What is your withdrawal rate?

[kgtest]

It's in my signature line.

I assumed people saw my signature, until I logged in on the mobile app where they don't display it. Or it didn't show for me .

 

[ownyourfuture]

I can't answer the question regarding ‘my withdrawal rate’ because I never really had a set amount.

When you retired. June 6th 2015
Age at retirement. 53
Asset mix or portfolio style. Income/Conservative

What growth you have seen in portfolio since retirement ?
I consider the following 5 items as my net worth/portfolio.
Here's what those 5 were worth the month I retired.

*Taxable* Brokerage Account $459,271.00
401-k $239,609.00
Home Equity $100,000.00
ESPP $87,504.00
IRA $27,665.00
Checking $5,000.00
= $919,049.00

As of today, with one new category (HSA)

*Taxable* Brokerage Account $619,611.00
401-k $261,529.00
Home Equity $100,000.00
ESPP $90,509.00
IRA $46,732.00
HSA $9,340.00
Checking $1,034.00
= $1,128,755.00

How much you retired with/saved. $919,049.00
Pension now or later. Began drawing a private sector pension of $3,058.00 per month in July 2015.
I'm guessing my total expenditures are around $4,000.00 per month. Because I'm lucky enough to have a pension that covers 3/4 of that, I've actually been able to increase my net worth.

SS at what age. If you would've asked me that question 5 years ago, with zero hesitation, I would've replied ASAP.
Now, because I'm still about 5 years away from age 62, & more importantly, 8 years away from Medicare, I'm not so sure ?

I was going to go into detail about the problems I've had, relating to staying under the income guidelines for healthcare subsidies.
But after viewing some of your previous posts, it appears that with your net worth/assets, & the fact that you’re 62, that won't be an issue for you.

Good luck.

 

[Dtail]

4nursebee,
Please keep in mind that mostly anyone on this site that retired between 2009 and 2017 has had their portfolio grow even with >WR 4%.
Yes even before 2009..........

 

[daylatedollarshort]

I don't know what withdrawal rate we will end up with. A few pensions and SS (only one more left to start collecting!) will cover all or most of our regular retirement expenses, depending on how much discretionary spending we decide on. We use a matching strategy so the goal is to at least keep up with inflation, which gives us a 3.33% safe withdrawal rate (100 / 30 years of retirement left = 3.33%), plus any real yield.

Right now our focus is just staying under the ACA MAGI limit. The ACA has been kind of good for us in a way beyond the subsidies. We've had to live on less than we otherwise probably would have. But we feel pretty content with our lifestyle and spending now and are both into sustainable living and low consumption. I'm not sure we would find any value in raising our spending post Medicare age, except maybe to donate more to charity or help our kids buy houses, since housing is pretty expensive here.

 

[NW-Bound]

.3% WR for 2018.

Whoa!

Did you not have a WR of 1.5% earlier or something, and now it dropped even more?

 

[Sheryl]

Doesn't anyone more or less wing it I know I'll be fine if I spend <2% and probably okay if I spend <4%, and I'm planning to just buy what I want, generally, which is what I've done for the past 20 years, and spent an amount about = 3%.
There are always aberrations - kitchen remodel, rental house that needs a new roof... etc. but generally speaking that's a good average.

 

[NW-Bound]

Doesn't anyone more or less wing it I know I'll be fine if I spend <2% and probably okay if I spend <4%, and I'm planning to just buy what I want, generally, which is what I've done for the past 20 years, and spent an amount about = 3%.
There are always aberrations - kitchen remodel, rental house that needs a new roof... etc. but generally speaking that's a good average.

The above, I do.

Looking back, in my most expensive year I spent 50% more than my cheapest year. Why? I had my daughter's wedding, plus some other non-recurrent expenses.

I do look over the overall trend, to make sure that the "non-recurrent" expenses do not recur too often. That would not be right.

 

[ychuck46]

Asking for a lot of personal data

You are asking for people to open their financial kimono to you, and for what? I wouldn't give that information out to virtually anyone, let alone some anonymous person or entity on a web site.

 

[albundyz]

I have not looked at everyone's answer, but I think we took a slightly different approach to withdrawals. We live in So. California and our house is paid for, which makes a difference. We retired in late 2007. My company offered me a lump sum. Before taking the lump sum and retiring, I had tracked our living expenses and calculated that we needed to withdraw $66K for 2008 living expenses. Then, I simply added 3% each year for inflation. I ran this out to age 93. Then, I asked how much rate of return (on our IRAs) would we need to support that amount of withdrawal. The answer was 2.5%, so I took the lump sum and retired. We've gotten slightly more than 2.5% over the 12 years. For this year (2019), our budget is $92K and we're living comfortably. so, to answer your question, our withdrawal rate has varied because the balance in our IRAs has varied, but our yearly budget (the withdrawal) has always increased by 3%. At age 93, we may run out of money, if we do we'll probably sell our house and live off the proceeds and SS and still be comfortable.

