My S(?) WR

[REWahoo]

My WR so far:

2010 0.0% - unexpected bonus from 2009 work
2011 1.14%
2012 1.33%
2013 2.16% - projected

Wuss.

 

[W2R]

I've just come to the end of my 3rd year, and my situation is non-COLA pensions supplying 70% of target spending on year 1.

My WR so far:

2010 0.0% - unexpected bonus from 2009 work
2011 1.14%
2012 1.33%
2013 2.16% - projected

That's great!

I retired on 11/9/09, about 2-3 months before you did. My "diet COLA" pension provided about 21% of my spending the first year.

My WR so far is extravagant compared with yours, though! Plus, I expect it to start rising precipitously soon, as I "kick in to gear" with my spending.

Based on portfolio value at the end of the previous year, my usual computation:
2010 2.61%
2011 1.98%
2012 2.12%

Based on portfolio value on the day of retirement in 2009, with no inflation correction:
2010 2.59%
2011 2.12%
2012 2.28%

 

[bbbamI]

You are my hero REWahoo! Maybe I won't sweat bullets when I decide to spend a little more money.

Here's our info...(both retired 55/58 currently)
DH retired in February 2009. We get a pension that covers 25% of our expenses. Won't received SS until 2016.

2009.....0% (there was enough money thru paychecks)
2010.....2.71%
2011.....3.27%
2012.....2.82%
2013.....3.5% (projected)

 

[Major Tom]

2012 was the first full calendar year that I was withdrawing from my portfolio. Expressed as a percentage of the value of my holdings at the beginning of the year, my WR was 2.65%.

AA is at about 60/35/5

For my projected WR for 2013, do I express that as a percentage of the portfolio value at the beginning of 2013 or at the beginning of my ER?

 

[youbet]

I've just come to the end of my 3rd year, and my situation is non-COLA pensions supplying 70% of target spending on year 1.

My WR so far:

2010 0.0% - unexpected bonus from 2009 work
2011 1.14%
2012 1.33%
2013 2.16% - projected

Alan,

A good way to handle your WR calculation when a blue bird like your unexpected bonus occurs would be to just add the bonus amount to your portfolio value and calculate the WR based on that. It's a bit misleading (for your own planning) to say the WR was 0.0%

 

[bbbamI]

2012 was the first full calendar year that I was withdrawing from my portfolio. Expressed as a percentage of the value of my holdings at the beginning of the year, my WR was 2.65%.

AA is at about 60/35/5

For my projected WR for 2013, do I express that as a percentage of the portfolio value at the beginning of 2013 or at the beginning of my ER?

I use the ending balance of each year for the next year. IOW, I'm planning on taking 3.5% from my portfolio balance (on Dec 21st, 2012) for expenses in 2013.

 

[obgyn65]

This is exactly the way I plan to do it also.

I use the ending balance of each year for the next year. IOW, I'm planning on taking 3.5% from my portfolio balance (on Dec 21st, 2012) for expenses in 2013.

 

[youbet]

For my projected WR for 2013, do I express that as a percentage of the portfolio value at the beginning of 2013 or at the beginning of my ER?

OM Tom.......

Two different things.

Beginning of your ER = initial withdrawal rate expressed as a percentage of your beginning of ER portfolio. Also expressed in nominal dollars.

Beginning of 2013 = current withdrawal rate expressed as a percentage of your current portfolio. If the percentage is greater than the initial withdrawal rate, then investments and inflation have been working against you. If the percentage is lower than the initial withdrawal rate, then investments and inflation have been working in your favor. Expressed as nominal dollars at the time, should be larger than the initial withdrawal by compounded inflation.

..._._

 

[REWahoo]

For my projected WR for 2013, do I express that as a percentage of the portfolio value at the beginning of 2013 or at the beginning of my ER?

As noted in my update, all of my annual rates are expressed as a percentage of my initial portfolio value when I retired. This is based on the methodology used in the classic Trinity 4% SWR study, which made no mention of using anything other than the initial portfolio value in the calculation.

I doubt we'll get agreement on this as noted from other replies. But for those who want to compare apples to apples, that's the basis for my numbers.

 

[NW-Bound]

A fun thread from the past...

The devil is in the details.

Sure is. For example, the following reply ....

Oh, and to provide a direct response to "So, what were all of you doin'?": Changing my underwear. Frequently.

... leads one to ask if buying Depend diapers would be cheaper than throwing out soiled underwear. And then how much the cost would have to be before it's worth one's time to add it as a Quicken expense category.

 

[REWahoo]

... leads one to ask if buying Depend diapers would be cheaper than throwing out soiled underwear.

So what's your safe Depends rate (SDR)?

 

[NW-Bound]

Ideally, it should be zero. I think one can train for it.

I remember many years ago, when I was taking Lamaze birth class with my wife, the instructor mentioned something about the Kegel exercise. Perhaps men can use similar techniques.

 

[Major Tom]

Thanks for the feedback REWahoo, youbet, obgyn65 and bbbam1. I intend to base my withdrawals on the initial portfolio value, but will probably "reset" with a new initial starting value at some point in the future. Many people haven't been specifying how they were calculating the WR values they were quoting, hence my question. I was wondering if there were some commonly-adopted standard in this thread that I had missed. It would seem not!

I began withdrawals at the beginning of July 2011, so expressing my WR's as a percentage of the starting value, they were

2011 - 2.57%
2012 - 2.57% (same dollar amount - no adjustment for inflation)
Projected for 2013 - 2.57% (I'm going to tough it out and try not to adjust for inflation for a while)

Oh, and youbet - Tnx OM, vy FB es 73

 

[youbet]

Tom,

I think there is value in understanding your withdrawals in terms of both initial portfolio value and current portfolio value.

