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Old 08-13-2021, 10:21 PM   #41
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You can either buy annuities with inflation rider, but based on the numbers which I have run, it is not worth it. Instead you can ladder deferred fixed income annuities, where you start another one 5 or 10 years later.
I was under the impression that there are NO cola-ed annuities available these days. If you know differently, can you point me to how to find one?
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Old 08-14-2021, 05:30 AM   #42
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Assess Healthcare costs very carefully

Premiums for policies, co pays, deductibles, exclusions and up charges. Vision. Dental. Pharmacy. These are unpredictable expenses for a healthy 40+ year old. Generic no cost rx may not be what one needs to enjoy quality of life or life at all. High quality rx glasses at Costco are not free and most want two pairs- including sun glasses. My point being you have a lot of years prior to being covered by an uncertain plan known as Medicare Parts A, B and D...if they even exist in twenty years or are fully privatized via the growth of Part C plans affectionately known a ADVANTAGE plans.

Whatever amount of time you have invested in assessing your investment and withdrawal rates, I recommend putting two times that effort into really understanding contemporary health care costs.

From someone who worked in HC for 45 years and watched first hand the transformation from a loving, caring profession to a full blown business model. Best of luck.
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Old 08-14-2021, 05:42 AM   #43
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When I retired at 51, my views on SWR were as follows:

4%: Not comfortable
3.5%: Maximum
3%: Mostly comfortable
2.5%: Very comfortable
2%: Absolutely golden

These were just feelings and not Fireclac results.
Ugh... Is this generally accepted, or a conservative approach? Do I need to change my plan?

I'm planning on a 3.5% WR at 47yr. Do I need to hang on longer for a lower WR?
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Old 08-14-2021, 05:52 AM   #44
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Ugh... Is this generally accepted, or a conservative approach? Do I need to change my plan?

I'm planning on a 3.5% WR at 47yr. Do I need to hang on longer for a lower WR?
Perhaps slightly lower with that long a time horizon (I'm assumng 50 years).

FIRECalc suggests a 3.3% WR for 95% success over 50 years. A 3.5% WR has a 92% success rate.
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Old 08-14-2021, 06:10 AM   #45
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I was under the impression that there are NO cola-ed annuities available these days. If you know differently, can you point me to how to find one?
You have to provide basic personal info (or I’d have verified), but it appears you can still buy COLAd annuities. They cost about twice as much for the same starting payout.

https://www.immediateannuities.com/i...justments.html

https://www.annuity.org/annuities/ri...ost-of-living/
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Old 08-14-2021, 06:12 AM   #46
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Ugh... Is this generally accepted, or a conservative approach? Do I need to change my plan?

I'm planning on a 3.5% WR at 47yr. Do I need to hang on longer for a lower WR?
I realize that this might not feel particularly helpful, but the only one who can answer your question is you. What others may find generally acceptable may not be acceptable to you. You have your own circumstances, your own willingness to continue working and your own perception of risk. The best you can do is use the various calculators and pick a point at which you are comfortable.

The only truly safe withdrawal rate is zero. That is, the only way you will never run out of money in your portfolio is not to spend any of it. However, I think it unlikely anyone is that risk averse. I'm certainly not; I wanted to stop working because I wanted time more than I wanted zero risk.
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Old 08-14-2021, 06:33 AM   #47
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I actually follow a very similar line of thinking. Maybe too conservative an approach but an unprecedented world wide pandemic with variants has many concerned about short term and mid term wellbeing, financials, supply chain, etc.
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Old 08-14-2021, 07:06 AM   #48
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It was a gift free of tax.

