2015 Withdrawal Rate

[jfn111]

Based on portfolio balance the 1st of the year
2013 2.96%
2014 2.70%
We have 4 years until the wife starts collecting her SS so we try to keep it under 3%

 

[2B]

REWahoo,
It looks like you started with a larger withdrawal rate, then declined--after SS or pension (or as a result of portfolio gains?)
I ask because I intend to withdraw at a higher rate until SS kicks in for both myself and DW, so I was curious about your experience, if this was the case for you. I'd like to draw 5-6%, then reduce to 4 and 3.5 after both of us start drawing SS.

I've addressed the SS delay with a sinking fund. I have the delayed SS and medical insurance pre-Medicare in a separate fund that is drawn down until Medicare and SS actually start. I can account for my WR either with or without this fund.

My 2015 plan is a WR of [-]7.37[/-] 6.56% with this or 5% without. That WR is "available to spend" and it includes (hopefully) currently unplanned vacations.

 

[2B]

To me, the "virtue" is appreciating what others do and why they make the decisions they make, and applauding them for making the right decisions for their own particular context.

To me the "sin" is judging and condemning congenial posts discussing members' individual and varying points of view regarding withdrawal rates, when you haven't walked a mile in the other person's moccasins (as the saying goes).

So, I think it is GREAT if you want to live happily during life, *and* help your family with the leftovers since that is apparently your (very valid) choice and point of view.

My original "sin" post wasn't intended to be aggressive. I'm just startled by the number of people focusing on living on a very small percentage of their assets. Many of these posts are from people that I believe to be safely over 60.

I could have retired on a modest budget sometime before 2005 but the concept had not occurred to me until I stumbled onto this forum. I've now worked too many OMYs. I don't see any reason to not attempt to enjoy my assets. My "sin" post was more of a challenge to people living on very small WRs. Why are you restricting your spending? If there is a plan that's great.

Just like nobody says "I wish I had spent more time in the office" on their death bed, I don't think anyone says "I wish I hadn't enjoyed my assets while I was still healthy."

 

[Meadbh]

My original "sin" post wasn't intended to be aggressive. I'm just startled by the number of people focusing on living on a very small percentage of their assets. Many of these posts are from people that I believe to be safely over 60.

I could have retired on a modest budget sometime before 2005 but the concept had not occurred to me until I stumbled onto this forum. I've now worked too many OMYs. I don't see any reason to not attempt to enjoy my assets. My "sin" post was more of a challenge to people living on very small WRs. Why are you restricting your spending? If there is a plan that's great.

Just like nobody says "I wish I had spent more time in the office" on their death bed, I don't think anyone says "I wish I hadn't enjoyed my assets while I was still healthy."

I can enjoy my assets more because I am confident that they will not run out. YMMV.

 

[Lsbcal]

...
I could have retired on a modest budget sometime before 2005 but the concept had not occurred to me until I stumbled onto this forum. I've now worked too many OMYs. I don't see any reason to not attempt to enjoy my assets. My "sin" post was more of a challenge to people living on very small WRs. Why are you restricting your spending? If there is a plan that's great.

Just like nobody says "I wish I had spent more time in the office" on their death bed, I don't think anyone says "I wish I hadn't enjoyed my assets while I was still healthy."

I understand what you are saying and it's good us to focus on a complete strategy instead of excess frugality and conservativeness. Perhaps "sin" is a bit strong.

The WR numbers are pretty meaningless without the personal context like:
age
percent needed for basics
percent needed for modest fund
percent needed for luxuries
minimum amount to be left to heirs

Complete strategy disclosure with numbers is a bit too personal for me. Plus this is the internet and there are some bad actors out there.

So some of us prefer to discuss how much our WR's are allowing us to have fun, what the WR trend is for us, and changes we make due to market forces and life circumstances. Seeing that someone used a tool and modified their strategy, and knowing some of their reasoning ... that is useful information to many of us here.

 

[MichaelB]

We will withdraw around 4%, the exact percentage will be determined at the close of 2014 later today.

