Those with no kids & no relatives to leave money, is your withdrawal rate still 4%?

[cyber888]

Those with no kids & no relatives to leave money, is your withdrawal rate still 4%?

So, I have no kids, and all my siblings are doing well .. essentially, I'm fine with having $0.00 balance on my nest egg the day I croak and leave the physical universe.

I know many people who have kids are trying to preserve their capital and say 2.5% or 3.00% is the safe withdrawal rate now, so they can leave millions of dollars to their kids and relatives. Well, I don't need to do that .. should I keep my projection at 4% withdrawal ??

Just wanted to hear from people who are like me - no plan to leave their nest egg to anybody .. and absolutely nobody.

 

[rodi]

I may be selfish... (In fact I know I am)... but I do not plan for inheritance to my kids in my retirement planning.

HOWEVER - I do plan for longevity... since we have no idea how long we'll live and what gyrations the market will go through.

My goal isn't to leave the kids a lot of money (although they probably will inherit a lot unless we have a super extended bear market combined with super high inflation). Rather, my goal is to not be a BURDEN on the kids.

Without a crystal ball - and being financially conservative... I will leave money on the table.

 

[teejayevans]

The only way of achieving that ($0 at death) is that all your money in annuities. At some point I will consider putting a majority of my money in a charitable annuity.

 

[kcowan]

I plan to have our stash last until DW is 98. There will likely be some extra costs towards the end for meaks and housekeeping.

But the odds are good that we will leave a substantial inheritance if the market continues to perform. I have discussed our high equity dependence with my kids and they agree that we should keep our 65% equity allocation. It has certainly paid off so far.

 

[Go-NoGo]

I would still keep the early withdrawals to 4% or less - otherwise I could imagine a scenario where I am, say, 85 and having a balance close to zero would leave me extremely stressed.

When I approach the end of runway, maintaining a constant balance of 7-10 years of living expenses would allow me to sleep a lot better at night. I would be quite happy to leave that to my nephew and nieces or some worthwhile charity

 

[Dtail]

Also depends on your budget with discretionary vs. non discretionary.
Do you have SS, pensions to cover % of expenses?
Generically speaking in your circumstances, 4% could work.

 

[teejayevans]

I would still keep the early withdrawals to 4% or less - otherwise I could imagine a scenario where I am, say, 85 and having a balance close to zero would leave me extremely stressed.

Then if I were you I would postpone SS till 70, so even if you run short at 85, you’ll still have a healthy income.

 

[Retireby45ish]

I’ve wrestled with the same question. I’d like to hear more about what the collective community thinks.

My thoughts: It’s tough because I’d imagine we would want to spend more money in our 50s, and 60s in travel and leisure and then slow down after that. I usually use Bernick’s Reality Retirement plan on firecalc as my most realistic scenario. But this does increase the success %.

But we would really be able to ramp up spending in the later years to continue to draw down the pile once we saw that 4% wouldn’t erode it. But by then I’m sure I’ll just be sitting in a chair someplace and taking walks or watching sunsets...and kicking myself for not spending 5-6% in the previous decades. Lol.

 

[Go-NoGo]

Then if I were you I would postpone SS till 70, so even if you run short at 85, you’ll still have a healthy income.

That is the plan - wait until 70 to start SS. But even then, SS payments by itself alone would not be a comfortable existence, hence some hedging on early withdrawal rates.

 

[geeky_grrl]

I have no one I need to leave money too but I'm staying well below 4% because I retired pretty early (45). The 4% rule came from studies of 30 year retirements and I need to plan for a possibility of 40-50 years. I'm comfortable spending up to 3.25%, but my actual draws have been quite a bit lower than that so far.

 

[Gumby]

We have no children, so no inheritance considerations. Our withdrawal rate is less than 1% now and with that we have everything we want. So it is very likely we'll be leaving a great deal of money on the table. I don't care. It seems wasteful to spend more just for the sake of spending more. And who knows what the future will bring? Whatever it is, I do know that a fat portfolio offers a better chance of surviving it.

 

[pb4uski]

DA and DU are in that siutation... no kids... also, given pension, SS and nestegg no worries about running out of money. Will leaves most of residual estate to a few of their favorite charities. I'm discussing with him using QCDs to do more charitable contributions now while they can enjoy seeing them happen.

 

[OldShooter]

Retired about 15 years ago, we've been spending pretty much what we care to. Some expensive travel, a couple of cars, etc. We've been incredibly lucky and life and we'll still leave a pile. As @gumby says, spending more just for the sake of spending seems wasteful. It also conflicts with the mindset that got us here in the first place.

The other comment I often have in my head when reading these threads is that there is a false premise: the implicit idea that setting an x% course is some kind of commitment, possibly to be recorded on stone tablets. When I drive my car somewhere I am constantly making small corrections, sometimes even big ones to correct errors or to change my destination. IMO retirement is unavoidably like that. Expect change. Expect the need or the opportunity to react to external events. Don't get focused in a number. No plan survives first contact with the enemy.

