Do you have a zero withdrawal rate?

[travelover]

Why do you care? It's not one size fits all.

Yea! Of all the nerve, asking a financial retirement question here.

 

[NW-Bound]

Question for OP: Do RMDs count if you reinvest them all?

Not the OP, but I will not count RMD as withdrawal unless I actually spend it.

I will definitely count the tax withholding as an expense or WR. It shrinks my stash, so how can I ignore it?

 

[Floridatennisplayer]

Never thought of that since I’m 64. So my curiosity is for prior to that milestone.

 

[targatom2019]

age 50, third week into retirement and have no intention to withdraw from brokerage, Roth, TIRA or roll over IRA accounts.

 

[NW-Bound]

I read in the news about some California state workers getting pension as high as $390K/yr. And it is even COLA'ed.

No IRA needed for these folks, let alone WR.

You would need an IRA/401k of $10M to get that WR.

 

[rk911]

essentially a zero withdrawal rate. we live off of SS and pensions, 14-years now. and we're still living waaay beneath our income.

 

[SecondCor521]

My annualized spending is 2.34% of my FIRE stash. I have what I refer to as NPI (Non-Portfolio Income) of various sorts (side gigs, etc.) which total 1.72% of my FIRE stash, so my net WR is 0.62%.

However, I make all sorts of adjustments and provisos to get to that number which may not pass muster with anyone else even if they make sense to me.

FIREd, age 50.

 

[Souschef]

You have been withdrawing from your portfolio. I’m talking about zero portfolio withdraws. Where your income (SS, pensions, part time job, annuity) covers your annual expenses.

Our income from SS and pensions covers all our regular expenses. However, the RMD is used to pay taxes and gifts for our sons and to charities.

 

[daylatedollarshort]

After this year, pensions, SS, some odds and ends income and .29% WR will cover our planned retirement expenses, though we have talked about upping the WR rate to 1%.

 

[Alan]

We will stop making withdrawals in 2 years when we start taking US and UK SS, and also we will have completed our IRA to Roth conversions. (We currently are receiving 4 private pensions)

 

[FIREd]

The opposite here. No income streams at all yet, and only SS expected in the far future. So all living expenses are supplied by the portfolio.

+1. WR below 2%.

 

[GenXguy]

I'm not FIREd yet, but my current spending is slightly over 1% of my FIRE stash. SS would pay 100% of my expenses, but due to discretionary, I expect to have a 2% WR even at that point and probably close to 4% prior to SS kicking in. Currently, job pays for everything and can save 70%-80% to build stash, so I have a negative withdrawal rate.

 

[socca]

Curious who else has a zero withdrawal rate. Income that meets or exceeds expenses.

My preferred approach is to reject "safe withdrawal rate" as a framework for retirement financial planning, rather than claim a "zero withdrawal rate". I use the old-fashioned (obsolete?) approach of defining my means as my income, and live within that.

 

[wmc1000]

Now that we are both receiving SS, (started at FRA), our WR has dropped to zero.

 

[ShokWaveRider]

We just use/withdraw the dividend returns on our stash. It does not go up by much annually but it has not started to deplete yet after 10 years being FIREd either. We do not take SS or my UK pension yet either.

Currently I would estimate, just like European Interest Rates our stash gives us about 1% to use it.

 

[audreyh1]

The opposite here. No income streams at all yet, and only SS expected in the far future. So all living expenses are supplied by the portfolio.

+1. WR below 2%.

Wel, ours is higher, deliberately so. We withdraw around 3% of retirement assets annually. Probably should be even higher.

When SS starts we’ll probably just let our annual income increase. Maybe gift more aggressively. Same with RMDs.

 

[CRLLS]

I'm not really sure what this question means in a financial sense. I can certainly purchase an annuity and get my WR to zero. Or I could have not rolled over my pensions. I guess some people just "feel better" by not seeing monthly, quarterly or annual withdrawals.

FWIW, our current WR from our investments was 2.5% in 2018. Currently I'm collecting spousal benefits. Our WR would be <1% once my SS@70 kicks in. Our WR could be zero if we paid off the mortgage. So really, what does that mean?

Interesting question. I personally don't think it means anything. As someone once said, " Money is fungible".

 

[Midpack]

Some related insights in this 2018 thread. All FIRE and all SIRE are very different, so replies from FIRE folks are usually very different than replies from SIRE folks - often unknown to readers...

http://www.early-retirement.org/forums/f28/poll-sire-vs-fire-at-er-org-94307.html

 

[Midpack]

I'm not really sure what this question means in a financial sense. I can certainly purchase an annuity and get my WR to zero. Or I could have not rolled over my pensions. I guess some people just "feel better" by not seeing monthly, quarterly or annual withdrawals.

FWIW, our current WR from our investments was 2.5% in 2018. Currently I'm collecting spousal benefits. Our WR would be <1% once my SS@70 kicks in. Our WR could be zero if we paid off the mortgage. So really, what does that mean?