I have:
401K 1M. (Small amount is Roth 401K)
Roth IRA 330K
Brokerage 771
HSA 6K
New gift/cash 610K

Currently everything that was not part of the gift/cash chunk is in mutual funds. I am not sure what I am going to do now that I have the $.
I would keep everything in low cost mutual funds. You're young enough that you could withstand some market downturns when they occur, and watch the money go back up when the market returns to normal. It is a LOT better to make 7% in funds than it is to make 3-5% in bonds, in my opinion. Some years you'll make closer to 15%, or more.
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Old 08-14-2021, 07:43 AM   #49
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I realize that this might not feel particularly helpful, but the only one who can answer your question is you. What others may find generally acceptable may not be acceptable to you. You have your own circumstances, your own willingness to continue working and your own perception of risk. The best you can do is use the various calculators and pick a point at which you are comfortable.

The only truly safe withdrawal rate is zero. That is, the only way you will never run out of money in your portfolio is not to spend any of it. However, I think it unlikely anyone is that risk averse. I'm certainly not; I wanted to stop working because I wanted time more than I wanted zero risk.
Even that wouldn't technically be guaranteed not to fail if we ever experienced Venezuela-level hyperinflation.
I'll admit, that seems incredibly unlikely now, the only reason I'm bringing it up is that inflation risk is often the only reason some people don't go all cash, and even at US 1970s or even 1980s levels it could have a huge impact for many of us, and many people want to be prepared to keep their spending level even if we experience historically bad (but not necessarily anomalous) inflation. So just bolstering your point that your strategy really depends on your priorities.
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Old 08-14-2021, 07:51 AM   #50
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For that matter, continuing to work is no guarantee either. In an economic meltdown you might lose your job. You have to draw a line of reasonable worst case somewhere.
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Old 08-14-2021, 08:55 AM   #51
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You have to provide basic personal info (or I’d have verified), but it appears you can still buy COLAd annuities. They cost about twice as much for the same starting payout.

https://www.immediateannuities.com/i...justments.html

https://www.annuity.org/annuities/ri...ost-of-living/
I was imprecise in my terminology (and RetiredHappy was not!). She referenced inflation-adjusted annuities, which is what I MEANT to reference. Instead I conflated COLA and CPI-adjusted.

AFAIK, there are no CPI-adjusted annuities available. The immediateannuities site you provide only has options, as far as I can tell, for a fixed percentage increase.
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Old 08-14-2021, 09:22 AM   #52
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I was imprecise in my terminology (and RetiredHappy was not!). She referenced inflation-adjusted annuities, which is what I MEANT to reference. Instead I conflated COLA and CPI-adjusted.

AFAIK, there are no CPI-adjusted annuities available. The immediateannuities site you provide only has options, as far as I can tell, for a fixed percentage increase.
While there may not be CPI-adjusted annuities available any more (I don't actually know), as you note there are still fixed rate compounding annuities (e.g. 3%) which would be way closer than a lifetime fixed payout annuity in terms of inflation protection. There are no guarantees anyway, even a CPI-adjusted would probably be needlessly expensive since the insurer has to cover their bets for decades...
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Old 08-14-2021, 09:37 AM   #53
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Figure out what your actual cost of living is, then calculate your average annual entertainment expense goals will be. Divide that into monthly payments and only take that much out of your investments. Remember to include things like needing a new car on occasion, and get the best medical insurance you can. Save the rest of that money for a rainy day. If that day never occurs, write your will such that the world will be a better place for that money going into public use. Donate it to your local town's school, or to your own high school. Ear mark it for use by kids who want to go to college but who can't afford it. Put a portion of it into Public Television and Public Radio so the country isn't influenced by advertisers, and news can be unslanted and truthful. Write your will to donate your post-death remainder to causes you find large: NASA, the American Cancer Society, and don't contribute to sloth by those who are capable of working happily and satisfactorily to achieve their own retirement nest eggs.
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Old 08-14-2021, 09:44 AM   #54
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The OP has not come back to tell us about actual spending over the last couple of years and how that relates to the different SWR's that keep getting tossed about. I see this as a chicken before the egg discussion, only half the info is out here.
With that info it would be possible to see how inflation affects the real outcomes.
What you can spend and what you do spend are often wildly diverging numbers. Those of us who have LBYM for so long have a hard time going to the BTD mode.
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Old 08-14-2021, 10:01 AM   #55
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Even that wouldn't technically be guaranteed not to fail if we ever experienced Venezuela-level hyperinflation. ...
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For that matter, continuing to work is no guarantee either. In an economic meltdown you might lose your job. ...
Ah, I see the glass have empty crowd has arrived.
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Old 08-14-2021, 10:04 AM   #56
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The only truly safe withdrawal rate is zero. That is, the only way you will never run out of money in your portfolio is not to spend any of it. However, I think it unlikely anyone is that risk averse.
So THAT was the reason I've been a little restless the last few nights, and haven't been able to sleep. I just knew that I shouldn't have been spending any money from my portfolio. Egads! And there I was, thinking that if I could get to 1.5% WR, I'd be very safe indeed. The rest of my life is going to be a white knuckle ride, for sure!

