What is your withdrawal rate?

[4nursebee]

I failed to directly ask in the post, but I was interested in what your withdrawal rate has been.

 

[pb4uski]

....If you are willing, please share:
When you retired.
Age at retirement.
Asset mix or portfolio style
What growth you have seen in portfolio since retirement
How much you retired with/saved (how many x of expenses)
pension now or later?
SS at what age? ...

Retired in at end of 2011 at age 56
Target AA is 65% stock/35% fixed income/5% cash
Current portfolio is 125% of what it was when I retired... if I consider our winter condo that was paid for from the portfolio to be an asset of the portfolio, then make that 135%.
Retired with ~25x expenses
Fixed pension started in 2016... covers about 20% of expenses.
No SS yet... DW will start at her FRA of 66 + 2 months and I'll likely start at 70.

WR for 2018 and 2017 was ~3.6%.

 

[4nursebee]

thanks, everything updated

 

[HI Bill]

When you retired: 2020
Age at retirement: 54
Asset mix or portfolio style: 82/8/10
What growth you have seen in portfolio since retirement: N/A
How much you retired with/saved (how many x of expenses): 26X
pension now or later? None.
SS at what age? 70.
Planned WD rate: 4.2% initial

CAVEATS: Really plan to retire with 31X after selling a condo, and start out at 4.2%. After a few years of travel and renting, plan to buy a condo or house and lower the travel budget a bit. Phased approach, dependent on many variables.

Oh, the 31X is really 56X base expenses....31X includes a 60% travel budget.

 

[Splash]

Retired 2/1/2017 at 55 (DH 56)
AA 50%/50%
Retired with investments 33X expenses
WR for 2018 and 2017 was 3%
Current portfolio is 110% of balance at retirement
SS planning 70 for me, somewhere between 62 and FRA for DH
Pension undecided on when to start payments or if to roll into IRA as lump sum

 

[IrishMoss]

Right now, 18 months into retirement I'm averaging 3.4% withdrawal rate, but I do plan to bump it up to 3.95%. I wanted to see if I could live on less in case that becomes necessary in the future and it appears I can without too much sacrifice.

 

[audreyh1]

I am asking to learn what others find practical. We are planning on using a VPW method. Few seem to withdraw so high a percent, makes me a little nervous. I would like to keep track what others do, have started a public spreadsheet: https://docs.google.com/spreadsheets/d/1xQbnDkT4UEV_qbFAxBdf4yE7jypO2rKv03lJ_mYI94A/edit?usp=sharing

I would like to know what you do and why you choose that route.
If you are willing, please share:
When you retired.
Age at retirement.
Asset mix or portfolio style
What growth you have seen in portfolio since retirement
How much you retired with/saved (how many x of expenses)
pension now or later?
SS at what age?

Feel free to message me you info if you do not want to publicly post, I will not put your name on the list.

Thank you

Only a few people here use VPW. There is a Boglehead group that talks more about it. Your concern is about withdrawal rates being to high. Seems like you need to review that issue with folks who understand and use VPW.

I don’t see how collecting data from a bunch of folks who don’t use VPW is going to help.

 

[DrRoy]

RE in 07 at 57
AA 59/41
Portfolio up about 11% after withdrawls
Fired with 48X expenses, pension of 35% of expenses, no cola
no SS till 70
1st yr WR 1.5%, 2nd 2.2%, next year 2.5%

 

[racy]

I failed to directly ask in the post, but I was interested in what your withdrawal rate has been.