 

[HI Bill]

SORR has the same conundrum. Let's say this first 5 years for you were just average. After 5 years, supposedly your SORR risk is now over, but for your friend it is just starting. How does that make any sense? You're in the same position, so don't you have the same risk?

If you retire early, use FIRECALC, and anticipate having SS or a pension kick in at some point, the number of years from your retirement date to the other income kicking in is the key that relates to SORR.

Let's say you start with $2.5M, and plan to start with a SWR of 4% ($100K annually). You don't enter SS or any other future income. Your first possbility of failure comes after ~22 years, and you have an 85% success rate.

Now, let's add in SS, 15 years after retirement. Your succes rate goes up to 100%! Once you start taking pension/SS, it's assumed that your distributions from your initial nest egg are reduced by that amount, and that the risk to the SS is theoretically 0.

IF my nest egg is (inflation-adjusted) close to the same or greater than it was when I retired, when start SS, I'm planning to recalculate my SWR, and increase my spending.

 

[RunningBum]

If you retire early, use FIRECALC, and anticipate having SS or a pension kick in at some point, the number of years from your retirement date to the other income kicking in is the key that relates to SORR.

Let's say you start with $2.5M, and plan to start with a SWR of 4% ($100K annually). You don't enter SS or any other future income. Your first possbility of failure comes after ~22 years, and you have an 85% success rate.

Now, let's add in SS, 15 years after retirement. Your succes rate goes up to 100%! Once you start taking pension/SS, it's assumed that your distributions from your initial nest egg are reduced by that amount, and that the risk to the SS is theoretically 0.

IF my nest egg is (inflation-adjusted) close to the same or greater than it was when I retired, when start SS, I'm planning to recalculate my SWR, and increase my spending.

I already factor in my future SS and pension benefits by giving them a NPV, and including those amounts in my investment net worth that I base my WR on. There are other ways to factor this in, but this is what makes sense to me so that's what I use. I know I'm probably in the minority.

Not counting SS and pension right now, I might take 6% now, and then 2% once those start. (I didn't calculate the actual values.) The 6% withdrawal may look high but knowing that I have SS+pension coming, it's fine. As long as I've got the funds, I can spend from them and even defer SS to 70 if I want, knowing I've got that money coming.

Looking at it another way, I strive to keep my spending equal (plus whatever inflation or VPW allows), rather keeping withdrawals from my accounts equal, without SS in the early years and then adding it later with SS.

But your first line hints at what I consider the correct answer for SORR risk. It's the number of years TO the end event, not the number of years you are into your retirement.

 

[NW-Bound]

You are asking for people to open their financial kimono to you, and for what? I wouldn't give that information out to virtually anyone, let alone some anonymous person or entity on a web site.

Posters including myself are giving info about their expenses as a percentage of their portfolio size. And that could be $1 million, or $10 million.

The info about the relative size of the expenses vs. the stash size is still valid, no matter what the numbers are in absolute dollar amounts.

 

[street]

Whoa!

Did you not have a WR of 1.5% earlier or something, and now it dropped even more?

no, in 3 years of retirement it has been .5% or lower. The wife is taking SS so it dropped a little more. It isn't like we are eating cat food or living in a cellar it is just what it is. We spend on what ever, when ever just don't need anything big or outrageous. Lol

 

[Sconie]

-DW and I both retired in mid-2012; my age is now 70, while DW will be 65 this fall.
-Our AA is approximately 60/32/8, Equity Index Funds/Bond Indexes & CDs/MMs.
-Almost all of our basic expenses are covered by pensions.
-I took SS at age 69 and DW will take SS at age 66, which will be in the fall of 2020.
-Since retirement, our withdrawal rate has averaged approximately 2.0% annually, with a high of 5.5% and a low of 0.5%. Withdrawals have generally gone for discretionary spending, including house purchase(upgrade), new vehicles, art work, trips and the like.
-Similar to Athena53's post, above, I like to look at the value of our total portfolio...how it has performed....after withdrawals. For us, after withdrawals, we are on average, up by 4.6% annually.

 

[NW-Bound]

no, in 3 years of retirement it has been .5% or lower. The wife is taking SS so it dropped a little more. It isn't like we are eating cat food or living in a cellar it is just what it is. We spend on what ever, when ever just don't need anything big or outrageous. Lol

No, I did not say or think the above. Rather, your 0.5% WR may be larger than my 2.5% WR because your stash is a lot bigger.

 

[street]

No, I know you didn't mean anything like that either. I do know we are going to have to give more away and that will come as we continue to get older. I will be a poor man when I start paying taxes on some if it though. Lol

 

[HI Bill]

I already factor in my future SS and pension benefits by giving them a NPV, and including those amounts in my investment net worth that I base my WR on...Not counting SS and pension right now, I might take 6% now, and then 2% once those start. (I didn't calculate the actual values.) The 6% withdrawal may look high but knowing that I have SS+pension coming, it's fine.

