Poll: Push or pull?

[SecondCor521]

Just curious about something.

I mentally categorize my financial accounts, as I think most do, into my FIRE stash on the one hand and my day-to-day banking accounts on the other hand. In my case, the former includes my IRAs and a taxable account; the latter include checking, savings, and credit card accounts.

I use what I would call the "pull method": I spend down my cash on hand until it's almost out, then I pull some money from my FIRE stash to replenish it. In other words, I do my draws on an as-needed basis. I then monitor my WR to make sure I'm maintaining in a safe range.

It occurred to me that there could be another style, which I would call the "push method": Calculate a safe WR however you like, then use that to set up a regular draw to push money from FIRE to banking on a regular basis. In other words, do withdrawals regardless of one's banking account balances. In this approach, one would monitor safety simply by monitoring the level of cash in the banking accounts - if there's plenty of cash, then you're safe; if you're running dry then you're overspending your rate.

In my case, I've thought about the push method as maybe encouraging spending more, which might be a solution to my under-spending (I'm at a 1.17% net WR today), because the decision to pull money out at a certain rate would be automatic, rather than waiting until I am running low.

Which do you do? Pros, cons, thoughts?

 

[COZICAN]

I'm not RE yet but plan to do the push method. Setting up a regular paycheck will just make me feel better. Any unspent money will just go back into savings of some sort.

Coz

 

[brett]

I pull out money as needed. Once or twice a year. I move it into my hisa on line account, then transfer it to my current account when I need it.

 

[candrew]

I'm not RE yet but plan to do the push method. Setting up a regular paycheck will just make me feel better. Any unspent money will just go back into savings of some sort.

Coz

Our approach. Each month we have an automatic transfer out of IRA's. Any excess ends up in one of our taxable accounts.

 

[scrabbler1]

I don't really use either method the way you describe them. I am closer to the "push" method, though. I have two mutual funds which together generate dividends I automatically take as cash via ACH into my local bank account. I don't know what those amounts will until they are announced that day (such as today, the last business day of the month).


Excess dividends get reinvested somewhere, usually back into my main bond fund. Sometimes, I have to retain excess dividends to cover the lumpier expenses in later months.

 

[Ronstar]

I do pull - just withdraw when I run low. Primarily because I was operating on cash for the first 3 years of ER, and the past 2 years have been full of remodel projects that needed money on a sporadic basis.

 

[COcheesehead]

I use a cash management account tied to my brokerage account. It brings everything together including credit card into one space. I have a lot of monthly interest and dividends so there is always free cash flow to reinvest or skim off the top off. I feel you pay for having too much cash as it is a drag on return. With that being said, I monitor my spend via a spreadsheet so I always know where I stand in relation to my spending goals. So I voted PULL.

 

[Dtail]

Push amount with the same withdrawal each month. Very large lumpy expenses come out of an emergency account, but that's a whole other discussion.

 

[RetireAge50]

Both. Push for regular monthly stuff and pull for stuff like trips or major purchases. This way I have to make a conscious decision to spend money beyond the monthly stuff (because it requires a manual transfer of funds).

 

[Red Badger]

Voted bacon.

We have a push to the soulless mortgage holder (and a few utility bills) as its a fairly fixed amount. We use a pull (to the credit union) for discretionary stuff as it tends to be very lumpy.

 

[CardsFan]

Voted bacon.

We have a push to the soulless mortgage holder (and a few utility bills) as its a fairly fixed amount. We use a pull (to the credit union) for discretionary stuff as it tends to be very lumpy.

I voted bacon for a similar reason. We have a monthly push (not enough to cover normal spending), but then we pull additional funds as needed.

I would be comfortable just pulling as needed, but DW likes to get the "monthly paycheck".

 

[RAE]

Both. Push for regular monthly stuff and pull for stuff like trips or major purchases. This way I have to make a conscious decision to spend money beyond the monthly stuff (because it requires a manual transfer of funds).

+1, same here.

 

[OldShooter]

Pull. Monthly expenses can easily vary by many thousands, even $10-20K when we pay for a trip. Principal reasons include travel, property, and income taxes. A car in January, a refurbished pontoon boat & new motor in May, ... Push would make no sense.