2.2% last year. Projecting into the future about 2.5%

 

[Golden sunsets]

I am asking to learn what others find practical. We are planning on using a VPW method. Few seem to withdraw so high a percent, makes me a little nervous. I would like to keep track what others do, have started a public spreadsheet: https://docs.google.com/spreadsheets/d/1xQbnDkT4UEV_qbFAxBdf4yE7jypO2rKv03lJ_mYI94A/edit?usp=sharing

I would like to know what you do and why you choose that route.
If you are willing, please share:
When you retired. DH 2008, Me 2017
Age at retirement. DH 62, Me 68
Asset mix or portfolio style 52/42/6
What growth you have seen in portfolio since retirement 3.7% since my retirement 18 months ago, 143% since DH's retirement in 2008
How much you retired with/saved (how many x of expenses) 194X (Net Expenses after cola'd pensions, SS, Disability)
pension now or later? Now
SS at what age? DH 62, Me 70
SWR: 1.07% 2017, .67% 2018, .56% 20019(estimate)

Feel free to message me you info if you do not want to publicly post, I will not put your name on the list.

Thank you

1

 

[aja8888]

RMD forced withdrawals. Averaging around 4%

 

[youbet]

RMD forced withdrawals. Averaging around 4%

RMD only forces you to withdraw the income taxes due, right? You don't have to spend the residual after taxes. That's your choice.

For example, last year was a lower expense year for us for various reasons. We covered everything with pensions + SS. Our only withdrawal was the fed tax withholding I directed as the RMD's shifted funds from our IRA's to the brokerage account. So, WR (for that year) = RMD tax withholding / FIRE portfolio value. I did not include the portion of the RMD that was not sent to Uncle Sam as a "withdrawal." We still have those dollars.

 

[aja8888]

RMD only forces you to withdraw the income taxes due, right? You don't have to spend the residual after taxes. That's your choice.

For example, last year was a lower expense year for us for various reasons. We covered everything with pensions + SS. Our only withdrawal was the fed tax withholding I directed as the RMD's shifted funds from our IRA's to the brokerage account. So, WR (for that year) = RMD tax withholding / FIRE portfolio value. I did not include the portion of the RMD that was not sent to Uncle Sam as a "withdrawal." We still have those dollars.

You withdraw the amount in dollars in your tax sheltered account value @ 12/31/____(year) based on the percentage listed in the RMD table. Then you pay ordinary income tax on that amount based on your total taxable income. What you do with the money not paid in income tax from the withdrawal is up to you.

 

[Dtail]

You withdraw the amount in dollars in your tax sheltered account value @ 12/31/____(year) based on the percentage listed in the RMD table. Then you pay ordinary income tax on that amount based on your total taxable income. What you do with the money not paid in income tax from the withdrawal is up to you.

But effectively aren't you just moving a tax sheltered asset to a taxable asset in your portfolio (less the taxes of course) and thus conceptually this really wouldn't be considered a WR% inclusion.

 

[youbet]

You withdraw the amount in dollars in your tax sheltered account value @ 12/31/____(year) based on the percentage listed in the RMD table. Then you pay ordinary income tax on that amount based on your total taxable income. What you do with the money not paid in income tax from the withdrawal is up to you.

I think we have a terminology thing going on here......

You don't have to withdraw your RMD from your overall FIRE portfolio. You just have to withdraw it from your tax deferred TIRA and move it to another account within your FIRE portfolio, paying fed taxes on the withdrawal as ordinary income.

My point was that you are not forced into withdrawing the entire RMD, just the taxes.

 

[youbet]

But effectively aren't you just moving a tax sheltered asset to a taxable asset in your portfolio (less the taxes of course) and thus conceptually this really wouldn't be considered a WR% inclusion.

+1

 

[aja8888]

My point was that you are not forced into withdrawing the entire RMD, just the taxes.

How do you know what the correct tax would be if you only did that?

The 1099 I get for my RMD withdrawal has a box (7 i think) which delineates what the funds were pulled for.

 

[SecondCor521]

You withdraw the amount in dollars in your tax sheltered account value @ 12/31/____(year) based on the percentage listed in the RMD table. Then you pay ordinary income tax on that amount based on your total taxable income. What you do with the money not paid in income tax from the withdrawal is up to you.

