Quick survey

[Independent]

I retired before we started SS. I don't know what "withdrawal rate" means in the OP.

We planned to withdraw more dollars each year during the gap before SS starts then we will withdraw after SS starts.

We are not withdrawing a fixed percent of our portfolio each year.

I have an annually updated plan that says this should work out okay. (FireCalc plus DIY)

 

[papadad111]

It's interesting to see so many including their tax deferred accounts to determine safe WD rate even when in their mid 40's.

Yet almost all by caveat seem to EXCLUDE the annuity called social security which will come on line at age 62 albeit the amount may be less than the tool estimates today.

Future pensions seem to be inconsistent. Some include that future cash flow (discount to present value and include) while others consider it reinforcement or mad money.


Consensus is universal to exclude the residence unless downsizing and monetizing that asset

 

[jfn111]

I retired at 55 with a pension. I was able to access my 401K but not my wifes roll over IRA. We planned for a 3 1/2% maximum withdrawal rate based on all accounts.
I don't include SS in my current planning only because we didn't need an aggressive withdrawal rate. I could include SS and withdraw more but haven't needed the money.
Full Disclosure- I went and got my real estate license and ended up making more money then I thought I would and our withdrawal rate is under 3%.

 

[DayDreaming]

I withdraw what I need, I don't base it on a withdrawal rate.
When my checking account is getting low I transfer money into it from other investments.
I run FireCalc once in a while to assure myself I'm doing ok.

 

[pb4uski]

....Yet almost all by caveat seem to EXCLUDE the annuity called social security which will come on line at age 62 albeit the amount may be less than the tool estimates today.

Future pensions seem to be inconsistent. Some include that future cash flow (discount to present value and include) while others consider it reinforcement or mad money. ...

I don't think your assumption that almost all exclude SS is correct. I think most people include SS, but as a reduction to expenses/withdrawals once SS starts (that is the way that QLP or firecalc include it).

OTOH, I think some people reduce the benefit from what their SS statement says based on a view that at some point benefits will be scaled back.

 

[mrfeh]

Not retired yet, but will consider entire portfolio when computing withdrawal rate.

Frankly, I've never heard of only using taxable accounts as the denominator.

 

[mrfeh]

It's interesting to see so many including their tax deferred accounts to determine safe WD rate even when in their mid 40's.

Clearly there are additional considerations for retiring early (pre-50). Unless you want to use 72t, you need to make sure your taxable assets are enough to get you to 59.5.

But, that's a different topic from the original question.

 

[imoldernu]

In 1989, at 53, 29 large spreadsheets counting every dollar in, every dollar out for 20 years...the time horizon back then. Worked perfectly in dollars, even though very little according to plan. The plan only went to age 75, as it didn't seem logical to even think beyond that. Measured in today's dollars, when we turned 75, we were within 3% of plan. (SS at 62 worked out tax wise). That was then... now redoing plan and all looks okay for the next ten years.
A different time, when in the early years, our ultra safe CD's and IBonds were earning much more, and housing values were going up rapidly. Too old to change, now.

SWR was Short Wave Radio... Listened to music from Brazil.

 

[prototype]

FIRE'ed in 2011 now in my late 50's. Withdrawal's based on total portfolio. The only two withdrawals (both about 2.5%) I have made in 4 years were from after tax accounts. So I am actually "underspending" a bit. Pension (non-COLA'd) and distributions from after tax accounts have served me well so far.

 

[jebmke]

I base my WR on spending. If I spent it, I withdraw enough to pay the bills.

 

[papadad111]

I don't think your assumption that almost all exclude SS is correct. I think most people include SS, but as a reduction to expenses/withdrawals once SS starts (that is the way that QLP or firecalc include it).



OTOH, I think some people reduce the benefit from what their SS statement says based on a view that at some point benefits will be scaled back.

Fair point. I guess it's a curiosity that people include money not accessible til 59.5 In a portfolio balance yet exclude SS at 62. It's just the different treatment that's interesting. Few treat the two pools of funds similarly.

Any guess as to why ?

Perhaps it's that the former is "in your name with a monthly statement" and there is a 72 t option to allow immediate access ... The latter, more uncertainty with no early access before age 62 in most cases ?

 

[Totoro]

The assets are already in my name and I manage them -but the funds are only available to someone else- and I just have to wait for an ummm 'unfortunate trigger'...I'm beginning to wonder if I should start to consider it.

Serious question.

Have roughly the same issue (many of us here likely?).

In truth: I don't count on it right now, yet I do consider it on mother's side when mulling over possible long term financial scenarios. In our family we have relatively open discussions about it too, that helps. I do her asset management (and granny).

Only when they give it away and the $ lands in my bank account it becomes part of my 'hard plan' though. As time goes on this might change.

On father's side we are basically estranged. There is a life changing amount on that side (order of magnitude a few million) but that I don't factor it in, nor even consider it in the scenarios. It still may happen though. We'll deal with that once (if) it becomes a topic at hand.

In a calculating way it is a simple equation of sorts: range of years of life left x chance to inherit in the future x range of assets. All can be estimated, just like the return on your own investments with added uncertainty.

This doesn't mean I love my parents (yes both of them) any less. It's just a factor in my life to take into account at appropriate levels.

 

[Independent]

It's interesting to see so many including their tax deferred accounts to determine safe WD rate even when in their mid 40's.

If I were retiring in my mid 40's, I'd want to do a side calculation that shows my after-tax assets are adequate to get me to the age where I can access the tax-deferred.

If I've got a $3 million portfolio at age 45, I'd feel that I could withdraw $75,000 per year.

That works fine it's $1.5 million after-tax and $1.5 million in the IRAs.

But, if the $3 million was $300,000 in after tax and $2.7 million in IRAs, I'd have to think about how I'm going to access the IRA early.