Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 10-23-2020, 02:36 AM   #41
Thinks s/he gets paid by the post
teejayevans's Avatar
 
Join Date: Sep 2006
Posts: 1,551
I calculated Present Value of my SS benefits and use that to calculate withdrawal rate, which I try to keep under 4%, but occasionally life changes requires more $. To me it’s not a rule, it’s a guideline.
teejayevans is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-23-2020, 02:46 AM   #42
Recycles dryer sheets
 
Join Date: Sep 2018
Location: High Plains Non-Drifter
Posts: 314
This is a great thread; that MarketWatch article is very well written. Thank you all very much.

Carrying the argument a bit further, I guess it means some deflation isn’t so scary for retirees either. I stumbled upon this: https://retirementaction.com/2012/03...t-on-retirees/

We are still gunning for a SWR well south of 4%, but I will sleep better tonight having read this thread.

Looks like the Baby boomers (of which I am one, though barely) could fair reasonably well yet again.
WyomingLife is offline   Reply With Quote
Old 10-23-2020, 02:49 AM   #43
Recycles dryer sheets
 
Join Date: Sep 2018
Location: High Plains Non-Drifter
Posts: 314
Quote:
Originally Posted by audreyh1 View Post
Lucky heirs!
Iím bald so mine were unlucky, sadly
WyomingLife is offline   Reply With Quote
Old 10-23-2020, 04:18 AM   #44
Thinks s/he gets paid by the post
Badger's Avatar
 
Join Date: Nov 2008
Posts: 1,981
Quote:
Originally Posted by mickeyd View Post
I still have not tapped my retirement stash and it keeps growing. We are 75 yo and seem to get along fine with pensions and SS paying the way. I probably need a long vacation.

+1
We are both frugal out of habit for so many years and enjoyed more of the simple pleasures. With "Needs" taken care of and very few "Wants" the only things really important to us is taking vacations that include bicycling, hiking, or some other type of active pursuit that we are still able to enjoy. The pandemic has brought that to a screeching halt but if/when things improve enough to where we feel safe to continue then we will be making up for lost time as long as we can. Other than that we give the maximum gift to each of the grown children to make their lives a little easier and make donations to a few places that could use some financial help. The retirement stash still grows.


Cheers!
Badger is offline   Reply With Quote
Old 10-23-2020, 04:27 AM   #45
Recycles dryer sheets
 
Join Date: Feb 2019
Location: Tampa Bay
Posts: 211
About 45% of my spending is on the following: Health Insurance, Health OOP, Property Taxes, Homeowners Insurance (FL), and utilities. They are all pretty fixed and relatively cheap so not much room for me to mitigate increases. Property tax growth is somewhat capped by Homestead in FL but the others I expect to increase much faster than any "low inflation" estimate. I expect that within a couple years, they will account for a much greater proportion of my expenses -especially as the largest is healthcare/insurance and I've consistently been getting older at a steady rate (although, I expect to "age" a bit slower once I FIRE myself).
FLSUnFIRE is offline   Reply With Quote
Old 10-23-2020, 05:12 AM   #46
Full time employment: Posting here.
 
Join Date: Aug 2015
Posts: 832
4% has always been the guideline or rule of thumb, for planning, but not a strict requirement. Our SWR will be what ever it needs to be. I don’t consider it a larger SWR due to larger withdrawals while delaying filing for SS. I keep the total amount required that would equal my planned SS in HY (? Not so high, now) accounts, and withdraw as needed and ignore it as part of my portfolio. It is no different than ignoring our pensions and SS as portfolio equivalents, but rather as the cost of annuities. That those amounts they currently generate exceed our normal expenses was always the plan. Like others here, we do not pinch pennies or indulge in the frugality involved during w*rking years, building the nest egg, & just let our natural tendency to not waste money on “stuff” we don’t need, be part of everyday. But if we want something, ( take out vs cooking at home, business or first class travel, cars, whatever) so far, it has all been covered with next to no portfolio withdrawals. At 63 & 68, we cannot see the logic to deny ourselves what we can easily afford with the money we saved and invested now that we are there. Keeping a constantly growing larger balance than we could use is not a priority. I abhor waste, so we cannot see not using coupons or fuel points or whatever fairly effortless bonus programs are out there even though it is a flyspeck on total costs. $5 is still $5, even if it gradually buys less.

