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View Poll Results: What nest egg withdrawal rate are you comfortable with?
1.0 - 1.49 percent 9 3.19%
1.5 - 1.99 percent 4 1.42%
2.0 - 2.49 percent 26 9.22%
2.5 - 2.99 percent 42 14.89%
3.0 - 3.49 percent 78 27.66%
3.5 - 3.99 percent 61 21.63%
4.0 - 4.49 percent 26 9.22%
4.5 - 5.0 percent 17 6.03%
more than 5% 19 6.74%
Voters: 282. You may not vote on this poll

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Old 04-18-2017, 09:56 AM   #141
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Don't do it! Buy a second property on a lake. Those huge homes will become a large burden. Think small!
The lake here is very far. This house is nearer to us but we are not too far from the beach either. But I'm only contemplating because it takes time to do a house up. I mean the garden. Trees need time to grow. We've been here 4 years and the trees are still small. Not huge. I want a jungle in my backyard.
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Old 04-18-2017, 10:00 AM   #142
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Maybe smaller portfolios? Agree with your sentiment though. It would be useful if the people with low WR's explained what their plan is for the residual? Although obviously, it would be heirs and charities.
Right now I'm at 0% WR using rental income and pension for income. When UK and US SS start in around 11 years I will have an even larger excess of income. I'll be making withdrawals for infrequent large expenses like a new car, but I hope to be accumulating throughout my retirement.

I have half my money allocated to my nieces, my ex wife is the beneficiary on an IRA that we had together that she didn't bother to contest in the divorce and the rest goes to a local independent cinema, a local theater, NPR and ACLU.
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Old 04-18-2017, 11:01 AM   #143
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Some interesting responses. Clearly the WR is not the only relevant metric. Points out again that we are all different and one size does not even come close to fitting all.
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Old 04-18-2017, 12:20 PM   #144
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Can some people provide reasoning behind their chosen WR? These responses are on average more conservative than I was thinking I'd be when I retire. If I compare withdrawal rates on ******** (go to Crowdsourced Financial Independence and Early Retirement Simulator/Calculator and leave all default options in place and only change the spending plan and the chosen percentage) and compare the results of a WR of 3, 4, 5, 6, 7, and 8% I see that 5 and 6 percent both provide significantly greater total withdrawals on average than 4 or especially 3% WR, greater lowest total withdrawal, much higher average and lowest withdrawal in the beginning third, and without significantly affecting the withdrawals in the last third. Not until 7 and 8 percent do things start taking a dive. This is for 30 years of retirement. Why do people chose a rate around 3%? Are they just being extra cautious? Am I putting too much faith into this simulator? Is their asset allocation different from the 75/25 default? Perhaps they are banking on expenses increasing a great deal later in retirement compare to early in retirement? Yes a 3% WR leads to a larger nest egg on average when you die, but I can't use it when I'm in the ground, my goal is to get the most money out of my investments possible. I think leaving my kids an average of 600k when I kick the bucket would do plenty to make them smile. Perhaps others disagree and want to leave more for heirs?
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Old 04-18-2017, 01:39 PM   #145
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Can some people provide reasoning behind their chosen WR? These responses are on average more conservative than I was thinking I'd be when I retire. ... This is for 30 years of retirement. Why do people chose a rate around 3%? Are they just being extra cautious? ...
1. 30 years is a short time for early retirees. Our projections have DW accumulating very close to 50 years in retirement. That definitely impacts your withdrawal rate. (Although we aren't going to be using "SWR.")

2. Many people are leery of market valuations for both US stocks and fixed income investments. Is this time different than the dataset (in a bad way) because of both stocks and bonds being highly valued?

3. Look at what other countries experienced during the 20th century--most markets underperformed US/Canada....

Frankly, given the tenor of discussions on the forum, I'm a bit surprised at how big the percentages are in the poll!
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Old 04-18-2017, 01:47 PM   #146
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Can some people provide reasoning behind their chosen WR? These responses are on average more conservative than I was thinking I'd be when I retire...

...Why do people chose a rate around 3%? Are they just being extra cautious?...

... I think leaving my kids an average of 600k when I kick the bucket would do plenty to make them smile. Perhaps others disagree and want to leave more for heirs?
I try to get down to 3%, and preferably live on only the dividends when our SS starts. It's not because I want to leave a lot to my children. If I spend most of the stash and just leave them the houses, I think they would be happy already.