When using only the initial portfolio value, withdrawal rates will always rise through time. You increase the withdrawal amount with inflation over time while holding the portfolio value steady at the beginning value.

When using current portfolio values, both withdrawal amounts and portfolio values (might) vary. Withdrawal rates may go up or down. I think there is some value when, after years of retirement, you note that (if things have been going against you) your current inflation adjusted withdrawal is, say, 50% of your remaining portfolio because your portfolio had been devastated by a deep, prolonged recession or whatever. At that stage, looking back at a far distant initial portfolio value might be interesting but not all that pragmatic........

I look at both numbers. But it makes a whole lot of sense, as mentioned, to state which method you're using. For folks using the constant percentage method, it's always going to be the current portfolio value. For Trinity folks, I guess it would be the initial value. For folks like me who spend what they're comfortable with at the time, well, better call out whether initial or current value since we're likely looking at both.

It looks like my 2012 WR was 3.9% of my EOY 2012 portfolio value. It was 4.9% of my initial portfolio value. The relationship of the 3.9% to the "magical 4%" figure is strictly coincidental. We had some extraordinary expenses this year all of which were counted in the withdrawal rate including helping the DIL buy a new Forester, spending time with a Mercedes driving periodontist getting a dental implant, initial funding of a 529b for the grand daughter, fed taxes due to Roth conversions and deciding I deserved to drink craft beer instead of Bush Lite.........

 

[Lsbcal]

For 2012 our withdrawal rate was 5.4% of the beginning 2012 portfolio. That was highish because of (1) extra taxes due to taking IRA distributions and SS, (2) some unplanned dental work, (3) DS needed some financial help.

For 2013 the plan is 4.0% of the beginning year's portfolio due to (1) lower taxes since will take more from Roth, and (2) full SS.

Beyond this I'll probably target 4.0% assuming stocks return maybe 7% nominal.

 

[REWahoo]

FWIW, here are my withdrawal numbers shown as both % of initial portfolio value / % of portfolio value for the beginning of the respective year:

2006 - 4.9% / 4.9%
2007 - 9.8% / 9.2%
2008 - 7.9% / 7.9%
2009 - 6.1% / 8.2%
2010 - 5.4% / 6.5%
2011 - 4.2% / 5.2%
2012 - 3.9% / 4.3%
2013 - (projected) 3.4% / 3.5%

 

[walkinwood]

2. Have you seen Raddr's update of his hapless hypothetical Y2K ER?
Raddr's Early Retirement and Financial Strategy Board • View topic - Hypothetical Y2K retiree update

I wonder why Raddr chose to use T-bills instead of intermediate Treasuries as Bengen did in his first paper on SWR.

 

[Koolau]

A fun thread from the past...



Sure is. For example, the following reply ....



... leads one to ask if buying Depend diapers would be cheaper than throwing out soiled underwear. And then how much the cost would have to be before it's worth one's time to add it as a Quicken expense category.

Not to change the subject, but it appears the adult diaper industry in Japan will soon exceed that for infants. (see http://www.matrade.gov.my/pt/sobre-...rtunity-for-adult-diapers-in-japan-march-2012) A very frightening scenario if you are living primarily on a gummint pension. While the US is in better shape and also tolerates significantly more immigration, this scenario will eventually repeat here if no other changes occur. YMMV

 

[grasshopper]

Gee 2 long neck meds and I am lost. I only know that I could have spent more in 2012 than I did.

 

[Alan]

Wuss.

We will try harder this year, with cruises to and from the UK, a cruise to Norway and Iceland, a month in Ireland, 2 weeks in France, a week in Spain, 4 weeks in Cornwall, Kent and Yorkshire and several more weeks visiting relatives in England.

Alan,

A good way to handle your WR calculation when a blue bird like your unexpected bonus occurs would be to just add the bonus amount to your portfolio value and calculate the WR based on that. It's a bit misleading (for your own planning) to say the WR was 0.0%

I agree, but we just spent it on 20 weeks worth of vacations in Colorado, Canada and England, so I really should have discounted 2010 since 2011 was really the first year totally on pensions and withdrawals.

 

[donheff]

I started withdrawals three years ago at 3.5% of EOY portfolio. I have been spending about 2.7% and tossing the remainder into a rainy day fund in case the future gets, we'll, rainy. I also run several alternate scenarios on a spreadsheet to keep track of what I would be at with the Bengen, Guyton, etc approaches. I added one this year from Vanguard that calls for a fixed EOY withdrawal (eg my 3.5) but caps the increase or decrease to +- 5% of the previous year's withdrawal. Since I don't actually need the full 3.5 I applied the 5% increase limit this year.

If the future stays rosy I will reconsider in about 8 or 10 years. Then I may do some splurging or gifting to the kids as well as increased charitable giving.

 

[Lsbcal]

Here is my latest picture:

 

[Lsbcal]

We will try harder this year, with cruises to and from the UK, a cruise to Norway and Iceland, a month in Ireland, 2 weeks in France, a week in Spain, 4 weeks in Cornwall, Kent and Yorkshire and several more weeks visiting relatives in England.
...

I'm impressed. Will not show this to DW.

We too will try harder to spend this year.

 

[REWahoo]

Here is my latest picture:

Withdrawals shown as % of initial portfolio or % of respective year portfolio?

 

[NW-Bound]

Lsbcal, if I read your chart correctly, it says that your portfolio is currently only 6 to 7% below its value in 2004, presumably when you retired, and on an inflation-adjusted basis.

If so, that's pretty darn good! A good 8 years of retirement, living hog-wild on WR as high as close to 7%, and still have most of your stash left. I'd better think about spending more.

But what else besides booze and women though? Both would get me killed though, the 1st via liver cirrosis, and the 2nd at the hand of my missus. What to do, what to do?