Have enough for 4% SWR

Retire2013

Retire2013

Recycles dryer sheets
Joined
Aug 7, 2009
Messages
489
Location
Southern California
Hello All! Happy Easter to those who celebrate this holiday. And Happy Spring to everyone else!

I write to share some personal happy news. As of last month, I have accumulated a nest egg that would give me 4% SWR if I quit right now. I will work an additional 2 to 3 years to bring that down to 3% SWR before I ER. I do NOT include the value of home in portfolio, only what's at Vanguard and Fidelity, etc.

Also, I have paid off my mortgage (sent Wells Fargo a check for $41K) this month and have zero car payments. I charge everything on a credit card to earn miles or hotel stays, etc. but I pay the entire balance at the end of each month to avoid paying any interest. I have zero debt. Feeling pretty great! Just would like you all to be happy with me! :dance:
 
Congrats, that is one of life's real milestones! I take it you're under 65 (like man of us) based on your WR target. Happy Easter.
:clap:
 
Great job. It's a lot easier to go to work on Monday knowing your FI
 
Great job, can't wait till we're there.

Happy Easter!
 
Congratulations!!! Nice work.

You say you would have a 4% WR if you quit now and are hanging in there to reduce it.

In my case, my WR will decline later on when I start a pension and again later on when I start SS. So in your case it may be that you 4% WR will decline later on if you have other income streams coming on line. If so, you may be more comfortable than you think.
 
That is a great position to be in - congratulations, and Happy Easter :dance:
 
Congratulations! I am happy for you.

Have a great Easter.
 
Retire2014 said:
I write to share some personal happy news. As of last month, I have accumulated a nest egg that would give me 4% SWR if I quit right now. I will work an additional 2 to 3 years to bring that down to 3% SWR before I ER. I do NOT include the value of home in portfolio, only what's at Vanguard and Fidelity, etc.
Click to expand...
Congratulations!

Serious request: could you update this post quarterly to share your thoughts on "Just two to three more years" versus the level in your BS bucket?
 
My understanding is that the 4% is a fairly safe withdrawal rate and covers all of your expenses. If your house and car(s) are paid off, you are much safer right now than the rule of thumb 4% suggests. Why wait to get to 3%? I say pull the cord right now!
 
Retire2014, congratulations on your achievement.

Reducing your WR from 4% to 3% means you need to increase your portfolio by 1/3 after inflation, which many would find challenging. Is this coming mostly from stepped up contributions or are you expecting oversized investment returns as well?
 
utrecht said:
My understanding is that the 4% is a fairly safe withdrawal rate and covers all of your expenses. If your house and car(s) are paid off, you are much safer right now than the rule of thumb 4% suggests. Why wait to get to 3%? I say pull the cord right now!
Click to expand...

Hi Utrecht, I really like your way of thinking, especially on Sunday nights when setting the alarm for the Monday commute to w*rk. The only reason I want to go for 3% is because I will have to buy my own health insurance. I am not eligibe for any retiree health benefits. But on really bad days, I can remind myself that I can pull the plug at any time and will not be living out of a cardboard box. I do feel much "safer" after reading your comment. Thank you.
 
utrecht said:
My understanding is that the 4% is a fairly safe withdrawal rate and covers all of your expenses. If your house and car(s) are paid off, you are much safer right now than the rule of thumb 4% suggests. Why wait to get to 3%? I say pull the cord right now!
Click to expand...
You may be overlooking an important variable.

4% is the classic safe WR based on a 30 year retirement. At 65, 4% is indeed considered safe. At 55, most would consider 4% WR pretty aggressive, lower probability of success. Many consider a 3-3.3% WR indefinitely sustainable, IOW you could retire at almost any age unless the future is markedly worse (real returns) than the past...

Given the OPs age target, I'd say it would be wise to shoot for 3% or so. YMMV
 
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MichaelB said:
Retire2014, congratulations on your achievement.

Reducing your WR from 4% to 3% means you need to increase your portfolio by 1/3 after inflation, which many would find challenging. Is this coming mostly from stepped up contributions or are you expecting oversized investment returns as well?
Click to expand...

Hi Michael,

You are correct with your math. That is what I've calculated as well. I need to increase my portfolio by a 1/3. I do not factor ANY investment returns in my calculation; the increase will come purely from savings. I have no mortgage and no car payment. I cook nutritious delicious meals at home for myself. My hobbies are inexpensive: yoga, and hiking w/ my dogs, and bicycling the many trails in and around Washington DC. Hence, I have a lot of money leftover each month to buy into more funds at Vanguard. I am assuming zero percent return from investments between now and 2014. That said, I also do not factor in any major market downturn between now and 2014 either. Thank you for your comment.
 
Is SS factored into your 4%? In other words, is the withdrawal your living costs minus SS or is it just your living costs?
 
Nords said:
Congratulations!

Serious request: could you update this post quarterly to share your thoughts on "Just two to three more years" versus the level in your BS bucket?
Click to expand...


Hi Nords,

Were you really being serious about quarterly update of thoughts on the "2 to 3 more years?" I would be happy to but 2 to 3 more years is such a long time that I worry I'd be a nuisance to Forum members if I provide update quarterly. I think there are many on this Forum who are living in the 2-to-3-more-years mode. :LOL:
 
pb4uski said:
Is SS factored into your 4%? In other words, is the withdrawal your living costs minus SS or is it just your living costs?
Click to expand...



I am eligible for SS but I have NOT factored any SS in any of my calculation. I am not sure it will even be there when I become of eligible age. I am assuming I will receive zero dollars from SS and no Medicare, i.e., I have to buy health insurance or go to Bangkok to get medical treatments (after reading Khufu's thread--this is a distinct possibility) if I should need a knee or hip replacement or anything major.

I also want to wait until 2014 to see what the health insurance situation will be. I have no pre-existing condition right now. I have excellent health but should I be diagnosed of something, I really am concerned about the pre-existing condition issue w/ health insurance.
 
Retire2014 said:
Hi Michael,

You are correct with your math. That is what I've calculated as well. I need to increase my portfolio by a 1/3. I do not factor ANY investment returns in my calculation; the increase will come purely from savings. I have no mortgage and no car payment. I cook nutritious delicious meals at home for myself. My hobbies are inexpensive: yoga, and hiking w/ my dogs, and bicycling the many trails in and around Washington DC. Hence, I have a lot of money leftover each month to buy into more funds at Vanguard. I am assuming zero percent return from investments between now and 2014. That said, I also do not factor in any major market downturn between now and 2014 either. Thank you for your comment.
Click to expand...
That's pretty good and a nice example of how to benefit from frugal living. Assume you have made some provision for unplanned expense?

As to the 4% vs 3% question, I say choose the one that works for you and lets you sleep well at night. Hope this works out, and yes, do keep us posted on your progress.
 
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