2015 Withdrawal Rate

[MichaelB]

Quote:

Originally Posted by 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]

Quote:

Originally Posted by 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]

Quote:

Originally Posted by 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%.

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.

Quote:

Originally Posted by N02L84ER 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]

Quote:

Originally Posted by Katsmeow 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]

Quote:

Originally Posted by mpeirce 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.