Your actual SWR goal

[Arif]

Just curious what folks are planning to use as a savings withdrawal rate. Particularly those that are young (30 to 40s) and retiring without a pension who might have 50-60 years in ER.
We all pretty much have heard that the 4% rule will keep you from eating cat food (unless you want to) in old age. However, if 4% is safe then 2% must be twice as safe and thus be even more bullet proof.
I plan on using 2.5% to 3% but it is not based on any research, just "gut" feeling and a desire to not return to work when I'm 80.

 

[Webzter]

3%

Will probably work part time at that point as well. The thing is, I am good friends with my boss, work 35 hours a week most days, get 4 weeks of vacation and 2 weeks of holidays, and am paid an obscene amount. The party won't last, but work is actually not a chore right now

 

[Darryl]

Planning is all based on 4% no plans to go over that but if investments do especially well or work is going well and I stay longer. I may use a smaller %.

 

[W2R]

I'm not all that young (59, planned ER at 61 or 62). However, I am assuming a 40 year retirement due to some longevity in my family.

I am basing my planning on an SWR of 3.5%. I have read that 4% is good for 30 years, 3.5% for 40 years, and 3% will last infinitely. But the 40 year value is the only one I have paid much attention to.

 

[Meadbh]

2%, for a number of reasons, e.g. no pension, family longevity, plans to move to an area with higher costs, and my desire for a cushion. Could RE now at 4% but another financial goal will help keep me interested for the next several years of w*rk.

 

[Helen]

Our withdrawal rate won't be uniform. My partner and I are planning to retire when we are 55/56 (she can go at 55 and six months later I can bail at 56).

The first four years we will live entirely off our after tax savings. At age 60 both our pensions will kick in and we'll supplement the rest with a 4% WR. 2 years later we will begin SS and if we want we will take 4% from the IRAs.

Those first four years will be expensive. We won't touch our IRAs until we're 60.

 

[CyclingInvestor]

I am 48, retired, living on the dividends of high quality stocks that generally increase
earnings/dividends considerably faster than inflation (PG, JNJ, GE, KIM, GGP,
VNO, WRE, etc). Currently that amounts to about 3%, with about 50% as easy
to trim travel/entertainment expenses in case I see dividend cuts.

 

[Alex]

5% using the 95% rule.

 

[Ed_The_Gypsy]

I messed up. I voted 3.5%, but I am really thinking a straight 4% of total every year.

 

[firewhen]

2% because that is my nature. If 4% is safe, then 2% is twice as much so (maybe not mathematically but it seems so). Also, we are already at 2.5%, so saving alittle more and watching the portfolio grow should not be that difficult. We are also on the younger side, and waiting until 50 seems more prudent and acceptable.

Depending on how things go, if the market stalled, and a number of years went by, might not wait until 2%, but that is my preference.

 

[firewhen]

Arif,

I might also add that it was funny seeing the 1% and 1.5% choices. The lowest I have ever seen talked about is 2%. Even I am not willing to go below that, though it will be interesting to see if anyone votes (and hopefully talks about) those choices.

 

[landover]

My plan was for 3%(fixed)+2%(variable), but with the appreciation of currency of my original country where I returned recently, I am thinking 2%+2%. Variable 2% is mostly travel expenses so mostly not in local currency.

 

[haha]

Arif,

I might also add that it was funny seeing the 1% and 1.5% choices. The lowest I have ever seen talked about is 2%. Even I am not willing to go below that, though it will be interesting to see if anyone votes (and hopefully talks about) those choices.

I was below 2% until I experienced an event that changed the denominator. I am still below 3%, and I will work before I go above this. Not because I expect failure, but because life is full of surprises and I like having financial power.

Ha

 

[kramer]

I am 41 and just semi-fired and am at right about 3%, although my budget would seem low to some FIRE-ees on this board (so I selected 3%). But I plan to work for a year or two overseas in my first five years of semi-FIRE, bringing my first five year SWR to an average of 2% per year, hopefully.

I am also a renter, have never owned a home, and I may not get one until I can buy into a lower cost age 55+ community in 15 years.

My thinking is more along the lines of withdrawing 3% of the portfolio per year, not 3% inflation-adjusted. By my late 40s, I will probably be drawing something that is inflation-adjusted, i.e., I will be less willing and able to supplement my income with work if the portfolio drops and being older and closer to Social Security should make that less necessary, anyway.

