What was your WR YTD

[DJRR]

It's a 4% WR the first year. After that, the actual WR will vary even while the person withdraws whatever the previous year + CPI

Because the stash will change, imagine if stocks and bonds fell 50% the second year. The person would still withdraw $40k plus CPI. But the withdrawal Rate would be around 8% due to the smaller denominator.

Sure, but the number doesn't tell you much, especially if you take no action. What I care about is the (S)WR. That methodology already accounts for investment variance.

What I assume is that if I make it to Social Security then I will follow something like Audreyh1 "I use the % of remaining portfolio method which is based on prior Dec31 value and takes the same % every year." At some point I will be less interested in my potential terminal value and more interested in maximizing my spending/giving.

 

[sengsational]

Just subtract non-portfolio income from total spending. That's your portfolio withdrawal. (Non-portfolio income means: pensions, SS, pay from a job, etc.)

Yes, I think that's the appropriate definition and safest way to calculate the rate; most of us can isolate income not driven by the nest egg, and money that's spent and gone (as opposed to exchanging it for an asset you will continue to hold and own)

But I basically took our spending for the year, and subtracted from that DH's SS and pension income (he doesn't have RMDs, yet). The resulting amount is the amt we had to take from our portfolio to fund our spending.

Yep, same as above. Net spending. I sometimes refer to it as spending beyond SS & pension. What can be confusing is asset driven income (unearned income, like dividends and interest). Since that's driven by the nest egg, that's not part of the calculation.

 

[braumeister]

Just subtract non-portfolio income from total spending. That's your portfolio withdrawal.

That's what I've always done. Mine varies greatly year to year, but over the last ten years I've averaged about 2.2%, so I feel very confident.

 

[HI Bill]

I use VPW. I have not started taking SS, so all of my spending comes from investments. I simply take the amount spent over the year and divide by the prior year's ending value.

2021: 4.7%
2022: 4.3%
2023: 6.0% (VPW says 6%)
2024: 7.0% (VPW says 6%, paying off a car)

You guys need to seriously up your spending, Blow that Dough, LOL!

 

[youbet]

My advice FWIW: don't try to add up your withdrawals. There are too many ways to get off track... dividends, transfers, partially reinvested RMDs, etc. Forget all that. Just subtract non-portfolio income from total spending. That's your portfolio withdrawal. (Non-portfolio income means: pensions, SS, pay from a job, etc.)

I don't have any trouble quickly and simply adding up withdrawals. I just add up the several amounts that I grab from our Schwab account during the year and that's it. It doesn't matter a bit what is going on inside your portfolio in terms of dividends, cap gains, RMD's, etc. The only number you need is the simple addition of your withdrawals during the year.

Spending does NOT come into play and your spending rate is NOT what you are trying to calculate. You're calculating your withdrawal rate.

So, Take your total withdrawals for the year and divide by your end of prior year FIRE portfolio balance and there's your withdrawal rate that year.

Spending shouldn't be part of the calculation and just adds unnecessary complications.

 

[FREE866]

I don't have any trouble quickly and simply adding up withdrawals. I just add up the several amounts that I grab from our Schwab account during the year and that's it. It doesn't matter a bit what is going on inside your portfolio in terms of dividends, cap gains, RMD's, etc. The only number you need is the simple addition of your withdrawals during the year.

Spending does NOT come into play and your spending rate is NOT what you are trying to calculate. You're calculating your withdrawal rate.

So, Take your total withdrawals for the year and divide by your end of prior year FIRE portfolio balance and there's your withdrawal rate that year.

Spending shouldn't be part of the calculation and just adds unnecessary complications.

This is exactly what I do

 

[scrabbler1]

I don't have any trouble quickly and simply adding up withdrawals. I just add up the several amounts that I grab from our Schwab account during the year and that's it. It doesn't matter a bit what is going on inside your portfolio in terms of dividends, cap gains, RMD's, etc. The only number you need is the simple addition of your withdrawals during the year.

Spending does NOT come into play and your spending rate is NOT what you are trying to calculate. You're calculating your withdrawal rate.

So, Take your total withdrawals for the year and divide by your end of prior year FIRE portfolio balance and there's your withdrawal rate that year.

Spending shouldn't be part of the calculation and just adds unnecessary complications.

To me (and, I suppose, to many others here), my withdrawal rate IS my spending rate.

My income comes from my investments (I am not old enough for SS or my frozen company pension, and I do not take any IRA withdrawals yet) and my friend repaying a loan (which isn't really income from an income tax perspective). Some of the investment income is automatically reinvested. But what I take as cash, along with the loan repayments, gets lumped together as cash which pays my expenses. Anything left over gets reinvested somewhere within a few weeks after receiving it, usually into the bond mutual fund which generated the cash (dividends) I get every month.

 

[youbet]

To me (and, I suppose, to many others here), my withdrawal rate IS my spending rate.

Sure, that's not unusual, especially for folks with very early retirements such as yourself. But in my case, my spending is funded by a combination of ongoing income (pension, SS) and FIRE portfolio withdrawals. My withdrawals are less than my spending. So, in my case, why bring in the complications of spending amounts when all I need is the withdrawal amounts?

(Annual withdrawals) / (end of prior year FIRE portfolio value) = WR.

 

[CardsFan]

I stopped tracking spending after 5 years into RE. But a quick look at what we moved into the checking account over the year says our WR was less than 1%.

