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View Poll Results: Which fits you best? See first post for explanations.
I am a retiree whose WR (% withdrawn) is more or less constant each year, and I spend all of it. 11 7.05%
I am a retiree whose WR (% withdrawn) is more or less constant each year, and I tuck some away outside my portfolio, for future use. 21 13.46%
I am a retiree whose spending is more or less constant each year,and I let my WR vary accordingly. 27 17.31%
I am a retiree who doesn't withdraw about the same amount, or about the same percentage each year. 47 30.13%
I am not a retiree. 20 12.82%
I don't fit into any of these categories. 30 19.23%
Voters: 156. You may not vote on this poll

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Old 01-10-2017, 06:18 AM   #41
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Originally Posted by RobbieB View Post
I don't worry about it. Don't track expenses, don't have a budget.

My overhead is low and my discretion is high.
+1
retirement has been short so far, almost 2 years. But we came up with a really conservative budget based on 2013 spending while working. We have been dealing with DMIL and have not had time to do much else. Just looking at our monthly CC bill, we are way under the conservative estimated.

I don't really track WR. I have a spreadsheet that monitors healthcare and tax spending for doing taxes. The other thing I see if my credit card bills that I pay, but don't record these. This just gives me a feeling of my spending.
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Old 01-10-2017, 07:22 AM   #42
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I estimate current year expenses in January following an analysis of previous year's spending including taxes. I check to see if that figure falls within my SWR guidelines (so far, it has). I then withdraw from several different sources, including tax sheltered accounts and a dividend from my holding company, trying to keep personal taxes within lower tax brackets to the extent possible. My January withdrawals are deposited to savings accounts linked to checking, and usually cover my annual expenses, but if necessary, they can be topped up later in the year. Sometimes there is a surplus, as there is this year. When that happens I will, in order of preference, (a) put it in my TFSA (tax free savings account), (b) keep it in savings to offset current year's expenses, or (c) prepay some investment mortgage debt. I do not go out and spend it just because it's there.

This year I would like to put the surplus in my TFSA as I have contribution room, but it's not clear what the best long term investment would be inside the TFSA as markets are currently overvalued. Perhaps a HISA might be the best choice, as this would enable me to invest in index funds within the TFSA in the event of a market crash, while also acting as an emergency fund. I will definitely not be paying down tax deductible mortgage debt, as all my mortgages are currently at historically low interest rates.
What is a TFSA? Could you enlighten me?
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Old 01-10-2017, 07:30 AM   #43
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What is a TFSA? Could you enlighten me?
Meadbh lives up North. TFSA is a creature of Canadian law:

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The Tax-Free Savings Account (TFSA) program began in 2009. It is a way for individuals who are 18 and older and who have a valid social insurance number to set money aside tax-free throughout their lifetime. Contributions to a TFSA are not deductible for income tax purposes. Any amount contributed as well as any income earned in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn. Administrative or other fees in relation to TFSA and any interest or money borrowed to contribute to a TFSA are not deductible.
The Tax-Free Savings Account
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Old 01-10-2017, 07:46 AM   #44
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I did't vote either. 2017 is technically our first year of decumulation and also DH's first RMD. Our pensions and SS exceed our monthly spending minus taxes. And the first RMD to be pulled this December exceeds federal and state taxes. So we will pay the taxes in December and funnel the rest to taxable investments. WR rate estimated to be .6% this year unless we purchase a new vehicle late this year.
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Old 01-10-2017, 08:13 AM   #45
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My pensions pay for day to day needs. I take RMD, pay taxes,. That's gonna stop this year. We're getting old. Time to spend it.

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Old 01-10-2017, 08:20 AM   #46
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Oh, and reinvest RMD after taxes.

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Old 01-10-2017, 08:27 AM   #47
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I selected keep the excess outside the portfolio but that isn't precisely what I do. I have an SWR but spend less that that. I leave the excess in the portfolio but track that amount as a pseudo account while reducing the SWR portion of the portfolio accordingly. The excess amount is reserved for special needs like a huge splurge or spending during a downturn.
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Old 01-10-2017, 09:40 AM   #48
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I don't budget or track expenses but our SS and small pensions have been taking care of all our expenses since the house is paid for and Medicare and Tricare takes care of any medical. This year my wife will be taking RMD that will amount to about 30% more. Then a year later our combined RMD will be about 100% more. Since our tax bracket will be much higher than the present 15% bracket the actual amount realized will not be double but still more than we will spend. If still able we can travel and have a few luxuries but our frugal mentality makes it uncomfortable to be frivolous so it looks like I will be making annual donations to local no-kill animal shelters and a few other select charities. There will still be plenty to pass on to the grown children who will probably blow it on dining, booze and grown-up toys.