Interesting question. I personally don't think it means anything. As someone once said, " Money is fungible".

It’s become increasingly rare (private sector at least) but some folks have generous pensions (congrats) - that exceed their spending with/out Soc Sec. That seems to be the underlying question of this thread. “Who else has a big pension?”

And as you say most people here could buy and annuity and become zero withdrawal households - but I’d almost never recommend it.

 

[ShokWaveRider]

I'm not really sure what this question means in a financial sense.

Me neither. I would like to know what the actual term WR really denotes.

What I mean is: Is WR based on the amount taken annually from One's overall investable asset stash (Not Home, car Etc.).

OR is it based on the amount taken annually from One's overall investable asset stash plus/Including any gains, dividends or interest.

E.G. If one's nest egg on January 1st xxxx is $3.5m and one withdraws $70k pa from it, one's WR is 2%?

If one's nest egg on January 1st xxxx is $3.5m and it returns 5% ($175k) and one withdraws $110k pa from it, one's WR is 3%?

In other words is WR based on before or after additions of returns?

Assume that the WR is take in a lump sum on December 31st for these examples before taxes.

 

[mountainsoft]

I’m talking about zero portfolio withdraws. Where your income (SS, pensions, part time job, annuity) covers your annual expenses.

Once my wife and I start drawing SS, her pension and SS should easily cover our expenses. At that point we'll probably have zero portfolio withdrawals, other than one-off unplanned expenses.

However, until we can draw SS our withdrawal rates will be around 8-10% for the first few years of retirement.

 

[Rianne]

Is cash part of the portfolio? We have a stash of cash. The definition of portfolio includes cash, but I don't include the cash outside of the investment portfolio. We have cash as a supplement to DH LLC income to stay in ACA requirements. We do not W/D from "portfolio." Reinvest all CG, interest, dividends. When determining the 30 year stretch, I don't include the cash outside of our investment portfolio. And I don't include the outside cash in NW. Probably doing it wrong, but when we're 65 in 3 years, pension kicks in. Then 66.5 SS kicks in. That covers our expenses, provided spending stays as is. Our concern is RMD.

 

[ivinsfan]

Sorry, Ivansfan, not sure why this seemed to anger you.

I only asked, because today at lunch with some newly retired buddies they asked what kind of withdrawal rates each other was dealing with. I asked what they meant. They said withdrawing from your portfolio to cover your expenses. And I see people here talking about their withdrawal rates and quoting financial articles talking about average withdraw rates.

I told them right now we aren’t needing to withdraw from our portfolio or anything as our income covers our expenses.

Thus, I was curious about this as I am newly retired. Nothing I planned for, it just has ended up this way. So, I was curious about this.

Angry no, just thinking this is a pat yourself on the back type thread. Bolstered by your throw away comment that you didn't plan for it, it just happened that way. Most comments about SWR around here come into play when people are discussing future retirement goals or comfortable living in retirement. It's not used a yardstick of who has the highest or the lowest SWR....You didn't know what your buddies meant when they talked about their SWR's?

 

[Sue J]

Well, we have a zero withdrawl rate, for our normal monthly expenses. DHs pension is more than our monthly cost of living and many months I save the extra, usually that's about 20% of the pension. I also have a little part time income (school crossing guard, low pay but I enjoy it!) and I started my Social Security (718 a month) a few months ago. Most of the time I can save both of those.

Then the big lumpy things happen like a cash wedding gift (2017) to our son and daughter-in-law, we bought a new to us used car and some years we seem to have something medical that's bigger than normal. Oh, this year we finally did a new kitchen! That's really the only time we withdraw anything.

But we are not wealthy! We just live in a low cost of living area with no mortgage and no debt. We are very comfortable living on DHs pension. It's not huge but it covers our ongoing monthly expenses so to us it's PLENTY.

 

[ivinsfan]

Well, we have a zero withdrawl rate, for our normal monthly expenses. DHs pension is more than our monthly cost of living and many months I save the extra, usually that's about 20% of the pension. I also have a little part time income (school crossing guard, low pay but I enjoy it!) and I started my Social Security (718 a month) a few months ago. Most of the time I can save both of those.

Then the big lumpy things happen like a cash wedding gift (2017) to our son and daughter-in-law, we bought a new to us used car and some years we seem to have something medical that's bigger than normal. Oh, this year we finally did a new kitchen! That's really the only time we withdraw anything.

But we are not wealthy! We just live in a low cost of living area with no mortgage and no debt. We are very comfortable living on DHs pension. It's not huge but it covers our ongoing monthly expenses so to us it's PLENTY.

And if it's plenty for you, does it matter if it's less then zero one year or 5% another year? It doesn't...does it? I'd hate to see people think zero WR is somehow "better" and not enjoy things like a beautiful new kitchen. Zero will definitely leave more for your heirs but that's not the only way to roll.