What is your withdrawal rate?

[pb4uski]

My misunderstanding. I thought you were just pulling out of the tax sheltered account the amount you figured you will eventually owe in tax (on the distribution) for that year and not the entire RMD for the tax year.

I don't have any taxes withheld from my RMD distribution. I have the amount I figure to distribute moved to my taxable account and just pay the taxes I owe for the year (based on all taxable income for that year) in April when I file.

And sorry about the mistake above; The factor is a divisor, not a percentage.

But the divisor can easily be converted to a percentage by 1/divisor. So if divisor is 25.6, percentage is 3.9% (1/25.6).

 

[SecondCor521]

But the divisor can easily be converted to a percentage by 1/divisor. So if divisor is 25.6, percentage is 3.9% (1/25.6).

Sure. My point was that you wouldn't want to mistake a divisor for a percentage or vice versa.

Someone thinking that their first RMD is $X*27.4% instead of $X/27.4 is way off the mark.

 

[jollystomper]

When you retired. June 2018
Age at retirement. 60
Asset mix or portfolio style 40/36/24
What growth you have seen in portfolio since retirement 2.8% in 11 months (not counting interest and dividends)
How much you retired with/saved (how many x of expenses) 19x expenses (but pension covers about 60% of projected expenses)
pension now or later? now
SS at what age? undecided, between 64 and 70


My first year (July-June) withdrawal rate is going to be about 1%. I underestimated my interest/dividend income, and with savings/CD rates up a lot since I retired, living off of these has so far helped keep my cash withdrawals low.

 

[4nursebee]

+1

It does make one wonder about what the purpose of collecting this might be, doesn't it?

If it matters what method we PLAN to use, then just ignore that part of my original post, I do not think it is material. The info would be used the same regardless of the method.

 

[HI Bill]

When I retired, I assumed we would need the same take home pay that I was receiving. That was our starting point.

Next, I assume we will run out of money at my age 105. All calculations are done in Today's Dollars, so inflation is not a factor. However, I also assume our ROI is just 3% over inflation and that SSA COLA is about the same as inflation.

Finally, I ask Excel to calculate my annual withdrawals and spending so we have no money at age 105. As long as I do not exceed that amount each year, we are comfortable.

We have averaged just 74% of that number over the first 6 years allowing our assets to grow more. SSA starts next year for me (age 70) and 2022 for DW (age 70). We have averaged 5.7% withdrawal rate for the past 6 years, and that will drop to 2.5% after both our SSA benefits are factored in.

Net, we have a max spend for each year. We have to pay taxes from that amount in addition to spending on us. We have flexibility because we are living well below that number. Works for us.

That sounds great for the period you've been retired. But the whole point of FIRECALC (and Monte Carlo) is to simulate the SORR. When the market drops, you may not return inflation + 3% on an annual basis.

Are you using a annualized fixed WR, or are you just spending a % of remaining assets? Once you drop to 2.5% WR, this will be a mute point. My mom took out 5-6% annually, and over the course of 15 years, depleted some 37% of her investments.

 

[4nursebee]

Thanks everyone, more info added.

 

[levindb]

Are you using a annualized fixed WR, or are you just spending a % of remaining assets? Once you drop to 2.5% WR, this will be a mute point. My mom took out 5-6% annually, and over the course of 15 years, depleted some 37% of her investments.

My assumption of 3% over inflation is just a conservative ROR for my lifetime. That number says I do not need to take a lot of risk. I have been averaging about 8% over my first 6 years of freedom. The Goal Seek (or What If) function in Excel gives me my annual salary that I have to live with. I don't need to spend it all, and we live comfortably well below that number, just like what we did in our prior lives.

To answer your question, we do neither. We have a smaller fixed $$/month (same as my old take home pay) moved to our checking account, and then we may also have chunky withdrawals for our World Cruise last year or our 6 week Safari this year. We do not look at % of remaining assets per se, we have Excel tell us the maximum/year...which is adjusted whenever a press ReCalc on the spreadsheet. If the market is not doing well, then the salary number goes down a bit, and we adjust our lifestyle a bit.

There are only 2 numbers we are guessing at:

ROR - 3% over inflation
Age at death - 105

FIRECALC asks me to guess at a lot more numbers and I am not smart enough to do that.

 

[Souschef]

In our case, our investments are split about 50/50 between IRA and taxable assets. So this year my RMD divisor is 17.4 , or 5.7%. Divided in half, it is 2.9% (approx) WR. The funds are used to pay all our taxes, gifts for our 4 sons, and a cruise

 

[dtbach]

Retired in 2010 at 57. 65/25/10 portfolio. WR is ~3.4%. Portfolio is up over 30% since retiring. Have a military pension. DW taking SS this year at 62, while I take restricted. Will take my own at 70.

 

[RetireAge50]

We withdraw about 3.5%. Way low but this site has brainwashed us plus this is all we really need. I’ll probably be spending a bunch later or kids will be happy.

 

[gcgang]

Retired 2012 @ 57 yrs old.

60-25-15.

Portfolio up since retired.

Spend whatever. Will try to spend whatever+ over the fewer remaining years.

 

[gerntz]

Whatever the RMD amount is.

 

[athena53]

We withdraw about 3.5%. Way low but this site has brainwashed us plus this is all we really need. I’ll probably be spending a bunch later or kids will be happy.