We filled up 2 cars yesterday as a single purchase on Septembers fuel points to claim a $14 savings instead of $7. 2 cars needed gas so why not make the small effort to go at the same time and space them so I could easily swap the nozzles from one car to the next when the first was filled. To me, it is no different than consolidating trips to save fuel and time, or planning to avoid said trips during rush hours (which are minimal in our locale).

But food coupons, travel points etc, using local library resources, doing most all my own home & auto repairs, shopping at Target or Marshalls, etc are about the most effort we put in to being “frugal”. I’ll pay someone to do what I don’t want to or can’t do, which will be more & more as we age, I’m sure. But in the meantime, we don’t shop for clothes at thrifts, or own super economy small cars or live in a 1200sqft house and set thermostats where we don’t want, to rein in expenses. We buy organic when it makes sense ( better produce) but not if the differential is 100% or makes little sense. Organic bananas? Really? But we have our social commitments (like delicious $5/dozen local free range brown eggs vs tasteless commercial $1.50/doz chicken factory white eggs) that are damn the cost, as whatever it is, is better for everyone (except the wallet) all around, so it sort of evens out.
Perryinva is offline   Reply With Quote
Old 10-23-2020, 06:34 AM   #47
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 10,347
Quote:
Originally Posted by NW-Bound View Post
Could that be a problem?

I talked to my wife recently, and said when we will be able to travel again, we will fly business class. To my surprise, my frugal wife agreed.

Well, that may bring my expenses from 1.7% (1.67% to be exact) to something a bit higher. Still less than 2%. I guess that depends on how much international travel we will make, but I don't see doing more than one long trek a year.
+1 In this hunkered down pandemic year, it looks like we will withdraw about 1%. We are looking forward to flying business class for international bike trips if we can ever get back to that.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Old 10-23-2020, 10:01 AM   #48
Thinks s/he gets paid by the post
corn18's Avatar
 
Join Date: Aug 2015
Posts: 1,191
I'm planning on 6.2% WR from 55-70. Once SS kicks in, it goes down to 1.6%.
__________________
Don't do something, just stand there!
corn18 is offline   Reply With Quote
Old 10-23-2020, 12:27 PM   #49
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2008
Posts: 5,171
Quote:
Originally Posted by NW-Bound View Post
No, the kids are self-sufficient at this point. They do not need my money. If they get it, they can go straight into ER.

No goal. We just have not found anything worthwhile to spend money on.
Lot of fancy electrical cars coming out in the next couple of years.

explanade is online now   Reply With Quote
Old 10-23-2020, 12:59 PM   #50
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 28,784
Quote:
Originally Posted by explanade View Post
Lot of fancy electrical cars coming out in the next couple of years.

I will have to say that Tesla Cybertruck is something I have an interest in.

Call it ugly if you will, but I am a brute who cares more about utility and function than form. And I like the tough body panels a lot.


PS. Still does not move the WR that much with a truck, but at least it's something I can use.
__________________
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
NW-Bound is online now   Reply With Quote
Old 10-23-2020, 01:11 PM   #51
Recycles dryer sheets
Happyras's Avatar
 
Join Date: Jun 2015
Location: Redmond
Posts: 429
Quote:
Originally Posted by donheff View Post
+1 In this hunkered down pandemic year, it looks like we will withdraw about 1%. We are looking forward to flying business class for international bike trips if we can ever get back to that.
Hell, we just booked British First class to Barcelona next Sept. Flying First Class to Houston the end of this month to see friends for dinner. We will likely never need to withdraw from our retirement accounts, and feel very fortunate....

