Withdrawal Rate: your personal comfort zone.

[jollystomper]

my pre-retirement comfort zone is 2.5-3.0%. Based on current projections, to meet our planned expenditures we will start at 2.6%. But we will flex it based on what our actual experience is.

 

[kcowan]

I made 2 assumptions in my retirement spreadsheet. 4% WR and 7% growth in mainly equity (currently 68%) portfolio. Including inflation. That was 14 years ago. Last year my portfolio grew 11.2% and our WD was 1.8%. This was mostly due to purchasing a condo in Mexico in 2007 and living there about 6 months each year. It is amazing how we can snowbird, live high and save money! Without that 6 months in Mexico, our WD would have been around 3.5%. (unskilled workers make 80 to 100 pesos a day but can do most tasks)

 

[euro]

As we have no pensions, I'm more comfortable with around 3% or less but I could probably stomach up to 4% before seriously cutting back.

 

[Nemo2]

Thus far, DW & I, (and my late wife & I before that), have always spent just a little less than we're bringing in with interest income/dividends, and the Canadian close equivalent of Social Security, (no company pensions for either of us).

We travel a bit, enjoy each other's company, and want for naught....if the 'nut' keeps growing, our friends/relatives are welcome to it after we're gone.

 

[Taxman59]

Right now, over 6%, but I have an annuity coming online in 18 months which will reduce the WD to 5% then SSI in a few years after that which will reduce it to under 3%. There is also an inheritance which should come in in about 3-15 years which will increase the stash and drop the WD to under 2%.

 

[steadystate]

A couple of things:

The results are shaping into a classic bell curve, with mean at around 3.5%. I'm surprised it's not in the 2.5% range, given the seeming conservatism of forum participants.

I feel better, as someone trying to get up the nerve to pull the plug, that lots of other folks either plan to or have retired with withdrawal rates in the same ballpark that we are planning on. I'm trying to square myself with the concept of living off savings ... find it scary no matter what the numbers say.

 

[athena53]

I've averaged 3.5% in the 3 years since I retired due to heavy expenses of downsizing, but that's over and done with (new HVAC, many windows replaced, new plantation shutters) and I should be able to keep it at 3% this year. It should decrease in 6 years when I start collecting SS but I'll also get hit with taxes on RMDs so hard to say. I can go below 3% in a bad year but the travel and charitable donations would suffer.

 

[Ready]

I have no concerns about spending 4% because I know if it doesn't work out I can take a reverse mortgage, or sell my home and downsize. If we play it too conservative, we will just leave lots of money to charity. No children or heirs for us, so there is no reason to die with a big stash.

 

[Another Reader]

Zero, zip, nada, zilch.

I am forced to withdraw from an inherited IRA. I have two modest pensions, the rentals, and now Social Security. I pay more off in mortgages every year than I am forced to withdraw from the inherited IRA plus I contribute to taxable accounts. I'm STILL not comfortable with the concept of decumulation.

 

[RetireAge50]

I have every year mapped out including portfolio withdrawals, pensions, and social security. Plan is to continually adjust as market changes etc..

In any given year, the portfolio portion varies based on the other income streams. If I take the average portfolio withdrawal over 45 years and divide by starting portfolio balance I get 3.26%. Not sure if this means anything or not.

 

[ugeauxgirl]

I was having this discussion with DH this morning- the 4% rule study shows the absolute worst case scenarios- and the portfolio draws kept increasing even in a down market. Real people don't usually behave like that. Anyone with sense will reduce spending when their portfolio declines significantly, and most people spend less over time anyway. I voted 3.5-4 for this scenario- but as we're retiring really early, we'll be starting with a 3% draw. I have every intention of increasing that over time to include additional travel when the kids leave for college-

 

[NanoSour]

I ER'd in 2013 and track withdrawals using BG's Variable Withdrawal Percentage spreadsheet. Ran it for a 31 year retirement and this years percentage is 5.8%. I'm comfortable with this. The percentage goes up each year ending at 100% in 2043. Lots can change between now and then.

 

[redduck]

....if the 'nut' keeps growing, our friends/relatives are welcome to it after we're gone.

