What was your WR YTD

[audreyh1]

But but but.......try this one: I have had 1 or 2 people repaying (interest-free) personal loans over the years. I take those monthly checks and deposit them into my bank account. These are independent income streams, not coming from my basic portfolio of investments. They don't have any impact on my spending, even though they were as much as 37% of my spending for a given year. (Now, it is about 20% of spending.)

These outside income streams have had a small impact on my calculated WR because the portfolio's value (i.e. denominator of WR calculation) is slightly higher than it would have been. But the numerator, my spending, remained unaffected.

Adding outside funds to your retirement portfolio reduces your withdrawal for spending in any given year.

[This is assuming those outstanding loans are not counted as part of your portfolio, otherwise it would simply be return of principal and no net impact.]

 

[pacergal]

We actually made a WD this year, so 0.02%.
We have pensions and ss income.

 

[joesxm3]

My base WR for 2023 was 3.38%, but adding in the new Tesla it was 5.99%.

As I mentioned in the other thread, my base spending amount has been pretty constant despite inflation but the portion spent on hobby stuff has dropped considerably. So I guess I am automatically adjusting my spending to compensate for inflation. Just like they do when they substitute hamburger for steak in the inflation number calculation.

 

[Midpack]

Nothing is simple here...

 

[ER2B]

Our WR 2023 is just a tad over 1%. Need to withdraw more from retirement and taxable accounts and BTD but there is IRMAA.

 

[CRLLS]

To me the "W" in withdrawal rate is "Withdrawal" So WR is sum of portfolio withdrawals divided by portfolio. Any $ received and spent from anywhere other than a portfolio withdrawal is not figured in the calculation.

Agreed. If I started the year with 1,000,000 and added 50,000sometime during the year and over the year withdrew 75,000, I had 75,000/1,000,000 WR. Next year I start with whatever the value is as the end of this year as the denominator, Interest/dividend/growth included.

WR (withdrawal rate) is not comparing ending balance divided by starting balance or net growth, or any other form of mathematical gyration. It is simply how much was withdrawn and has nothing to do with growth or contributions.

I think that most of us here have a bank(ish) account somewhere that is used for daily finances.

We had a WR of 0.0% meaning we did not tap into our "retirement bucket" including our tIRAs and Roth IRAs and Inherited IRA for spending. If we count a strategic RMD withdrawal of the inherited IRA, the WR is ~0.6%. It is arguable WRT that last part being a true withdrawal in the manner that we are talking here.

Does anyone include RMDs as part of their WR, even if some/all of it went to another investment account and the taxes?

 

[W2R]

Nothing is simple here...

+100000000000

You all are confusing me beyond belief with all your different methods!

Here's my method so far, which is deeply flawed:

I took what I spent and subtracted income from pension, SS, and RMDs (but not dividends which I probably should have done). Then I divided the remainder by my portfolio value on 12/31/2022. That gave me a WR of 1.12%.

Surely that can't be right! But there you go, for what it's worth (probably nothing). I'll work on it more later and come up with a more sensible WR.

 

[Major Tom]

Expressed as a fraction of my portfolio value on 12/31/2022, my 2023 WR was 2.78%. I will pay myself the exact same amount from my portfolio in this coming year, so expect my 2024 WR to be ~2.37%, based on the portfolio value as of 12/31/2023.

At the end of every year, I make one annual withdrawal from my portfolio to fund the next year's spending. This may not be how others calculate their WR, but I don't sweat the exact figures that much, especially as I am only 2 years away from early SS. I highly doubt that I will take SS early, but it's a great comfort to know that it's there if I want it.

EDIT -
I just saw W2R's post when I made mine (we were probably typing our responses at the same time). W2R - I think you and I are similar, in that we don't worry too much exactly how we are calculating our WR's. I have a built-in "spidey-sense" for when my spending is beginning to take me out of my comfort zone, and I apply the same "feels" to my portfolio withdrawals. The precise WR figure is not important to me; I don't need to know it in order to ensure that I won't run out of money.