Just to nitpick so others aren't confused later, it's a divisor, not a percentage. You take your previous year 12/31 balance and divide it by the appropriate number in the table. (The next year, you take the new 12/31 balance and divide it by the previous divisor minus one. I think.)

 

[RunningBum]

How do you know what the correct tax would be if you only did that?

The 1099 I get for my RMD withdrawal has a box (7 i think) which delineates what the funds were pulled for.

You're not getting it.

This thread is talking about the withdrawal rate from all your investments. In other words, your spending rate.

You are talking about your required distribution (not withdrawal) from an IRA, which just goes into your taxable account. Until you actually spend it, it's not a withdrawal from your whole portfolio. The taxes paid are spent (including taxes, donations, etc), so that part of the RMD is a withdrawal.

I suppose if you move your RMD into some account you no longer consider part of your investments, it all counts, but why would you do that?

Or if you spend it all, of course it all counts, but that's only because you spent that much, not because of the RMD.

 

[youbet]

How do you know what the correct tax would be if you only did that?

The 1099 I get for my RMD withdrawal has a box (7 i think) which delineates what the funds were pulled for.

I've been pretty good at estimating the withholding for my RMD so far. I figure what my estimated tax payments should be for the year on my non-RMD income then add the RMD and recalculate. The difference in taxes is the amount I have withheld from the RMD. It's never exact, but close enough. My goal is to get a very small refund overall, and I'm usually pretty close.

My 1099 shows the amount of the entire RMD withdrawal and how much of that was withheld for fed taxes. The amount withheld for fed taxes is the part I consider a "withdrawal" for purposes of calculating my withdrawal rate.

 

[aja8888]

I've been pretty good at estimating the withholding for my RMD so far. I figure what my estimated tax payments should be for the year on my non-RMD income then add the RMD and recalculate. The difference is taxes is the amount I have withheld from the RMD. It's never exact, but close enough. My goal is to get a very small refund overall, and I'm usually pretty close.

My 1099 shows the amount of the entire RMD withdrawal and how much of that was withheld for fed taxes. The amount withheld for fed taxes is the part I consider a "withdrawal" for purposes of calculating my withdrawal rate.

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.

 

[Helena]

.

Since I early retired, my nest egg has grown.

I only need to use a portion of the increase every year.

 

[W2R]

Only a few people here use VPW. There is a Boglehead group that talks more about it. Your concern is about withdrawal rates being to high. Seems like you need to review that issue with folks who understand and use VPW.

I don’t see how collecting data from a bunch of folks who don’t use VPW is going to help.

+1

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

 

[Cobra9777]

Most info is in my signature. Other info...

Portfolio is currently 131% of the value when I retired. It helped that DW decided to work another 3 years after I retired.

The portfolio mainly consists of low-ER broad-market ETFs like VTI, AGG, and VXUS. There's a slight tilt to high-dividend on the equity side (VYM), and corporate on the bond side (LQD, HYG). Real estate consists of one rental house and SCHH.

We have two small pensions that cover about half our expenses. The portfolio value at ER, relative to the other half of expenses, is 27X. Based on current value, it's 35X and our WR is 2.8%.

Tentative plan for SS is for DW to claim at some point between 62 and FRA, depending on several factors. I'll defer to 70. Once we're both collecting SS, we won't need to make withdrawals from the portfolio. Dividends and RMDs will be reinvested unless something highly unusual pops up.

Regarding expense planning, I have a spreadsheet with many years of history as well as projections to age 100. This is broken down into 19 categories. Projections for each category include life events (e.g. downsizing house, Medicare at 65) as well as expected changes in consumption (e.g. less travel as we age, fewer cars and miles driven), along with a unique inflation rate for each category (e.g. high for energy and medical, low for clothing). I'm more comfortable with this level of detail as opposed to broad assumptions and models about the overall spending profile.

 

[levindb]

A different approach to withdrawal rate

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.