I'm not sure what your friends/relatives would do with it. It might make an interesting wall hanging. But seriously, if the 'nut' keeps growing you may want to see a doctor. It might need to be lanced.

 

[Gumby]

My actual comfort zone is 0%. I "retired" from my career job of 27 years in 2010 (with a pension) but then started consulting. The consulting proved to be far more successful than I ever would have guessed, so I am still adding to the stash. My pension is 100% of base expenses with nothing left over. My husband will start drawing SS next year (April 2018) at age 66. I will start drawing 50% spousal at Dec 2019 (my age 66) and then I will file for my full at end of 2023 when I turn 70 (I am the higher earner). But I am loath to withdraw any amount from savings/investments because I can't help thinking "well what if something happens in 5 years, 10 years, 15 years and I really need that money?" So, I dunno.

Similar thoughts here. We expect to retire in 2 years. Our planned WR is actually 0%, because pensions will cover our entire current expenses. I would be comfortable with a 2% draw on the portfolio to fund extra travel (can't think of anything else to spend money on), although that 2% is equivalent to half of our current total expenses, so it may be difficult to spend it all.

 

[scrabbler1]

As a percent of all investments, not just the taxable ones I have unfettered access to, my SWR has been in the 2.1%-2.2% range. As a percent of only the taxable investments, it is about 3.3%. Once I can begin access to my reinforcements in 6 years, my picture only improves.

 

[athena53]

Anyone with sense will reduce spending when their portfolio declines significantly.

I agree and that would be my plan in a bad year. It would be harder to do if you NEED all of that 4% and there's no wiggle room.

 

[Christine]

I use Variable Percentage Withdrawal and am comfortable with anything the formula suggests. So I voted more than 5%. I have a good pension as basis and have studied the logic behind VPW.

 

[Dwhit]

I am comfortable with a little over 5% at present, because I expect it to drop in a few years when I get the house paid off, become eligible for Medicare and get the last kid through med school.

 

[Nemo2]

I'm not sure what your friends/relatives would do with it. It might make an interesting wall hanging. But seriously, if the 'nut' keeps growing you may want to see a doctor. It might need to be lanced.

IIRC that's called a hydrocele.......Lance? Is that the doctor's name?

 

[mamadogmamacat]

It was 2.9% for my first year of ER. I voted 2.5 to 2.99, so it was nice to see for the first year, despite some unexpected home expenses and the pets health care being toward the high range of what was expected, that I was still in my "comfort zone".

 

[DrRoy]

3.5% Highest that is acceptable
3.0% Comfortable
2.5% Golden

I mostly agree with this. Personally, with a modest pension, I expect to be in the 2% range W/O SS (too young). It's my 1st month of RE.

 

[Looking4Ward]

Here are the annual withdrawal percentages of our initial nest egg as of the date we retired:

Yr 1 - 4.8%
Yr 2 - 9.8%
Yr 3 - 7.9%
Yr 4 - 6.1%
Yr 5 - 5.4%
Yr 6 - 4.2%
Yr 7 - 3.9%
Yr 8 - 3.5%
Yr 9 - 3.7%
Yr 10 - 4.3%
Yr 11 - 4.2%
Yr 12 - 4.5% (projected)

As to what we are comfortable with, I'd prefer under 4.0 but I'm not willing (nor do I see the need) to cut our spending to achieve that number. Don't want to leave the kids too much - bad for family harmony.

REWahoo, I'm curious after almost 12 years of withdrawals at that level what percentage of the initial nest egg remains?

 

[Ronstar]

My comfort zone is 3-3.5. But I seem to have more fun when I'm at around 4.

 

[bradaz2488]

Currently I'm comfortable with a 2.6% WR. They been ~2% for the past 4 years of ER


However, over the next 44 years of our ER plan the WR will slowly increase from 2.3% to 12%. The assumes a 6% return on a 60/40 AA, 2.5% inflation, 7.5% inflation for healthcare, no SS or Medicare benefits.

 

[REWahoo]

REWahoo, I'm curious after almost 12 years of withdrawals at that level what percentage of the initial nest egg remains?

Not accounting for inflation, we're about 10% above where we started. Using CPI numbers and adjusting for inflation, we're down roughly 15%.