Cheers!
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Old 01-10-2017, 09:51 AM   #49
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I don't worry about it. Don't track expenses, don't have a budget.

My overhead is low and my discretion is high.
Same. Have a large cushion and expenses are not high enough to threaten it at this point.
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Old 01-10-2017, 09:55 AM   #50
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What is a TFSA? Could you enlighten me?
Thanks 2017ish for providing the information requested.

The TFSA was introduced in Canada in 2009 and is similar to a Roth in the US, but with fewer restrictions. You put after tax savings in, and from that day forward, their earnings are tax free, and withdrawals are tax free. There are contribution limits, but they are cumulative. For this year, the contribution limit is $5500. You can invest in a multitude of vechicles within your TFSA. You can withdraw funds at any time, tax free, but you cannot add the amount of the withdrawal to your contribution limit until the following calendar year.

The TFSA is a great vehicle for a young person 18 or older who is in a low tax bracket. It is also great for retirees who are back in a low tax bracket and want to save. It is a great place to save for those in high tax brackets who have already maxed out their RRSPs (registered retirement savings plans). So it's good for everyone, really. It can be used as an emergency fund, but some avid investors have achieved huge growth within their TFSA, to the extent that a few of them have been audited by Revenue Canada, as it is not meant to be a day trading account. Americans in Canada, or Canadians in the US, should beware, as the IRS does not recognize the TFSA as a tax free account.

https://en.m.wikipedia.org/wiki/Tax-...avings_Account
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Old 01-10-2017, 10:08 AM   #51
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... Americans in Canada, or Canadians in the US, should beware, as the IRS does not recognize the TFSA as a tax free account.

https://en.m.wikipedia.org/wiki/Tax-...avings_Account
Thanks for that info! (DS1 and his Canadian bride are considering migration from SanFran to Toronto ....)
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Old 01-10-2017, 10:27 AM   #52
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I don't track expenses (I only watch the check book balance.) I don't have a standard WDR or expected spending. It typically comes out +/- 25% of an average, I suppose (though, honestly, I haven't even calculated that either - it's sort of an "impression."). I typically withdraw from the "port" no more than once a year and if the WDR is less than about 3.5% (in the old days) or now, maybe(?) 4% or more, I don't worry about it. IF my port took a big drop, I might be more concerned, but I've structured it to be a bit more market-resistant than many here (at an up-side cost, I admit.) At age 70, I've kind of abandoned the 30 year time-frame. Now with SS, it may be time to open the purse strings a bit (First class instead of cattle-car?). I guess we'll see if an old dog can learn new tricks. If not, I'm still happy with my spending. YMMV
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Old 01-10-2017, 10:54 AM   #53
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Thanks for that info! (DS1 and his Canadian bride are considering migration from SanFran to Toronto ....)
They should check out the Canadian Money Forum.

http://canadianmoneyforum.com/index.php
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Old 01-10-2017, 11:13 AM   #54
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I selected keep the excess outside the portfolio but that isn't precisely what I do. I have an SWR but spend less that that. I leave the excess in the portfolio but track that amount as a pseudo account while reducing the SWR portion of the portfolio accordingly. The excess amount is reserved for special needs like a huge splurge or spending during a downturn.
This is somewhat my thinking nowadays. I credit Audrey (audreyh1) for this line of thought.

Our spending money is thus composed of:
1) WR % for this year. Based on the VPW tool and the parameters I use like portfolio depletion at age 110.
2) Unspent money (as per #1) from previous years 2015 and 2016.

This is a nice mental crutch as we thus have a fairly sizeable pot of unspent money that can be used in a downturn. All these funds are still in the portfolio but in a short term investment grade bond fund (VFSUX).

I have to constantly remind myself to have fun and not to be afraid of the big bad market bears. Besides the VPW simulations take into account markets like the 1930's and 1970's.

Here is our spending graph. The projections for 2017 and beyond are from VPW.




This year we have 3 trips fully planned and booked. Have to keep up that exercise too as going out a lot can add to the waist line. It's a full time job spending money. But I'm up to the task, I think.
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Old 01-10-2017, 02:20 PM   #55
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I don't understand the question in the OP.

What does it mean to "withdraw it", but not "spend it" ("keep it"?)? If you don't spend it, it is still in your portfolio, you didn't withdraw it.