My DW started riding horses/showing again its our main source of spending now. Lots of folks willing to take your money in that sport. Being stuck at home created a lot of depression for her. Our portfolio provides a great assurance we will be OK, but a greater risk for us is not inflation, it is the potential loss of the TCJA, taxing our installment gains we built for retirement.
Happyras is offline   Reply With Quote
Old 10-23-2020, 01:11 PM   #52
Thinks s/he gets paid by the post
 
Join Date: Jul 2007
Location: St. Louis
Posts: 1,344
American funds talks about 5% on page 5
https://www.spahnfinancial.com/files...Guide_2019.pdf
FANOFJESUS is offline   Reply With Quote
Old 10-23-2020, 02:40 PM   #53
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 5,646
Quote:
Originally Posted by teejayevans View Post
I calculated Present Value of my SS benefits and use that to calculate withdrawal rate, which I try to keep under 4%, but occasionally life changes requires more $. To me itís not a rule, itís a guideline.
I've always struggled with this concept of figuring NPV of pension and/or SS. Thought Experiment: Consider you at age 62, taking SS or Pension for first time. Is not the NPV HIGHER than when you are, say, 82? IOW at age 62 you have the time between when you begin to the time when you die. At age 62, you have 20 more years to collect than when you are 82. SO, the NPV at 82 must be smaller, right?

Using the NPV to allow you to put more into equities is probably valid (treating SS or Pension as something like "bonds.") But in real terms, your SS or Pension (or purchased annuity for that matter) MUST be worth less every month because you will receive ONE LESS payment for every month you collect. What do you think since YMMV?
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is online now   Reply With Quote
Old 10-23-2020, 03:00 PM   #54
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 5,332
Quote:
Originally Posted by Koolau View Post
I've always struggled with this concept of figuring NPV of pension and/or SS. Thought Experiment: Consider you at age 62, taking SS or Pension for first time. Is not the NPV HIGHER than when you are, say, 82? IOW at age 62 you have the time between when you begin to the time when you die. At age 62, you have 20 more years to collect than when you are 82. SO, the NPV at 82 must be smaller, right?

Using the NPV to allow you to put more into equities is probably valid (treating SS or Pension as something like "bonds.") But in real terms, your SS or Pension (or purchased annuity for that matter) MUST be worth less every month because you will receive ONE LESS payment for every month you collect. What do you think since YMMV?
I calculate my NPV on my Social Security based on collecting from age 70 to age 85. Since I'm 51, my SS NPV goes up every month between now and 70 because that time series of payments is getting closer and is thus discounted less. It then drops from 70 to 85 because of the fewer months to collect before I die situation that you mention.

I don't use SS to adjust my AA, although I probably could and perhaps should. My SS NPV is currently about 6 times what I have in bonds (but I have a very small bond allocation).
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is online now   Reply With Quote
Old 10-23-2020, 03:17 PM   #55
Thinks s/he gets paid by the post
HI Bill's Avatar
 
Join Date: Dec 2017
Posts: 2,177
Quote:
Originally Posted by Koolau View Post
I've always struggled with this concept of figuring NPV of pension and/or SS.
+1.

Adding the NPV of something you may not start receiving for 20+ years doesn't adequately factor in the SORR for your non-SS assets. Let's say FIRECALC's first failure point (not including SS) is 17 years after your RE. If that's before SS kicks in, you have now run out of $, and are not yet eligible for SS. Using SS's NPV is not valid, IMHO. It also ignores the risk that SS recipients may not receive the full value of what's currently estimated.