 

[audreyh1]

In your first paragraph your net portfolio withdrawal was $25,000 because you added $50,000 I’m assuming from outside sources.

It depends on where the RMD went. At least the taxes will be added to your expenses. If you reinvested the RMD then net after taxes it would not be a withdrawal.

 

[street]

Agreed. If I started the year with 1,000,000 and added 50,000sometime during the year and over the year withdrew 75,000, I had 75,000/1,000,000 WR. Next year I start with whatever the value is as the end of this year as the denominator, Interest/dividend/growth included.

WR (withdrawal rate) is not comparing ending balance divided by starting balance or net growth, or any other form of mathematical gyration. It is simply how much was withdrawn and has nothing to do with growth or contributions.

I think that most of us here have a bank(ish) account somewhere that is used for daily finances.

We had a WR of 0.0% meaning we did not tap into our "retirement bucket" including our tIRAs and Roth IRAs and Inherited IRA for spending. If we count a strategic RMD withdrawal of the inherited IRA, the WR is ~0.6%. It is arguable WRT that last part being a true withdrawal in the manner that we are talking here.

Does anyone include RMDs as part of their WR, even if some/all of it went to another investment account and the taxes?

I would say you should. Portfolio at start of and compare to end of year you will see the expense of taxes. So, more expense and less stash will give a better WR come the year end. If you spend the RMD than it will show up as a WD other wisw it isn't a WD.
IMO

 

[audreyh1]

You all are confusing me beyond belief with all your different methods!

Here's my method so far, which is deeply flawed:

I took what I spent and subtracted income from pension, SS, and RMDs (but not dividends which I probably should have done). Then I divided the remainder by my portfolio value on 12/31/2022. That gave me a WR of 1.12%.

Surely that can't be right! But there you go, for what it's worth (probably nothing). I'll work on it more later.

Dividends are part of the portfolio.

The RMD is a withdrawal if you spent it. If you reinvested the RMD it’s not a withdrawal. Taxes owed on the RMD might be an expense this year or next depending on when you pay or withhold the taxes.

 

[Finance Dave]

+100000000000

You all are confusing me beyond belief with all your different methods!

Here's my method so far, which is deeply flawed:

I took what I spent and subtracted income from pension, SS, and RMDs (but not dividends which I probably should have done). Then I divided the remainder by my portfolio value on 12/31/2022. That gave me a WR of 1.12%.

Surely that can't be right! But there you go, for what it's worth (probably nothing). I'll work on it more later and come up with a more sensible WR.

This is how I think of it, and ours is therefore .9%. We have a small pension, and I make about $5k/year doing some minor handyman tasks. This past year we sold a rental and used some of that profit rather than withdrawing a lot from retirement accounts. Neither of us is yet on SS, but DW will start during 2024. I would guess over the next few years we'll be around 1.5% or so.

 

[FREE866]

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.

 

[joesxm3]

They way I look at it is that before retirement your planned withdrawal rate is useful for projections, but after you have pulled the trigger you may as well just let the ducks fall where they may.

In 2022, my portfolio losses were many times my spending. So except for a new roof or car I really don't worry about what I am spending. Especially taking into account the die early scenario.

 

[Sunset]

I thought for FIRE purposes that WR was determined at retirement. ie. If you have a million dollars and withdraw $40k that is 4%. Next January 1 you withdraw $40k plus CPI for last year and you should be able to make 30 withdrawals 95% of the time.

This is a 4% WR to me. Anything else is some kind of variable withdrawal scheme where you are trying to mitigate some perceived risk or benefit from current market and life conditions. This is more practical and probably wise, but undercuts the math behind the 4% recommendation in the first place.

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.

 

[Cobra9777]

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.)

For us, it's 3.1%, which is much higher than last few years, mainly due to increased travel. But probably lower than it could be considering we are pre-SS.

 

[PatrickA5]

Our 2023 Withdrawal Rate was a negative 33% due to DW still working part of the year and a large inheritance added to the portfolio.