No, it's because I do not want to see my stash shrink. I don't call myself Uncle Scrooge for nothin'. On the other hand, if the market god grants me more money, I will not hesitate to spend more. But I want to see that money first, before I can plan to spend it.

Everybody has a reason, and the above is mine. Maybe I will change at some point, but right now my lifestyle is sufficient. Other than possibly spending for better airline seats, I do not feel craving for anything. Just looking at my stash and seeing it grow after withdrawal for spending, even if that growth may be illusional due to inflation, that makes me happy and I do not have to spend it.
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Old 04-18-2017, 01:54 PM   #147
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My current annual spend (excluding income taxes) works out to a WR below 1%. It's plenty to support a living standard at my personal comfort zone; this hasn't changed since childhood. I'd be OK with a higher WR but I don't think that would increase my comfort. This may change once I fully retire if the additional leisure time takes a higher WR to occupy.

As for financial confidence, I like the idea of not worrying about a stock market sequence of returns like what the Nikkei 225 experienced over the past 30 years. According to Yahoo Finance they're still a bit underwater. I think it's very unlikely to happen but I'm not aware this scenario is included in any of the models even though IMO the probability is not miniscule.
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Old 04-18-2017, 02:03 PM   #148
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The Nikkei is of course a basket case, but its dividend yield is still around 1.6%. Even if one draws another 1 percent or 2, his stash may get really diminutive after 30 years, but he may not be broke yet. I am just guessing here, of course.
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Old 04-18-2017, 04:28 PM   #149
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I have no children, so there is no need to leave a legacy and I could spend it all. But I have everything I need and the vast majority of what I want. Except for upgraded travel experiences, I can't think of anything more I would want to spend money on. If that means I die a gazillionnaire, then so be it.
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Old 04-18-2017, 04:50 PM   #150
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I have no children, so there is no need to leave a legacy and I could spend it all. But I have everything I need and the vast majority of what I want. Except for upgraded travel experiences, I can't think of anything more I would want to spend money on. If that means I die a gazillionnaire, then so be it.
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Old 04-18-2017, 05:06 PM   #151
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I decided to pull 5% with hopes to cut back at 70 when we take SS. I retired at 60 three years ago and live with the belief that we should travel while we can, love life and cut back a bit later. Just my 2cents worth


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Old 04-18-2017, 05:42 PM   #152
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If I am going to die a gazillionaire, and if I spend 1% of a gazillion each year before I croak, what is a gazillion with two zeros removed? It's a bazillion, and that is a lot more than what I am spending now!

So, whether it's 1%, 2%, or 3%, it's still good with 1, 2, or 3 bazillions of spending if and when I become a gazillionaire. I just do not see myself doing 0%. It's because 0% of a gazillion is $0. And that is no good!
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Old 04-18-2017, 06:13 PM   #153
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If I am going to die a gazillionaire, and if I spend 1% of a gazillion each year before I croak, what is a gazillion with two zeros removed? It's a bazillion, and that is a lot more than what I am spending now!

So, whether it's 1%, 2%, or 3%, it's still good with 1, 2, or 3 bazillions of spending if and when I become a gazillionaire. I just do not see myself doing 0%. It's because 0% of a gazillion is $0. And that is no good!
Well, that could all depend on your retirement income! If you have enough income for all your needs and desires, savings and investments is just a backup.
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Old 04-18-2017, 06:17 PM   #154
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1. 30 years is a short time for early retirees. Our projections have DW accumulating very close to 50 years in retirement. That definitely impacts your withdrawal rate. (Although we aren't going to be using "SWR.")

2. Many people are leery of market valuations for both US stocks and fixed income investments. Is this time different than the dataset (in a bad way) because of both stocks and bonds being highly valued?

3. Look at what other countries experienced during the 20th century--most markets underperformed US/Canada....

Frankly, given the tenor of discussions on the forum, I'm a bit surprised at how big the percentages are in the poll!
Agreed - most early retirees are looking at 40 years instead of 30, and some even have to plan for a 50 year retirement. Retirement income streams like SS and pension may not come online for a decade or more after retiring.

I was also surprised that 3.5% was closer to the median rate considering how many people here seem to mention rates of 3% and even lower.

Also - FWIW - some of us are not using % of initial portfolio value adjusted for inflation each year, (the so called constant spending [income] model), but are using % of current portfolio value each year, going up and down with the market value of the portfolio. (FIRECALC calls this the % of remaining portfolio method).