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The OP has not come back to tell us about actual spending over the last couple of years and how that relates to the different SWR's that keep getting tossed about.
That's OK. Time and time again, we have proved that we don't need an OP to weigh back into a thread in order to have a jolly nice conversation. In fact, without an OP, we can take it in almost any direction we want

Just kidding of course. I'm feeling unusually perky this morning. It would be nice to hear back from AreWeThereYet0.
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Old 08-14-2021, 10:07 AM   #57
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While there may not be CPI-adjusted annuities available any more (I don't actually know), as you note there are still fixed rate compounding annuities (e.g. 3%) which would be way closer than a lifetime fixed payout annuity. There are no guarantees anyway, even a CPI-adjusted would probably be needlessly expensive since the insurer has to cover their bets for decades...
You can also build your own with an annuities ladder.... a SPIA for today's benefit and then a deferred annuity that annuitizes in periodic increments to provide the inflation protection that you want.

So if you want $1,000/month in today's dollars and assume inflation is 3% and want your inflation incrases to start every 3 years, then buy a SPIA that pays $1,046/month now, then a deferred annuity that starts in 3 years that pays $97/month (bringing your total to $1,143/month), etc.
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Old 08-14-2021, 10:18 AM   #58
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So THAT was the reason I've been a little restless the last few nights, and haven't been able to sleep. I just knew that I shouldn't have been spending any money from my portfolio. Egads! And there I was, thinking that if I could get to 1.5% WR, I'd be very safe indeed. The rest of my life is going to be a white knuckle ride, for sure!



That's OK. Time and time again, we have proved that we don't need an OP to weigh back into a thread in order to have a jolly nice conversation. In fact, without an OP, we can take it in almost any direction we want

Just kidding of course. I'm feeling unusually perky this morning. It would be nice to hear back from AreWeThereYet0.
The coffee is working today!
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Old 08-14-2021, 11:38 AM   #59
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I am 43 and I was just gifted part of my inheritance early. I now have 2.7M not counting house or efund. My grandmothers lived until about 90, my mother 86 and my father is almost 90. Given all of this data what would you consider a safe withdrawal rate if I were to leave the workforce and never plan to return? 2% 2.5% or 3%? Thanks.
Male or female...it matters...e.g. a male your age statistically dies in their late 70s, female mid-80s.

Spouse/partner/etc. or anyone else you want to have money after you die?

EDIT: the WRs you list are very conservative...I'd personally not go below 3% & my heirs get whatever they get.
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Old 08-14-2021, 12:05 PM   #60
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Ugh... Is this generally accepted, or a conservative approach? Do I need to change my plan?

I'm planning on a 3.5% WR at 47yr. Do I need to hang on longer for a lower WR?
PB4 did the Firecalc calculations for you, but in general the WR's listed are on the conservative side, as many current posters reached FIRE with a LBYM lifestyle and tend to stay to some extent in that mode.
No issues with that, but all the historical WR analysis has withdrawal percentages over 3% for a never ending retirement.
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