As a single person, my biggest "risk" is getting married and starting a family. So if I end up doing that, I might have to go back to work -- it would be willingly, of course, but something like that is more likely to make me go back to work than anything else -- by far, probably. I would assume that for very early retired married people their biggest risk is divorce.

Kramer

 

[Coach]

I'll be starting at about 6%. That will go down when SS kicks in. That's higher than may people would be comfortable with, but I'm single, no expectation of a particularly long life, no desire to leave an estate, and willing to reduce my withdrawal if things go badly.

Coach

 

[Zipper]

5% of whatever the year end balance is.

 

[unclemick]

Well let's see - been dinking around in ER for 13 years - I need to settle down and plan. Right?

5% variable with current yield of total portfolio(3% including Norwegian widow stocks) as a fall back position in a hard times mode.

1993 - 2005 was all over the map - selling and eating the duplex, stock dividends/merger type sells, temp job, small pension kicking in at 55, SS at 62 and finally doing some traditional IRA - wouldn't look pretty on a spreadsheet - lumpy years smeared out over lean years and all that.

Lost the book in Katrina - but had a Vanguard retirement booklet probably written in the late 80's that intimated(to me) that 6-8% wasn't out of the ballpark 'for old retired folks'.

Found this forum in 2003 and tuned into 25 times expenses!

How times have changed.

heh heh heh - anyone remember the high interest rates of the 70's, 80's? The famous stocks are dead article?

 

[tightasadrum]

vswr

I voted at 4%. That's really between what it will be starting around the first of the year, when I hope to end this madness, and the ultimate rate after pension and SS kick in. (6% to 3.5%) Since it's weighed to low side, I just picked 4%.

drum

 

[RunningBum]

Mine is about 2.5%. Like kramer, I'm a bit concerned that I need to cover myself if I do get married again, or otherwise miscalculate my budget for the future since I'm 45 now. I'd rather put in an extra year or two now than later.

 

[bots2019]

I voted 3%. Given that I'm anticipating some kids college costs, etc post-retirement it seems like 4% (+ extra stuff) would be too agressive as I'm planning for potentially 50+ of retirement.

There are worse problems than going a little conservative and ending up with a bigger pile than you expected - right?

 

[kcowan]

I started at 4% in 2002 and have revised the target to 3.5% as of 2007.

Using 5% for personal inflation rate and 9% for average portfolio returns. (Used to be CPI and 7% now adjusted to be more realistic with 5 years of actual experience.)

 

[Lusitan]

I'm in my early 30s and planning for a (hopefully) long FIRE period that will start around 40. I'm using 4% for all my planning at this point, but with a little cushion built into the annual dollar amount.

 

[retire@40]

I will be using 4% of which 1% (25% of the 4%) will be purely for entertainment and travel. So I can always go down to 3% in bad times by doing more free things for entertainment.

 

[Sam]

I'll be starting at about 6%. That will go down when SS kicks in. That's higher than may people would be comfortable with, but I'm single, no expectation of a particularly long life, no desire to leave an estate, and willing to reduce my withdrawal if things go badly.
Coach

Me too, Coach. Will be starting at 6%, and down to 4.5% when SS kicks in. I'm willing to reduce my withdrawal in bad times too. Not sure what your definition of long life is, but I have no plan to hang around after 80. A few differences from your situation: I'll do 6% for 9 years (53 to 62). I do plan to leave a reasonable inheritance for my kids.

Let's update on each other in 5, 10, and 15 years, and see if we're eating cat food, deal?

 

[Coach]

Me too, Coach. Will be starting at 6%, and down to 4.5% when SS kicks in. I'm willing to reduce my withdrawal in bad times too. Not sure what your definition of long life is, but I have no plan to hang around after 80. A few differences from your situation: I'll do 6% for 9 years (53 to 62). I do plan to leave a reasonable inheritance for my kids.

Let's update on each other in 5, 10, and 15 years, and see if we're eating cat food, deal?

Sam, 80 is about what I'm using for planning, too.

If I can manage it so that the check to the funeral home bounces, I'll be delighted, but odds are I'll leave a bundle on the table. No kids, so it will probably go to great-nieces and -nephews. There should be enough of them around by then that they'll get a nice little treat but nothing that will seriously affect their lives. Enough to remember their weird Uncle Coach.

It's a deal on checking back about the cat food. But PM if the news is bad -- I'd be embarrassed to admit it in front of our friends on here!

Coach