Using FIRECALC as intended, and effectively reducing your investment withdrawals when you start takin SS accounts for the added income, and includes the SORR on the correct portion of your "assets".
__________________
Balance in everything.
HI Bill is offline   Reply With Quote
Old 10-23-2020, 03:55 PM   #56
Full time employment: Posting here.
YVRRocketSurgery's Avatar
 
Join Date: Dec 2015
Location: Vancouver
Posts: 732
What I've wondered was...
The 4% rule was to account for maximum withdrawals to account for worst case scenarios
The worst case scenarios seem to be a combo of early poor market returns and high inflation with the worst series in the 60's/70's with double digit inflation and bear market.
The Fed and Bank of Canada introduced inflation targeting in the 90's with a 2% goal. Nowadays, they're going to relax the policy to allow inflation to float higher a bit if to support higher employment. However, I can't see them allowing it to get close to double digits.
So if half the variable (inflation) is kept under reasonable control, how does it impact a SWR? I know this would not be a perfect analysis but I'd like to see historical simulations run with a maximum inflation rate of say 6% (and with a 60:40 ratio).
__________________
Target April 2022
"You don't save me. I save me."
YVRRocketSurgery is offline   Reply With Quote
Old 10-23-2020, 04:15 PM   #57
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jan 2018
Location: Tampa
Posts: 7,982
Quote:
Originally Posted by HI Bill View Post
+1.

Adding the NPV of something you may not start receiving for 20+ years doesn't adequately factor in the SORR for your non-SS assets. Let's say FIRECALC's first failure point (not including SS) is 17 years after your RE. If that's before SS kicks in, you have now run out of $, and are not yet eligible for SS. Using SS's NPV is not valid, IMHO. It also ignores the risk that SS recipients may not receive the full value of what's currently estimated.

Using FIRECALC as intended, and effectively reducing your investment withdrawals when you start takin SS accounts for the added income, and includes the SORR on the correct portion of your "assets".
I look at it this way too.
__________________
TGIM
Dtail is offline   Reply With Quote
Old 10-23-2020, 06:37 PM   #58
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2008
Posts: 5,171
Quote:
Originally Posted by NW-Bound View Post
I will have to say that Tesla Cybertruck is something I have an interest in.

Call it ugly if you will, but I am a brute who cares more about utility and function than form. And I like the tough body panels a lot.


PS. Still does not move the WR that much with a truck, but at least it's something I can use.
Seem the Hummer EV they showed?

Also Rivian coming, as well as a slew of EVs around or over $100k.
explanade is online now   Reply With Quote
Old 10-23-2020, 06:43 PM   #59
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
MRG's Avatar
 
Join Date: Apr 2013
Posts: 9,845
Quote:
Originally Posted by explanade View Post
Seem the Hummer EV they showed?

Also Rivian coming, as well as a slew of EVs around or over $100k.
Indeed, some might have subsidies . A person could buy one of each taking care of some extra dough to blow.
MRG is online now   Reply With Quote
Old 10-23-2020, 06:45 PM   #60
Thinks s/he gets paid by the post
 
Join Date: Oct 2012
Location: Reno
Posts: 1,004
If you're interested in a quasi luxury trip, 3 years ago we biked down the Mosel River Valley with Zephyr Adventures and 4 years ago in Puglia with the same company. Highly recommended; the food/wine and accommodations are usually great.

We've used a much cheaper company without a guide (and more 2-3 star accommodations without a dinner meal) for the hikes up the West Highland Way in Scotland and the Kerry Way in Ireland. Cheaper and not as high end, but also a fine experience. They pick up your luggage and take it to the next bed and breakfast.



Quote:
Originally Posted by donheff View Post
+1 In this hunkered down pandemic year, it looks like we will withdraw about 1%. We are looking forward to flying business class for international bike trips if we can ever get back to that.
RobLJ is offline   Reply With Quote
Reply

Tags
4% rule


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
80% rule? 4% Rule? What is it really? Talkjk Hi, I am... 20 09-29-2018 09:03 AM
Ok move is done now man now what. dumpster56 Hi, I am... 13 07-15-2006 06:41 AM

» Quick Links

 
All times are GMT -6. The time now is 01:30 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.