 

[FANOFJESUS]

No kids and distant relatives. I am going to spend 5% of my balance every year after I read about this 90/10 fund. I am in the total market but close enough. Read page 5
https://www.spahnfinancial.com/files/21788/ICA_Guide_2019.pdf
It works but swings up and down more than the standard 4% rule.
I am like many of you I want to spend down before death but don't like to be wasteful either. Plus you know when you are old once you spend money you have no way to get any more.
I also retired early to drawn more money down. Part of me feels like it is a waste to die with money.
I really go back and forth with this question.
The distant relatives trouble me the most they act like they are entitled to money. They do not understand no. This troubles me. They just keep saying they will get money no matter how many times you tell them NO.
If I have anything left over I will give it to my church.

 

[OldShooter]

... I'm discussing with him using QCDs to do more charitable contributions now while they can enjoy seeing them happen.

Yes. It's great.

I have mentioned community foundations here before but can't resist pitching them again. These are 501(c)3 organizations specifically formed to benefit their local communities. The visibility and effect of donations to community foundations is great, unlike national charities where your money disappears into a large bucket without a trace. We'll let the Fortune 500 support them.

For example, DW and I have a community foundation fund that is oriented towards individual crisis situations. Sometimes it's small stuff. Steel-toed boots so the recipient can take the job he's been offered. A bicycle for a halfway-house resident who needs to get to his job but who is not allowed to drive. One time we bought all the parts for a high school shop class to repair a car, which the foundation then gave to a needy person. We've done wells, down payments on mobile home roofs, etc. It's kind of a human version of the starfish story.

This is not a donor-advised fund because QCDs can't be used for those, but we have an up close and consultative involvement in the foundation's decisions. Here's a place to start: https://www.cof.org/community-foundation-locator

 

[FIREd]

Single, no kids, and no desire to leave a large estate. But I'm only 46 years old and I could still be facing a long retirement. So I'm happily keeping my WR around 1.5%. I already have everything I need and money can't buy my wants, so there is no need to spend more.

 

[Markola]

We incorporate SS, home equity, part time work, and Medicare into our comprehensive plan, so the 4% Rule is not very relevant, given all that future lumpiness.

 

[npage]

Single, no kids, and no desire to leave a large estate. But I'm only 46 years old and I could still be facing a long retirement. So I'm happily keeping my WR around 1.5%. I already have everything I need and money can't buy my wants, so there is no need to spend more.

What do you do for health insurance or plan for given the contstant uncertainty? That's my biggest hurdle to pulling plug so early.

 

[SpinDoctorTX]

I have no kids, however we have a "gentlewo/men's agreement" if one of us goes first. DH has 2 sons so they'll get 25% ea. The other half to my family with different distribution instructions for a multitude of possible situations (DM gets all, DS, DB, or their kids). We have a provision that our house can be occupied by DM so long as taxes paid/ repairs done etc. DM is 84 in a month- she lives in Houston 1/3 of the year & on her KY farm the rest of the year..

 

[Zathras]

I live on 4% or less each year.
I have no kids, however, I also don’t feel any desire or need to leave this world with $0.
4% is a comfortable amount for me. I buy what I want/need. I plan to never be a financial burden to others.
And if I leave some funds to causes or people I care for, so much the better.

 

[Stormy Kromer]

I have a friend, an elderly bachelor with no children and lots of relatives he doesn't like. He doesn't have a will. I told him he absolutely needed a will or his relatives will get it all if he dies intestate. He wanted to give it to me (at least $5 million) I told him to give it to the children's hospital at the same hospital that saved his life when he had heart trouble a few years back. He said he was going to, I hope he got it all set up.


He lives on much less than 4% of his NW and he lives very well.

 

[Spudd]

I use VPW which varies the drawdown based on stock market results and how long you have left to live. I plan for the younger spouse to live to 100.

https://www.bogleheads.org/wiki/Variable_percentage_withdrawal

 

[OldShooter]

I have no kids, however we have a "gentlewo/men's agreement" if one of us goes first. DH has 2 sons so they'll get 25% ea. The other half to my family with different distribution instructions for a multitude of possible situations (DM gets all, DS, DB, or their kids). We have a provision that our house can be occupied by DM so long as taxes paid/ repairs done etc. DM is 84 in a month- she lives in Houston 1/3 of the year & on her KY farm the rest of the year..

This is all in a comprehensive estate plan with documentation of your DM's life estate in the house, etc. Right?

 

[Vincenzo Corleone]

My wife and I are in the same boat. I'd been vacillating between which withdrawal method we'd use but lately I'm thinking the Variable Percentage Withdrawal (VPW) method mentioned by Spudd a couple of messages back makes the most sense for us. We also named a number of charities in our wills should we not spend it all. These charities are smaller, lesser-known charities that would probably need the money more than the larger, better known charities like The American Cancer Society would.

 

[walkinwood]

It is a conundrum. Spend too much and you may have to curtail spending too much later. Spend too little & you have a fortune to spend later, but you may be too feeble to enjoy it.

On the other hand, like others have said, spending for the sake of it makes no sense.

Right now, we're comfortable on less than 4% of portfolio value, so we are adding some small / infrequent luxuries and indulgences. I keep a close watch on annual spend (trailing 12 months) as a percentage of portfolio, so hopefully, we'll see a problem coming before it becomes critical.