That's my reasoning. I'm doing fine on 3.5%, including generous amounts for travel and charity, and would prefer to err on the conservative side. My top priority is that I don't outlive my savings and end up depending on DS and DDIL to be caregivers or spending my last days in a nursing home paid for by Medicaid. DS and DDIL are savers but she's a full-time Mom and their 3rd is due any day now, so they're not going to amass a fortune. They may also have to help out her parents, who are good, hard-working people but of modest means.

 

[gayl]

Age at retirement. 50 from county / PT to early 60s

Asset mix or portfolio style - originally 90% stocks. Today 77% domestic index / 7% international index / 8% cash / 8% individual stocks

What growth you have seen in portfolio since retirement - enough

How much you retired with/saved - 10× age, obviously under 1m

pension now or later? At retirement - now

SS at what age? Eventually at 70.5

 

[SecondCor521]

SS at what age? Eventually at 70.5

Unless something has changed, I would recommend taking it at 70. You don't gain a larger payment by waiting past 70, and you'd just lose those payments if you don't take it at 70.

(RMD's start at 70.5; SS can be any age up to 70.)

 

[gayl]

Good to know! I heard there was a 'penalty' if not taken by 70.5 so I just figured I'd transfer it from Trad IRA to brokerage then.

 

[SecondCor521]

Good to know! I heard there was a 'penalty' if not taken by 70.5 so I just figured I'd transfer it from Trad IRA to brokerage then.

Uh, we may be talking past each other.

Required minimum distributions (RMDs) are required to start (roughly speaking) in the year in which you turn 70.5. This means withdrawals from your traditional IRA.

Social Security (SS) starts whenever you claim, but the monthly check you receive will grow only until your 70th birthday. This means it is logical to take it no later than your 70th birthday.

My original response was talking about SS. Your reply seems to be referring to RMDs. Two different things, two different ages.

(And you're right, there is a penalty if you don't take your RMDs on time and at least the minimum amount.)

 

[gayl]

Oops. Was on another ther re: RMD. re SSA: will take at 70 due to WEP / WPO

 

[NW-Bound]

When you retired: 2012

Age at retirement: 55. Wife retired in 2007 at 50.

Asset mix or portfolio style: Currently 56% US stocks / 14.5% International / 2% Bond / 25.5% cash / 2% unclassified (according to Quicken)

What growth you have seen in portfolio since retirement: 40+% despite withdrawal

How much you retired with/saved (how many x of expenses): 20x, although expenses dropped off quickly after retirement, such as college tuition

Pension now or later? No pension

SS at what age? Wife already taking at 62 / I will wait till 70


My expenses for the last 12 months is 2.7% of portfolio. The WR is lower than that, due to my wife's SS. And then, I can cut out gifts and charity and the WR can be as low as 1.5%. Then, when it is really tough I can start my own SS instead of waiting till 70. And I will also cut out travel and other non-essential expenses.

But if things get that bad, my stash probably will shrink to 1/2 of its size now, and that will bring up the WR percentage.

 

[Drake3287]

When you retired. 2014
Age at retirement.54
Asset mix or portfolio style Mix
What growth you have seen in portfolio since retirement 10%
How much you retired with/saved (how many x of expenses)1 Million
pension now or later?Now. Full CalPERS retirement at $100,000. per year plus COLA

 

[mickeyd]

We are age 73/69 and withdraw only RMD, however we do not necessarily spend any of it (other than to pay Uncle Sam his slice of the pie). We usually just stash the RMD $ in PMMF or TSM. PMMF money is for fun and adventure in the future and TSM is for long term and dividends. I do not deal in percentages, only in actual RMD cash.


Keeping it simple for almost 74 years.

 

[truenorth418]

Last year I spent 2.79% of end of previous year portfolio value.

This year I'm on track to spend 2.76%.

Age 55.

 

[53anddone]

I am curious how people calculate WDR taking into account earnings from investments.

Say you have investable assets (IA) of $5M.
Say you earn interests and dividends in the year of 200k.
You live off the 200K and thus at the end of the year you still have $5M in IA (assume no change in equity prices).

Is your WDR 200k/5M (4%), or is it zero because your IA did not change.

Just curious thanks.

 

[REWahoo]

I am curious how people calculate WDR taking into account earnings from investments.

I think you'll find there is no consensus on this - people calculate it however they wish.

As for me, I always use the initial amount of my portfolio at retirement as the denominator in calculating my WR. The Trinity Study was based on the initial portfolio amount, adjusted annually for inflation, with no provisions to adjust for portfolio changes.

 

[NW-Bound]

I am curious how people calculate WDR taking into account earnings from investments.

Say you have investable assets (IA) of $5M.
Say you earn interests and dividends in the year of 200k.
You live off the 200K and thus at the end of the year you still have $5M in IA (assume no change in equity prices).

Is your WDR 200k/5M (4%), or is it zero because your IA did not change.

Just curious thanks.

I believe most people would say that it's 4%.

Else, if they had a gain of 300K and spent only 200K, they would have to say that they had a "negative" WR rate, and it does not make sense.

Or during the Great Recession when people's stash shrank by 30 to 40%, they did not say that their WR was that much, plus what they spent.

WR is expenses. Investment growth is like income. One is inflow, and the other is outflow.


PS. The Trinity Study looks at SWR (Safe WR) as a percentage of the original stash, with adjustment for inflation so that the two numbers are compatible. I prefer to look at WR as a percentage of the current stash.