View Poll Results: What nest egg withdrawal rate are you comfortable with?
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1.0 - 1.49 percent
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9 |
3.19% |
1.5 - 1.99 percent
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4 |
1.42% |
2.0 - 2.49 percent
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26 |
9.22% |
2.5 - 2.99 percent
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42 |
14.89% |
3.0 - 3.49 percent
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78 |
27.66% |
3.5 - 3.99 percent
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61 |
21.63% |
4.0 - 4.49 percent
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26 |
9.22% |
4.5 - 5.0 percent
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17 |
6.03% |
more than 5%
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19 |
6.74% |
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04-14-2017, 08:46 PM
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#101
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Southern Cal
Posts: 4,032
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Quote:
Originally Posted by nun
The flat rate only applies to men born after 1951 and there are a number of factors that go into the calculation. Anyone retiring now with at least 35 years of contributions will get £155 per week. It's really a pretty poor benefit. My US SS will get WEPed as I only have 18 years of FICA payments, but it will still be considerably more than the UK state pension.
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For some reason my husband's best friend will only get GBP 400 per month, much less than my husband. Not everybody gets GBP 155, maybe the term is he was contracted out. He is almost the same age as my husband so he must have at least 35 years.
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04-15-2017, 01:51 AM
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#102
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Administrator
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,056
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Quote:
Originally Posted by Fedup
For some reason my husband's best friend will only get GBP 400 per month, much less than my husband. Not everybody gets GBP 155, maybe the term is he was contracted out. He is almost the same age as my husband so he must have at least 35 years.
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My wife's brother opted out for about 20 years where half the contributions went into a self directed pension scheme similar to a 401k. He is a very astute lawyer and I enjoy talking finances with him as he is very much in the Bogle mindset but he says he did no better than if he did not opt out and got the the full OAP. The UK ended that experiment of being able to opt out with the recent changes, and going to a straight line calculation of benefits. My wife and I will both have 30 years so will get 30/35ths of the full pension.
I agree with nun that it is poor value compared to US SS for the workers but is very good value for people like us who live overseas but choose to make voluntary contributions.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
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04-15-2017, 08:03 AM
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#103
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Quote:
Originally Posted by Alan
I agree with nun that it is poor value compared to US SS for the workers but is very good value for people like us who live overseas but choose to make voluntary contributions.
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Yes, the recent changes in UK state pension were bad for almost all retirees. The basic level of pension was increased, but most people also got pension credit before which would have given them close to the same amount as the new flat rate pension anyway and those with income related addition pension have lost out in a big way. The only people that have really gained are those that would have only got the basic pension....ie people like me and Alan who made voluntary contributions. My pension under the old rules would have been £112/week and now it's £155/week.
Making Class 2 voluntary NI payments as been the best financial choice I've ever made....£7k in life time contributions for a ~£10k index linked pension starting at age 67. If I'd taken my annual contributions and invested them at 6%, at age 67 I'd have a lump sum of £45k. For an index linked (2%) SPIA to provide the same income to age 83 as the UK state pension the interest rate would be 23%
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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04-15-2017, 02:44 PM
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#104
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Southern Cal
Posts: 4,032
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The old U.K. Pension, I think a spouse would get 60% of contributing spouse. I'm not sure at what age. But the new pension, you have to live in UK to qualify for your own pension or at least have NI number.
My husband may have contributed less than GBP 3000 in total to the U.K. State pension. So that's a great return for his money. We only found out about it when we were both unemployed after the dot com bursted. Otherwise, we wouldn't have free time to read about it. I agree with Alan on another post, it's found money. What's not to like.
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04-15-2017, 06:20 PM
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#105
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Quote:
Originally Posted by Fedup
The old U.K. Pension, I think a spouse would get 60% of contributing spouse. I'm not sure at what age. But the new pension, you have to live in UK to qualify for your own pension or at least have NI number.
My husband may have contributed less than GBP 3000 in total to the U.K. State pension. So that's a great return for his money. We only found out about it when we were both unemployed after the dot com bursted. Otherwise, we wouldn't have free time to read about it. I agree with Alan on another post, it's found money. What's not to like.
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Before I moved to the US (back in 1987) I talked to some of my school friends who were doing contract work in Saudi Arabia and read a book on being an expat. Both recommended voluntary NI so that's what I did.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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04-17-2017, 07:48 AM
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#106
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Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,879
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Given the wording of the question (30 year retirement), I answered 3.5-4.0. However, our actual number is 3.0, as our planned retirement is 10 years longer.
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04-17-2017, 07:57 AM
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#107
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Recycles dryer sheets
Join Date: Dec 2012
Posts: 335
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Because of a pension and SS, we're withdrawing 0% from the qualified money right now. Once we turn 70.5, I guess we'll be in the 1-2% category or whatever the RMD will be.
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04-17-2017, 11:24 AM
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#108
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Recycles dryer sheets
Join Date: Aug 2014
Posts: 141
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Although I retired in 2016, DW is still w*rking and anticipates doing so at least another two years before retiring. At that point, depending on market performance between now and then, I anticipate an initial withdrawal rate of 4.5 to 5%. SS kicks in 9 years after that (I'll be 70; DW 62) and our WD should reduce to 2.5 to 3%.
I intend to set up a HELOC this summer for use in case of a significant market correction over the next ten years and my current plan then calls for a reverse mortgage at my age 70 if necessary. No pension or employer-based healthcare, so that is a bit of a wildcard, particularly given DW's comparatively young age.
