Instead, I'm asking about how - practically - you are making decisions about what to sell, by how much (and what to buy to re-balance if necessary) according to your chosen method on a regular basis.

So for example, I have a diverse portfolio and I am following a structured method (doesn't matter what). I want to draw down, say, 6 months income to spend. Is there, or could there be, a system that would tell me to sell, say, $5,000 of fund X, $2,500 of IT Y and $1,000 from bond Z taking into account my chosen strategy to include things like inflation adjustment, likely tax etc.?

Hope that's clearer.

I understand the question and I agree that such a tool could probably be devised. It would be a >very< complex beast if it were to cover all the bases (e.g. college funding/427 and FAFSA planning, legacy planning, long-term care financing, etc) as well as all the various flavors of withdrawal methodologies. That's no reason not to build such a tool -- even an imperfect tool would have some advantages over the present "method" (i.e. most folks don't even know what questions to ask).


What you are describing is what a full service financial advisor should do. Maybe the big firms have some super-duper proprietary software that spits out tax-optimized plans that take all the client preferences into account.


I do think that the significant uncertainties in asset class returns, tax laws, etc makes it impossible to generate a high-precision plan, and that a person who gets the big parts right will probably do okay--about as well as someone who uses an optimizer to get a two-decimal plan/answer based on historical data.