Regarding increased spending:
Quote:
This produces some uncertainty and anxiety, as I can see myself getting used to a higher standard of living. When the next recession hits, ouch.
Why not re-run FIRECalc with your current situation? If you were confident enough with the FIRECalc output to retire originally , then you should be confident now with more experience, and a shorter time to cover, and a better handle on expenses (not to be morbid, that is just the way it goes for all of us!). If FIRECalc looks good with current spending, it seems you are OK, no? If not, seems like some adjustment is in order to get comfortable again.

FIRECalc, with the defaults, doesn't lower spending in recessions, so we should not need to either. Depending of course, on how much margin we want to allow for a future that might be worse than the worst of the past, and how much margin we've added elsewhere. And I think almost everyone would agree that a 2% WR is very conservative, probably a 'forever' portfolio.

-ERD50
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Old 01-10-2017, 02:30 PM   #56
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The market has been booming ever since the 2008-2009 recession. Some of us have kept more or less the same WR, but that provides us with more and more spending money each year.

I attached graphs of my spending, and the corresponding percentages of my 12/31 portfolio, for each of my first 7 retirement years. As you can see, I'm spending more or less the same percentage, around 2%, but after the first year the dollars spent have been going up, up, up. Last year I spent 135.8% of what I spent in 2010, in dollars. Yet, the percent of my portfolio spent was down 0.39%.

This produces some uncertainty and anxiety, as I can see myself getting used to a higher standard of living. When the next recession hits, ouch.

How are you handling this situation? I'm going to attach a poll so wait a minute and it will appear.
Shouldn't annual spending be reduced by any incomes such as social security or pensions? If so later ER years should have less spending than earlier ones assuming no extreme lifestyle changes.

If not is the social security income just added to the portfolio value?
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Old 01-10-2017, 02:55 PM   #57
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I don't understand the question in the OP.

What does it mean to "withdraw it", but not "spend it" ("keep it"?)? If you don't spend it, it is still in your portfolio, you didn't withdraw it.
Well one could think of "withdraw it" as marking it for the near term spending pool. That pool could be for the next year or for the next year plus the next few years. Takes care of things like new cars or a big downturn. There are so many ways to account for longer term needs and unknowns.

Some actually take it out of their idea of a portfolio i.e. there is the portfolio and there is the spending pool.

Quote:
Regarding increased spending:

Why not re-run FIRECalc with your current situation? If you were confident enough with the FIRECalc output to retire originally , then you should be confident now with more experience, and a shorter time to cover, and a better handle on expenses (not to be morbid, that is just the way it goes for all of us!). If FIRECalc looks good with current spending, it seems you are OK, no? If not, seems like some adjustment is in order to get comfortable again.
...
-ERD50
Some of us are never quite comfortable with spending down the nest egg. Those lines that go down and to the right in FireCalc are one thing to take note of but quite another to live through.

So far many of us have never ridden one of those many year downhill lines. If we have a stretch like the 1970's for instance, I can only imagine the angst that will be expressed here. And I'll probably be among them.
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Old 01-10-2017, 03:03 PM   #58
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I checked "I don't fit into any of these categories". Almost all of our income is pension and starting last spring, SS, and a few hundred in dividends. I haven't touched my IRA yet because that's DW's safety net if I exit before she's 66 and can take the full SS benefit w/o penalty. She has a TSP account and a small IRA CD that we haven't touched either. DW needs the safety net because the pension drops 30% when I exit. She'd probably be okay with just what's in savings until then, but I like her to have lots of options.
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Old 01-10-2017, 03:06 PM   #59
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Shouldn't annual spending be reduced by any incomes such as social security or pensions? If so later ER years should have less spending than earlier ones assuming no extreme lifestyle changes.

If not is the social security income just added to the portfolio value?
I think you are confusing the terms here.

I wouldn't reduce my spending by SS/pension - that makes no sense at all. I think that what you mean is, to the extent that SS/Pension covers a portion (or all) of your spending, that is money you don't need to withdraw from your portfolio.

Income is not 'added to the portfolio value', it offsets your spending. Alternately, you could calculate the value of that income stream, add it to the portfolio, then ignore it as income, but that seems like the long way around, and I probably just confused myself .

FIRECalc handles this. Entries for SS/Pension offsets your spending, so less is required for withdrawals.

-ERD50
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Old 01-10-2017, 03:06 PM   #60
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I'll have to wait a bit. I just calculated DH's RMD and our SS for next year. Assuming all else the same (except for cap gains/divs), we should be able to cover our expenses. The big unknown is that we will exhaust our losses this year and for the first time since 2008, have a positive number. This year is not bad due to some add'l tax loss harvesting, but have no idea what next year will look like. Surprisingly, our income will be higher in retirement than with DH working...what a problem to have. We may be able to cover expenses, but if not, won't have to pull out a lot of add'l $ from savings.
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