2024 will be our first year of no outside money coming in (other than my SS), so we will have an actual WR somewhere around 4.25%. This will go down to sub 2% once DW starts SS in a few years.

 

[5Miler]

I also consider my WR to be computed as Withdrawals for 2023/Investment account balances as of 12/31/2022.

I have computed my WR to be 0% for 2023 as I live off of SS.

DGF spent a similar amount but her WR was 2.09% as she is not on SS but earned a small amount from her play around Travel Agent gig.

Together our WR was 1.40%.

I did have two withdrawals during the year. I withdrew $8K from my Roth in Feb to cover estimated expenses for an implant but it ended up costing much less so this money was redeposited in my after tax account. Guess I should have waited until an actual bill was presented.

I also converted $30K of my TIRA to a Roth but all taxes were covered via withholding from my SS benefit so I don't count it as a withdrawal.

 

[rodi]

3.6%

That's with 2 kids in college with expenses that are *not* qualified for 529. Plus purchasing a used car for one of the kids. Tax expense on a Roth conversion. Plus some serious travel. We definitely had some big ticket spending this year. It remained in the range I like, in part, because we have a new tenant with higher rent in our granny flat. My goal is to keep it in the ballpark of 3.5%.

Income not from withdrawals includes DH's SS, my micro pensions, and our rental income. I only count money withdrawn from the portfolio. It will change when I start collecting SS in 5-7 years. RMDs will be in effect, but if you just reinvest the money after paying taxes, the only withdrawal is the taxes paid.

 

[W2R]

+100000000000

You all are confusing me beyond belief with all your different methods!

Here's my method so far, which is deeply flawed:

I took what I spent and subtracted income from pension, SS, and RMDs (but not dividends which I probably should have done). Then I divided the remainder by my portfolio value on 12/31/2022. That gave me a WR of 1.12%.

Surely that can't be right! But there you go, for what it's worth (probably nothing). I'll work on it more later and come up with a more sensible WR.

Dividends are part of the portfolio.

The RMD is a withdrawal if you spent it. If you reinvested the RMD it’s not a withdrawal. Taxes owed on the RMD might be an expense this year or next depending on when you pay or withhold the taxes.

Thank you, Audrey! I always trust your logic and computations as some of the best available on the forum.

OK, taking those adjustments into account, my second stab at this would be 1.44%. Still working on it to make sure.

 

[Dash man]

4.73% of investments and 3.27% of Net Worth compared to 12/31/2022. We did some home improvements to a beach house and added solar to our primary home.

Overall 2023 year end Net Worth is up 8.1%

 

[MdaPetralia]

Rather than just list the actual WR, I think the better exercise would be to compare actual WR vs budgeted WR.

2024 - 1.91% budgeted
2023 - actual WR 2.54% vs 2.06% budgeted - actual higher due to large lumpy exp (car purchase, furnishing new home)
2022 - actual WR 1.47% vs 1.65% budgeted)
2021 - actual WR 1.46% vs 1.67% budgeted)

No pension, W-2, or SS income.

 

[Rosie]

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.)

Y'all made me look.

This rainy morning I was puzzling, over many cups of coffee, how to figure out our portfolio withdrawal rate, and Cobra's is the approach that made the most sense to me. (I think that's how W2R and some others did it too?).

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.

So by that method, our YTD WR is 1.6% of our portfolio. Works for meee.

Oooh the sun's coming out, time to head out for a walk!

 

[jollystomper]

Ours was 1.38% or 1.56% (rounded to 2 decimal places) depending on the simple calculation one chooses .


The former calculation is


(Spending - (Pension + SS)) / Cash+Investments as of 12/31/2022


The latter calculation is


(Spending - (Pension + SS)) /Investments as of 12/31/2022


Submitted for your approval...

 

[Dtail]

We spent 4.8% as not taking SS yet.
So my definition of a WR using an example is as follows.
1m portfolio
Spending 100k
SS and Pensions equal 60k.
So the net WR using investment assets is the remainder of 40k which is 4%.