Withdrawal Rate Too Low?

[dtbach]

Quote:

Originally Posted by Ready I suspect that the majority of members in this forum will die with substantial fortunes, in spite of the comments many of us have made about wanting our final check to bounce on our way to the funeral. I think it's a combination of several things: 1) We enjoy accumulating wealth, and resist seeing it being spent and watching the balance decline after so many years of seeing it grow. 2) We overanalyze the SWR rules in spite of the studies demonstrating that 4% easily survived over many years of stock market booms and busts. We think 3% is the new 4%, and then we reduce the 3% to 2.5% just to be safe. 3) We are so worried about needing end of life care that we are willing to sacrifice enjoying the money today just in case we need extensive care down the road. 4) We have become so accustomed to LBYM that even though we have plenty of money we can't bring ourselves to spend it.

+1
I couldn't have said it better. My mother, bless her soul, died at 93 with over 2 million and could never spend a penny of it. I guess it made her happy. My Dad on the other hand wasn't so thrilled as now he is 96 and really can't do anything with it.

The lesson I learned is "don't be so darn stingy and live a bit" Yeah, you can go to a restaurant and actually order an appetizer AND a desert!And you will still probably die with more than enough. I will curse myself if I die with loads of money but denied myself too many things in life.

[NW-Bound]

Quote:

Originally Posted by dtbach ... I will curse myself if I die with loads of money but denied myself too many things in life.

If a person feels denied, then he/she should be spending more. One should ask him/herself that if he/she were diagnosed with an uncurable terminal illness and were to die in 3 months, would he/she regret not spending more earlier?

I don't think I will. But then, my WR is not 1 or 2% either, as I have no pension and not yet SS.

When I start SS, will I cut WR back, or keep the same WR and spend money like a drunken sailor?

Too early to tell, but kicking up the travel expense up a notch or two will take care of that problem. A low WR is easily fixable. A high WR is tougher to reduce. That's my story, and I am sticking with it.

[Hermit]

Quote:

Originally Posted by NW-Bound .... When I start SS, will I cut WR back, or keep the same WR and spend money like a drunken sailor?....

I now have a WR of just over 2%. When I turn 70 my SS will kick in and replace that 2%. At the same time, I will start RMDs and will use QCDs to move RMD money to a charity which will put my WR at 3.5%. At that point I think I will still be putting cash in investment accounts just because I won't know what else to do with it along with the fact that the deferred accounts will likely be generating more than the 3.5%. I am definitely going to have to ramp up on the toy purchases.

[NW-Bound]

Quote:

Originally Posted by Hermit ... I am definitely going to have to ramp up on the toy purchases.

Let us know when you get there. Some people here love to tell cohorts to spend money (particularly when it's not their own).

Not all of us are Suze Orman ("You are denied!"). We will cheer you on, or make vicarious suggestions for you to spend money.

[redduck]

Quote:

Originally Posted by marko +1 for Ready's comment. I'm not eager to leave a large inheritance to a bunch of nieces who won't even talk to me unless I talk to them first.

Hi there, favorite uncle marko.

How ya' doing?

Your very bestest niece,
XOXOXO

redduck

[Hermit]

Quote:

Originally Posted by NW-Bound Let us know when you get there. Some people here love to tell cohorts to spend money (particularly when it's not their own). Not all of us are Suze Orman ("You are denied!"). We will cheer you on, or make vicarious suggestions for you to spend money.

A 1-ton truck and slide-in camper are in my future! Then there is one or two ATVs. These will happen, but not until I finish my house. If I get them before, I may never finish it! Besides, by then, I hope DS is also off the payroll.

[Fedup]

Quote:

Originally Posted by Johanson In my opinion, they are paid for after the first use. I don't understand why more US hotels don't have them. They are everywhere in Europe, Asia, South America, and Africa although I haven't spent a lot of time in the last two continents mentioned.

I have no idea on how to use them. I saw them in our hotel in Italy. I thought it was a waste of space.

[HadEnuff]

There really is no such thing as WR "too low".

Lower than necessary, OK, but "too low"? There is no penalty for not running out of money.

[Ready]

Quote:

Originally Posted by Fedup I have no idea on how to use them. I saw them in our hotel in Italy. I thought it was a waste of space.

This reminds me of a funny story that happened years ago. In 2000 we bought a piece of land that we planned to build our home on. The land included plans that had already been drawn up by a local architect and made it through the local planning commission approval process.

The plans showed a bidet next to the toilet in the master bathroom. I had no idea what that was. When we met with the architect to review the overall plans, I had to ask him "what exactly is a bidet?" My partner was mortified.

The architect responded, "Um...it's a thing you use to wipe your butt".

I had no idea what that meant, but after we built the house I figured it out. I've been using it for 17 years now, and couldn't imagine moving to a house that didn't have one. There's nothing better than that feeling of being clean down there, if you know what I mean.

[redduck]

Quote:

Originally Posted by Ready ... I had to ask him "what exactly is a bidet?". The architect responded, "Um...it's a thing you use to wipe your butt". ...There's nothing better than that feeling of being clean down there, if you know what I mean.

You know, I'm going to have to put that on my bucket list.

[Nemo2]

Quote:

Originally Posted by redduck You know, I'm going to have to put that on my bucket list.

Surely if you have a bucket you don't need a bidet.

[Exit 2024]

Did anyone try calculator that is on the bottom of the article linked in op? I did not expect much and filled out just for fun but results made me pause for a minute or 2 It said that I need $9,724,502

[marko]

Quote:

Originally Posted by redduck Hi there, favorite uncle marko. How ya' doing? Your very bestest niece, XOXOXO redduck

Heeeyyyy!! I found an appreciative relative finally!