If you're taking 6% for more than 11 years before SS/pension kicks in, you do have significant SORR, and you may deplete your assets before you start SS/pensions. FIRECALC gives you a 38.5% success rate. For most people, the only SORR that they really need to worry about is making it to that first SS payment (assuming they're not FAT FIRE).

The point of adding SS and pension on the second tab of FIRECALC is that it then calculates your SORR in two phases: The years before, and after SS kicks in. If you add NPV of SS, then you need to go to the "Your Portfolio" tab and try to model the modest COLA you anticipate with those payments. But even doing so, you will be underestimating SORR if the duration is long enough.

I've calculated that if both my wife and I live to 100, social security would pay out $2M, in today's dollars. If I add that to a $2M retirement fund, I get $4M. If I take out 6%, the first year of failure is year 5.5, based on the $2M starting point, and I have a 100% failure rate based on a 40-year duration. I would still be 11 years from my first SS payment. I'm not sure there's a correct way to add in NPV of such future assets in FIRECALC.

Real life example: My mom took 6% average withdrawals from 2004 to 2018. She saw her non-inflation adjusted investments fall by 38% in that time.

 

[RunningBum]

As I said, I didn't calculate the actual values. I'm sure 6% is higher than what I'm really doing. I guess if I was at all concerned I might see if/how Firecalc actually does SORR in two stages, but with the nice returns I've had since retirement I'm not worried at all.

All I'm saying is that I don't have a steady WR and then a big bonus when SS kicks in. I take more early to account for not having to take nearly as much once SS starts. I'm sure I had more SORR than for someone who retires and immediately starts SS, in large part because they are at least 13 years older than when I retired.

 

[tomc5179]

When you retired: 2014
Age at retirement: 49
Asset mix or portfolio style: 70/25/5
What growth you have seen in portfolio since retirement: 1.34
How much you retired with/saved (how many x of expenses): 70
pension now or later? None
SS at what age? 70

 

[Perryinva]

I agree with the NPV of SS to calculate the amount saved multiplier of expenses as net fixed income against expenses. Apples and apples etc, ie someone with no pensions and small SS naturally needs a higher “times expenses” saved, vs someone with all expenses and then some covered by pensions and SS. But are expenses also including discretionary spend and gross required before taxes? It would appear I “only” saved 10x what my gross retirement income is required (by me, not just required expenses), but becomes 100x+ if I look at it as net expenses, including taxes not covered by fixed income, and all of that is discretionary. So what use is that number?

 

[pb4uski]

^^^ Unless you include mortality to derive an expected present value, it seems to me that any valuation of SS is flawed and likely to be overstated... not to mentionunnecessarily complex... why not just use the conventional approach of using the gap (spending less SS) as the numerator?

Can you provide and example? I'm having trouble following your post.

 

[Ronstar]

My rate is somewhere around 2.0%. Was a lot higher, but I sold our condo and the proceeds went into the portfolio. And I don't have the condo expenses anymore.

 

[Willers]

When I retired 4ish years ago I planned using a constant real dollar withdrawal and had about 35X expenses. In the reality of retirement I am budgeting using a % of portfolio each year.

Each year we've budgeted between 3.5% and 4% of investible assets (trying to blow that dough! , but have only spent about 2.5% each year. It hasn't been a conscious choice. It's just been what we felt like spending. I looked at VPW and think it is a good option for those that want a structured withdrawal, but we're fine with sitting down each December and saying ""OK, here is where we are. How much do we want to spend next year?" I'm guessing more than not (outside this board) proceed that way.

My AA varies a bit, but is now roughly 50/30/10. I started with a higher equity allocation, but my portfolio has grown 30% even with withdrawals, so I've drifted equities down.

We both have almost maxed SS coming our way (DW at 70, me likely 66-68 depending on what the calculators say) so we could be spending much more. We just don't need to.

 

[pb4uski]

Retired in at end of 2011 at age 56
Target AA is 65% stock/35% fixed income/5% cash
Current portfolio is 125% of what it was when I retired... if I consider our winter condo that was paid for from the portfolio to be an asset of the portfolio, then make that 135%.
Retired with ~25x expenses
Fixed pension started in 2016... covers about 20% of expenses.
No SS yet... DW will start at her FRA of 66 + 2 months and I'll likely start at 70.

WR for 2018 and 2017 was ~3.6%.

I just wanted to clarify... we don't live slavishly to a withdrawal percentage. Quite the opposite.

We withdraw what we want/need to spend... our spending is constrained by our sense of values... the WR is calculated based on withdrawals described above as a reasonableness check on whether we are spending too much... if our WR was more than 5% I would start digging into details. I say 5% because we have reinforcements of SS coming in about 3-7 years which will dramatically reduce our withdrawals.

 

[Willers]

I just wanted to clarify... we don't live slavishly to a withdrawal percentage. Quite the opposite.

We withdraw what we want/need to spend... our spending is constrained by our sense of values...

This is the way we look at it too. We spend according to what we value. No need to spend beyond that. I think more than a few on this board look at it this way.