 

[braumeister]

It's not always apparent, is it?

 

[audreyh1]

Push.

My income is based on the Dec 31 value of my retirement portfolio. On Jan 2 (or whenever the next market/business day is), I pull out an entire year’s worth of income - a fixed X% of the portfolio - and move it to a high yield savings account. I set aside what I have estimated as taxes I must pay throughout the year, including estimated taxes, and the remainder is available for spending throughout the year.

So you could say that my withdrawal/income drives my budget/planned spending rather than the other way around.

After the annual withdrawal I rebalance my retirement portfolio if needed. Then pretty much leave it alone.

 

[SumDay]

I pull my annual withdrawal from our IRA's and deposit to Ally. I have an automatic push coming from Ally the 15th of the month for regular expenses. Earlier this year we needed a new AC, furnace, hot water heater and sump pump, and did a pull from Ally to cover that gargantuan bill. It's working for us. I missed having a regular paycheck, and now with SS and my pension, we're in a good routine.

 

[ERD50]

Another "BOTH".

I like the push method, as it is on auto-pilot for covering regular bills, plus a little to keep a buffer for the other stuff that pops up. If something happened to me, everything would just go on, auto-pay pulling, and the auto-deposit push.

If the balance gets large, visit the "Blow That Dough!" thread, or invest it. If it gets tight, think about controlling your spending and/or just pull some more to cover.

-ERD50

 

[scrabbler1]

For money coming in, which is I believe the OP was asking about, I use "push." For money going out to pay the bills, I use "pull," mostly. I use "push" for only a few things going out.

 

[LRDave]

Push it real good...... (unrelated to OP's question; just can't resist a Salt-N-Pepa reference opportunity....)

 

[NW-Bound]

Pull mostly throughout the year, to replenish the checking account for wife to pay bills.

At the year end, if my WR is below plan I may do a push to keep the tax burden even from year to year. Or do a Roth.

This reminds me it's time for another pull. Darn, that last pull did not last long. Wife just paid those credit card bills from the long Europe road trip. Next month will be better, because there are no more large bills that are outstanding.


PS. Multiple choices should be allowed in this poll. Why can't a pusher or puller be allowed to like bacon also?

 

[pb4uski]

..... Which do you do? Pros, cons, thoughts?

I push a fixed amount each month from our online savings account, which is the cash portion of our 65/35/5 AA, to the local credit union checking account that I used to pay our bills.

I monitor the balance and the projected balance for the next 90 days on my Quicken home page (I have all our major bills, mortgage, etc defined as bills in Quicken so it automatically does a 90 day cash flow projection for me.)

If/when the projected cash gets or heading too low for comfort then I do a "special" transfer... my pension and regular monthly transfers amount to 78% of our annual targeted spending so I expect to have to occasionally do a special transfer. Our home insurance renews in Nov and our property taxes are due in Nov so I expect to have to do one in Nov... others are as needed.

I consider any withdrawals from the online savings account to be "spending" for the purpose of measuring WR since the net total of my local credit union account balances and credit card balances are typically negligible. The online savings account is the "gatekeeper" for the retirement portolio... so measuring withdrawals is easy, it is the sum of transfers from the online savings account to our local credit unon accounts for the year.

 

[SecondCor521]

For money coming in, which is I believe the OP was asking about, I use "push." For money going out to pay the bills, I use "pull," mostly. I use "push" for only a few things going out.

Right. My question was about transfers from the stash to the checking/savings accounts, not from checking/saving to bills.

 

[redduck]

I voted bacon. Apparently, I don't think in terms of "push or pull,' but I think about bacon much of the time.

 

[Moemg]

Push.

My income is based on the Dec 31 value of my retirement portfolio. On Jan 2 (or whenever the next market/business day is), I pull out an entire year’s worth of income - a fixed X% of the portfolio -

This is what I have done for eleven years and it works well.

 

[HI Bill]

I haven't started yet, but am planning on a push system, which will allow me to manage taxes, smoothing out the curve. If you take out too little, too early, you'll hit the tax torpedo later. Of course, if you intend to leave your assets to heirs, then you may not need to do this.