 

[street]

^ I do at end of year for no real reason, other than to see what the number is. More for fun than any useable information it gives. It is a measuring stick from year to year for what was spent. So, many topics through the year on WR and the 4% rule etc. I have always run the number for my knowledge.

We have never had a budget in the 40 plus years of married life. But we have always known at the end of each what the total for all expenses were.

 

[HI Bill]

Spending does NOT come into play and your spending rate is NOT what you are trying to calculate. You're calculating your withdrawal rate.

So, Take your total withdrawals for the year and divide by your end of prior year FIRE portfolio balance and there's your withdrawal rate that year.

Total withdrawals less reinvestments could work. I think we have a semantics issue. When I have extra $ from my withdrawals, I reinvest them. Spending is what reduces the portfolio in terms of calculating the WR (not losses or gains). If you don't spend it, it doesn't count towards your WR, even if you withdrew it from an IRA, 401(k) or brokerage account (it's still an investible asset).

This all assumes you don't have income from SS, Pension, etc.

 

[TheWizard]

I don't compute my withdrawal rate as a percentage.
I have a good sized pension/annuity plus age 70 SS which exceeds my expenses most months.
So I have what we call a Negative Withdrawal Rate for the past few years. It was in the ballpark of $50k to $60k of excess income for 2021 and 2022.

This year I bought a new car and roughly broke even, closer to 0% WR, I suppose.

But there are three kinds of accounts: tax-free (Roth), taxable, and tax-deferred.
If I had an RMD of $40k for the year, then how much would I need to add to my taxable account to have zero WR for the year?
Assume my average Federal tax rate is 17%, not my marginal rate of 24%. And assume flat 5% state tax.
I hope this isn't too complicated of a question for most of you...

 

[ClarkeK]

4.16%

 

[GravitySucks]

If I take the dollar value of all the withdrawals in 2023 and divide that by my total investment balance on 1/1/2023 the rate is 3.9%


I think I'm using the correct calculation.

Same, both in percent and method.

 

[FREE866]

Same, both in percent and method.

Yeah, I just looked at numbers every year since retiring in 2017. The lowest WR was 2.2 % and the highest was 4.1 %. So I'm feeling pretty good.



I'm 57 now and plan is to take SS at 67 which at that point the WR will go down substantially.

 

[Cayman]

<2%
With 2 months of moderate spend on domestic travel this year. We're 57 not drawing SS yet and not drawing the small pension yet.

 

[mrfeh]

Your 2023 WR is the percentage of your portfolio as of 12/31/22 that you spent in 2023. That can’t be negative.

This is the definition I would use also.

Our expenses were 1.5% of our portfolio value at the start of the year.

 

[GhostofTomJoad]

It was a surprise to me that I had a negative WR percentage this year. I reworked the number a few times and came up with the same percentage.

YTD, we had -.40% WR. In the 7 years of ER, I had one other year as a negative. We had some BTD events this year so a surprise.

WTF is WR? Thank you.

 

[rwdflynavy]

WR 2.3% if calculated end of 2023. 3.1% if calculated at the beginning of the year.

We live mostly on my pension and VA disability and are spending down an inherited IRA and annuity from my MIL's estate.

 

[Lewis Clark]

WTF is WR? Thank you.

Withdrawal rate

 

[Dtail]

Total withdrawals less reinvestments could work. I think we have a semantics issue. When I have extra $ from my withdrawals, I reinvest them. Spending is what reduces the portfolio in terms of calculating the WR (not losses or gains). If you don't spend it, it doesn't count towards your WR, even if you withdrew it from an IRA, 401(k) or brokerage account (it's still an investible asset).

This all assumes you don't have income from SS, Pension, etc.

I agree with this concept, as I also reinvest the non spent withdrawals.

 

[DrRoy]

1.9% this year. The same amount will be 1.7% for next year due to portfolio growth. Max was 2.8% for 2021 when we had a couple remodeling projects.

 

[donheff]

Wow! Another net worth type topic we will be debating until we die or become addled.

My method, by the way, is the correct method and is in compliance with Firecalc and generally accepted financial advisor principles. I was about to post it, but I am considering calculating it as a paid service. I would provide a specific number to you each January. You could confidently plug it into your spreadsheet in various SWR rows: Trinity, Guyton, Bogleheads variable; Vanguard variable, etc. I'm thinking my fee would be .01% of portfolio assets. Does that sound like a reasonable rate for knowing your number?

 

[TheWizard]

For those of you who calculate your WR to two decimal places, how exactly do you do that?
Example: let's say my only withdrawal for the year is $50,000 on July 1.

So for the denominator, do you use portfolio value on:
1) 1/1/23?
2) 7/1/23, just before the withdrawal?
3) 12/31/23?

Or do you use Creative Accounting and choose the date with largest portfolio value so that your WR seems lower?

 

[rwdflynavy]

For those of you who calculate your WR to two decimal places, how exactly do you do that?
Example: let's say my only withdrawal for the year is $50,000 on July 1.

So for the denominator, do you use portfolio value on:
1) 1/1/23?
2) 7/1/23, just before the withdrawal?
3) 12/31/23?

Or do you use Creative Accounting and choose the date with largest portfolio value so that your WR seems lower?

I did 1 and 3.

WR 2.3% if calculated end of 2023. 3.1% if calculated at the beginning of the year.