As a result, the answers in the poll are likely a hodgepodge of different withdrawal methods. But still, it gives you an idea.
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Old 04-18-2017, 06:19 PM   #155
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If I am going to die a gazillionaire, and if I spend 1% of a gazillion each year before I croak, what is a gazillion with two zeros removed? It's a bazillion, and that is a lot more than what I am spending now!

So, whether it's 1%, 2%, or 3%, it's still good with 1, 2, or 3 bazillions of spending if and when I become a gazillionaire. I just do not see myself doing 0%. It's because 0% of a gazillion is $0. And that is no good!
0% WR just means you have other income streams that cover absolutely all your spending, so you don't have to draw anything from your retirement investments.

Those of us with no such income streams (pensions, annuities, SS), have to draw something.
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Old 04-18-2017, 06:27 PM   #156
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I was also surprised that 3.5% was closer to the median rate considering how many people here seem to mention rates of 3% and even lower.

As a result, the answers in the poll are likely a hodgepodge of different withdrawal methods. But still, it gives you an idea.
The poll asked what WR would be comfortable, not what people are taking. I answered 3-3.5, but am taking less than 3, just because that is all we need. And it could be less than 2 when SS kicks in.
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Old 04-18-2017, 06:29 PM   #157
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The poll asked what WR would be comfortable, not what people are taking. I answered 3-3.5, but am taking less than 3, just because that is all we need. And it could be less than 2 when SS kicks in.
True - the question was what people would be comfortable with. But still I got the impression from posts over the years that many, many people were not comfortable with rates above 3%.
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Old 04-18-2017, 06:33 PM   #158
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Can some people provide reasoning behind their chosen WR? These responses are on average more conservative than I was thinking I'd be when I retire. If I compare withdrawal rates on ******** (go to Crowdsourced Financial Independence and Early Retirement Simulator/Calculator and leave all default options in place and only change the spending plan and the chosen percentage) and compare the results of a WR of 3, 4, 5, 6, 7, and 8% I see that 5 and 6 percent both provide significantly greater total withdrawals on average than 4 or especially 3% WR, greater lowest total withdrawal, much higher average and lowest withdrawal in the beginning third, and without significantly affecting the withdrawals in the last third. Not until 7 and 8 percent do things start taking a dive. This is for 30 years of retirement. Why do people chose a rate around 3%? Are they just being extra cautious? Am I putting too much faith into this simulator? Is their asset allocation different from the 75/25 default? Perhaps they are banking on expenses increasing a great deal later in retirement compare to early in retirement? Yes a 3% WR leads to a larger nest egg on average when you die, but I can't use it when I'm in the ground, my goal is to get the most money out of my investments possible. I think leaving my kids an average of 600k when I kick the bucket would do plenty to make them smile. Perhaps others disagree and want to leave more for heirs?
I think what you are missing is that most folks here are planning for a 40 year retirement period (people retiring in their mid-50s) to even a 50 year period for the extreme early retirees. A longer retirement period means a more conservative withdrawal rate. At least initially, until one gets closer to the "normal" retirement age of 65.
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Old 04-18-2017, 06:39 PM   #159
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True - the question was what people would be comfortable with. But still I got the impression from posts over the years that many, many people were not comfortable with rates above 3%.
I agree with you on this. I think we have a lot of STEM people here, who tend to be conservative thinking in statistical matters, myself included.

If you ever took a class in concrete design, it boggles the mind the level of safety factors going in to the design. I don't disagree, when the physical safety of people are at stake, but we tend to carry that into our daily lives. Measure with a micrometer and cut with a chainsaw.
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Old 04-18-2017, 06:46 PM   #160
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0% WR just means you have other income streams that cover absolutely all your spending, so you don't have to draw anything from your retirement investments...
Understood. That's what some earlier posters said.

What I meant was I did not understand how one could sit on a gazillion without withdrawing anything.

Even if I did not need to spend anything more on myself, I would take some money to give to charity, to pay for a vacation taken with my offsprings, my relatives, etc..., instead of dying and leaving them with a big surprise. Why not spend some while you are still alive and see what your money buys?

PS. I guess it's because I am not religious, I do not think I will be aware of what happens after my death. Hence, I want to see the effects of my goodwill when I am still alive.
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