Now, just send me your full name, address, important PINs and social security number and I'll put you in the will...guaranteed.

[Osprey]

Quote:

Originally Posted by Ready I suspect that the majority of members in this forum will die with substantial fortunes, in spite of the comments many of us have made about wanting our final check to bounce on our way to the funeral. I think it's a combination of several things: 1) We enjoy accumulating wealth, and resist seeing it being spent and watching the balance decline after so many years of seeing it grow. 2) We overanalyze the SWR rules in spite of the studies demonstrating that 4% easily survived over many years of stock market booms and busts. We think 3% is the new 4%, and then we reduce the 3% to 2.5% just to be safe. 3) We are so worried about needing end of life care that we are willing to sacrifice enjoying the money today just in case we need extensive care down the road. 4) We have become so accustomed to LBYM that even though we have plenty of money we can't bring ourselves to spend it.

+1
1-3 captures my outlook, the other concern leading me to a low initial withdrawal rate is fear of inflation. Hope to overcome my fear and spend enough to have adventures to fun destinations while we are still young and healthy. Recognize that the things I fear may never materialize, but age will definitely takes its toll.

[joeea]

Quote:

Originally Posted by dtbach I will curse myself if I die with loads of money but denied myself too many things in life.

You won't curse yourself - you'll be dead.

We all get to choose the life we want to lead and the risks we want to take or avoid.

Some don't want to deny themselves a "keeping up with the joneses", YOLO lifestyle. They may curse themselves when they can never afford to retire.

Others pinch every penny. The may curse themselves as they prepare to pass on a large inheritance to their heirs.

I suspect most here are somewhere in the middle.

[DrRoy]

Quote:

Originally Posted by Ready I suspect that the majority of members in this forum will die with substantial fortunes, in spite of the comments many of us have made about wanting our final check to bounce on our way to the funeral. I think it's a combination of several things: 1) We enjoy accumulating wealth, and resist seeing it being spent and watching the balance decline after so many years of seeing it grow. 2) We overanalyze the SWR rules in spite of the studies demonstrating that 4% easily survived over many years of stock market booms and busts. We think 3% is the new 4%, and then we reduce the 3% to 2.5% just to be safe. 3) We are so worried about needing end of life care that we are willing to sacrifice enjoying the money today just in case we need extensive care down the road. 4) We have become so accustomed to LBYM that even though we have plenty of money we can't bring ourselves to spend it.

Ready, did you have any idea what you were starting with your post?

I am:

1) Yes

2) Big yes on this one. I started the first year RE spending target (this year) at 100% of prior spending. With modest pension (no SS yet) I was only at 1.5% WR. I have raised the budget to what feels like a posh level, and it is still 1.9% WR. Guess we may try flying business class.

3) Not me on this one.

4) A little bit here, but getting over it.

[Danmar]

Quote:

Originally Posted by Ready I suspect that the majority of members in this forum will die with substantial fortunes, in spite of the comments many of us have made about wanting our final check to bounce on our way to the funeral. I think it's a combination of several things: 1) We enjoy accumulating wealth, and resist seeing it being spent and watching the balance decline after so many years of seeing it grow. 2) We overanalyze the SWR rules in spite of the studies demonstrating that 4% easily survived over many years of stock market booms and busts. We think 3% is the new 4%, and then we reduce the 3% to 2.5% just to be safe. 3) We are so worried about needing end of life care that we are willing to sacrifice enjoying the money today just in case we need extensive care down the road. 4) We have become so accustomed to LBYM that even though we have plenty of money we can't bring ourselves to spend it.

Nice post. Agree totally. I have a problem with #1 but trying to get over it.

[LARS]

Quote:

Originally Posted by Ready I suspect that the majority of members in this forum will die with substantial fortunes, in spite of the comments many of us have made about wanting our final check to bounce on our way to the funeral. I think it's a combination of several things: 1) We enjoy accumulating wealth, and resist seeing it being spent and watching the balance decline after so many years of seeing it grow. 2) We overanalyze the SWR rules in spite of the studies demonstrating that 4% easily survived over many years of stock market booms and busts. We think 3% is the new 4%, and then we reduce the 3% to 2.5% just to be safe. 3) We are so worried about needing end of life care that we are willing to sacrifice enjoying the money today just in case we need extensive care down the road. 4) We have become so accustomed to LBYM that even though we have plenty of money we can't bring ourselves to spend it.

Like others I agree, but honestly I think your four points can truly be distilled into one: a healthy dose of FEAR for the unknown is the root cause for continued LBYM.

[teejayevans]

Quote:

Originally Posted by Exit 2024 Did anyone try calculator that is on the bottom of the article linked in op? I did not expect much and filled out just for fun but results made me pause for a minute or 2 It said that I need $9,724,502

I'm already retired, so I put in 0s for income and savings, it would not let me put in current age and forced me to add 1 year, result was it assumed about 3% increase in savings and then said I could withdraw 5.2%.

I bet you have a high income so it assumes you need more after retirement.

[Exit 2024]

Quote:

Originally Posted by teejayevans I'm already retired, so I put in 0s for income and savings, it would not let me put in current age and forced me to add 1 year, result was it assumed about 3% increase in savings and then said I could withdraw 5.2%. I bet you have a high income so it assumes you need more after retirement.

Yes we have relatively high combined income but numbers still do not make any sense If our income $250k and we save 40% of it - why it is stating that we need $9 mil+ and almost $0.5 mil (!!!) income? Are they trying to scare hell out of me that I would contact their adviser?