Little or none of this will unfold as I envision it, but it's fun to pretend and prudent to plan. Oh, and I voted 3.5 to 3.99% as an average.
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04-17-2017, 11:34 AM
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#109
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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My comfort rate is zero, but I've worked up to .6% (once we are on SS). SS, pensions and little side income will cover most of our basic expenses and a few frills. I'm into bargain hunting and urban homesteading, so my hobby is continuously looking for ways to live high on the hog without spending a lot of money out of pocket. I keep a list of all the things I get for free or deeply discounted, and I'm at $1,400 for the month so far. It is mostly groceries, paper goods, cleaning supplies, gift cards, event tickets and other types of consumable because we're trying to declutter.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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04-17-2017, 11:50 AM
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#110
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Thinks s/he gets paid by the post
Join Date: Feb 2012
Location: Northern Ohio
Posts: 3,182
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Quote:
Originally Posted by Alan
https://en.m.wikipedia.org/wiki/Trinity_study
Withdraw 4% from your starting portfolio and each year increase that $ amount by inflation. The % each year is measured from that initial sum, not the starting value of your ongoing portfolio each year.
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I suppose I simply can't answer the original question. We don't base our spending on anything to do some arbitrary date (like the day I retired, though even that is a squishy terminal in many cases - DW's "income" faded away, my "income" dropped off a clift, but bounced a few times).
Some folks are more comfortable with a set amount each year with an inflation adjustment, but we don't see it that way. The world is too dynamic, the financial markets are too dynamic, and the our spending is dynamic as well.
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04-17-2017, 11:55 AM
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#111
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Administrator
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,056
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Quote:
Originally Posted by mpeirce
I suppose I simply can't answer the original question. We don't base our spending on anything to do some arbitrary date (like the day I retired, though even that is a squishy terminal in many cases - DW's "income" faded away, my "income" dropped off a clift, but bounced a few times).
Some folks are more comfortable with a set amount each year with an inflation adjustment, but we don't see it that way. The world is too dynamic, the financial markets are too dynamic, and the our spending is dynamic as well.
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I'm with you on that.
My post that you quoted was simply answering the question that fedup asked when she said she'd never heard of the Trinity Study.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
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04-17-2017, 12:08 PM
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#112
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2006
Posts: 11,401
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Many of you 0% people are going to die stinking rich. Your heirs will have a blast.
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04-17-2017, 12:15 PM
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#113
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Southern Cal
Posts: 4,032
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Quote:
Originally Posted by Alan
I'm with you on that.
My post that you quoted was simply answering the question that fedup asked when she said she'd never heard of the Trinity Study.
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I'm aware of 4% withdrawal rate of your yearly balance, but I wasn't sure why with the Trinity study, withdrawal from the original amount is better way.
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04-17-2017, 12:33 PM
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#114
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
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Quote:
Originally Posted by Fedup
I'm aware of 4% withdrawal rate of your yearly balance, but I wasn't sure why with the Trinity study, withdrawal from the original amount is better way.
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You need to read it. It's the grandfather of safe withdrawal rate studies.
__________________
Numbers is hard
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04-17-2017, 12:47 PM
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#115
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Thinks s/he gets paid by the post
Join Date: Jan 2013
Posts: 3,405
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Quote:
Originally Posted by Meadbh
Many of you 0% people are going to die stinking rich. Your heirs will have a blast.
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Yeah, but we won't be living under a bridge, eating cat food.
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04-17-2017, 12:57 PM
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#116
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Recycles dryer sheets
Join Date: Aug 2013
Posts: 399
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I answered 3.5-3.49%. Plan to withdraw:
Y 1-2 4.0%
Y 3-10 3.5% DH SS @ 62
Y 11- 3.0% My SS @ 67
But we have the ability to be flexible if needed. We have a lot of discretionary expenses we can eliminate if needed. Also, I want to take the slightly higher rate while we are younger and can enjoy spending on travel, etc.
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04-17-2017, 01:14 PM
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#117
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Administrator
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,056
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Quote:
Originally Posted by REWahoo
You need to read it. It's the grandfather of safe withdrawal rate studies.
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+1
Whether or not you believe in it, it is an iconic study in making your money last, a piece of ER history all students should study.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
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04-17-2017, 01:25 PM
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#118
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Thinks s/he gets paid by the post
Join Date: Nov 2009
Location: SF East Bay
Posts: 4,324
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Quote:
Originally Posted by Another Reader
Yeah, but we won't be living under a bridge, eating cat food.
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But if you were, just think of the fantastic meals and trips you could afford, being free of the worry of having to pay for housing
__________________
Contentedly ER, with 3 furry friends (now, sadly, 1).
Planning my escape to the wide open spaces in my campervan (with my remaining kitty, of course!)
On a mission to become the world's second most boring man.
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04-17-2017, 01:31 PM
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#119
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Quote:
Originally Posted by Meadbh
Many of you 0% people are going to die stinking rich. Your heirs will have a blast.
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At least some studies have shown that after a certain level spending more money doesn't necessarily make people any happier.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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04-17-2017, 01:37 PM
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#120
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Southern Cal
Posts: 4,032
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Quote:
Originally Posted by Meadbh
Many of you 0% people are going to die stinking rich. Your heirs will have a blast.
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I'm thinking of upgrading my residence because of this. But the new home is nearly 6000 sqft. Except I want more land, not bigger house. But around here more land means bigger house. I worry my husband and I will get lost in this big home. But still contemplating.
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