Looks like we will be withdrawing 3.65% for our 2015 budget. Our spending rate hasn't been this low in a long while. The last few years have been very good, and our rainy day fund has been drawn down, so I think this is a good time to take a bit more from the portfolio and build it back up.

 

[grasshopper]

Celebrating 9 years of retirement this week, I still say saving was easy, spending is hard. My WR has been between 2.5 and 3%, but this is still 2/3 of what I should be spending. Travel and critters are the only thing we spend money on.

 

[Live And Learn]

This will be my first year of ER (11 weeks to go !!!). At current planned spending and portfolio value my WR will be 3%.

Updated my portfolio balance at year end and put 30k aside from portfolio to pay for dental work (all those dental work threads have scared me !). Projected WR is now up o 3.1% and contingency fund is now up to 363k (which includes 35k for home improvements which we will definitely be spending in 2015).

 

[robnplunder]

Vast majority of you are stifling the economy with your meager WR. Go spend more. I am doing OMY and my funds can use the infusion of your surplus money.

My WR rate is -10%.

 

[N02L84ER]

4.5% - expecting to do some major home renovations.

 

[2B]

Vast majority of you are stifling the economy with your meager WR. Go spend more. I am doing OMY and my funds can use the infusion of your surplus money.

My WR rate is -10%.

I'm wondering whether I too will join the 3%-ers after I actually retire. The switch from saver to spender may allow my miser tendencies to take over. Even with "unlimited" spending, I saved close to 20% of my 2018 gross.

4.5% - expecting to do some major home renovations.

Finally, a spender has come forth. For serious ER around age 40 to 50, I can see being careful with a nominal 3% WR. It seems overly conservative for someone in their 60s especially if they have disposable income beyond "necessities." Of course, spending 3% may fulfill all of their wants so that's good too.

 

[Katsmeow]

OK for a spender, our withdrawal rate was about 13% during 2014 and will probably be similar (maybe a little less) during 2015.

To be clear, no that is not the permanent WR we will be using throughout retirement.

So, the explanations:

1. We had 2 kids in college in 2014 and will have 2 this year (one will be done at mid-year if all goes as planned). The other finishes in 2016.

2. We always knew that we would have high withdrawal rates in 2014-2016 and I've run firecalc and other planners based upon that assumption.

3. Firecalc gives us 100% for the total retirement since our withdrawal rate will go down to 3% after 2016. (this is fine for us...DH is 67 and I'm 60)

4. To limit sequence of returns risk, we put aside the "excess" withdrawals for 2014 to 2016 in a short term fund/CDs so that we would never have to sell equities to fund this 3 year period.

5. While we withdrew 13% from the portfolio in 2014 we didn't spend it all -- some was withdrawn so we could withdraw in the 15% bracket money that would be needed in 2015 -- and the ending balance of the portfolio at the end of 2014 is about 6% smaller than it was at the start of the year.

 

[mpeirce]

So, the explanations:

1. We had 2 kids in college in 2014 and will have 2 this year (one will be done at mid-year if all goes as planned). The other finishes in 2016.

We have one in college too, but we had previously set aside money to pay for it (we set this aside while I was still working). It's outside of our "net financial assets" that we base our budget on.

Just how we chose to approach it.

 

[Katsmeow]

We have one in college too, but we had previously set aside money to pay for it (we set this aside while I was still working). It's outside of our "net financial assets" that we base our budget on.

Just how we chose to approach it.

Well, I could have said we were doing it that way too. That is, I could say that we "set aside" money while working that we are now spending for college and then I could figure Firecalc using lower assets and lower spending and then I would have a lower withdrawal rate. For example, last year we spent more after tax money in total than we spent on college so I could have not considered that part of WR and just said it was money we had set aside. If I did that then our "withdrawal rate" would be lower. But -- functionally -- nothing would be any different. That is, I would spent the same amount of money last year and our overall chances of financial success would be the same. So, I just lump it all together and look at the whole thing as a total.