Withdrawal Rate: your personal comfort zone.

[steadystate]

Expected withdrawal rate from our nest eggs is obviously of huge importance in FIRE planning. I am curious, within this forum's population, of everyone's personal comfort level; i.e. the number you use in your calculations.

To be clear, at this rate you are comfortable that you will be able to support your desired monthly spend rate up to the point of being on the wrong side of the dirt.

To normalize things somewhat, assume you are retiring at age 60, and you have good genes and expect to reach at least 90.

 

[braumeister]

It has fluctuated a lot between 3% and 4% since retiring. One year it actually got up to nearly 4.1% but has been well below 4% since. I'm comfortable with that.

 

[MichaelB]

Jeff, I'm sure someone will be along shortly to point out that the break points have two choices - that is, 3.0 has 2 possibilities, 2.5 - 3.0 and 3.0 - 3.5. Would you like to give us some guidance how you would like us to answer (or change the poll options?).

 

[USGrant1962]

Pre-SS I'm comfortable with a little over 4% because adding SS represents about 1% of my portfolio - so my draw is closer to 3% later.

 

[W2R]

I voted 3.0-3.5%, because I think that would probably last a good 35 years (although we never really know what the future might bring).

But in reality, in 7 years of retirement I have spent 1.9-2.6%. What brings a big SMILE to my face is when I am under 2%.

After saving during the accumulation phase, I still enjoy saving even during retirement. It's nice to know that I have a lot of wiggle room in case it's needed for some reason.

 

[pb4uski]

For someone who is 60 and planning on a 30 year time horizon, I would be comfortable with 3.5-4.0%... and preferably towards the lower end of that range.

We retired at 56 and our WR is more than that currently, but once SS starts our WR will plummet to ~2% so I'm plenty comfortable.

 

[RockyMtn]

Would be comfortable with 3.0-3.5%. At this point though I am pulling out less than 1%.

 

[exnavynuke]

With SS thrown in the mix, a fixed income "pension", and expecting to reduce spending as I get close to that 90's, etc, I don't think I could use just one withdrawal rate. By the time I'd be in my 80's, SS and fixed income alone would probably more than cover all my planned spending.

If I ignore all of that, and assume I just had to live on investment withdrawals, then I'd be comfortable at 3.5-4%.

 

[jkern]

3.5% Highest that is acceptable
3.0% Comfortable
2.5% Golden

 

[2017ish]

If we were planning for ~30 years, and if we were going with a constant (inflation adjusted) spend rate, probably 3.0-3.5%?

Planning 45+ years for DW with a variable withdrawal rate though, so won't clutter the poll.

 

[Hyperborea]

Too many variables left unspecified to give a reasonable answer. Just some of those variables: other income - pensions, social security, etc.; the economic climate you are retiring into; do you own your home; single or married; health care options; country you are living in; how flexible you are willing/able to be if a high withdrawal goes bad.

 

[Surewhitey]

3-3.5% until SS...then 1-2% at most. Still a little unclear on cost of health insurance, but we're assuming a large-ish #...

 

[steadystate]

Jeff, I'm sure someone will be along shortly to point out that the break points have two choices - that is, 3.0 has 2 possibilities, 2.5 - 3.0 and 3.0 - 3.5. Would you like to give us some guidance how you would like us to answer (or change the poll options?).

I always manage to screw up these polls, sorry! I can't edit it unfortunately unless someone knows how. If I could I would make it like this:

1.0 - 1.49 percent
1.5 - 1.99 percent
2.0 - 2.49 percent

etc.

If a moderator could edit per the above that would be great.

 

[imoldernu]

We don't use SWR's but just check our solvency once a year and adjust as necessary.

Our formula...
Add Social Security to our spendable assets divided by 12 (current planned life expectancy)

If we spent more than that last year, we cut back, if we spent less we're ok. So far, for the past twenty years, we've been okay.

 

[MichaelB]

I always manage to screw up these polls, sorry! I can't edit it unfortunately unless someone knows how. If I could I would make it like this:

1.0 - 1.49 percent
1.5 - 1.99 percent
2.0 - 2.49 percent

etc.

If a moderator could edit per the above that would be great.

No problem.

 

[MichaelB]

When I stopped working we were above 4.5%, not including college bills. Since the kids moved out it's hovered around 4% (whew!). I chose 3.5% - 3.99%, because that's were my comfort level is.

 

[REWahoo]

What nest egg withdrawal rate are you comfortable with?

Here are the annual withdrawal percentages of our initial nest egg as of the date we retired:

Yr 1 - 4.8%
Yr 2 - 9.8%
Yr 3 - 7.9%
Yr 4 - 6.1%
Yr 5 - 5.4%
Yr 6 - 4.2%
Yr 7 - 3.9%
Yr 8 - 3.5%
Yr 9 - 3.7%
Yr 10 - 4.3%
Yr 11 - 4.2%
Yr 12 - 4.5% (projected)

As to what we are comfortable with, I'd prefer under 4.0 but I'm not willing (nor do I see the need) to cut our spending to achieve that number. Don't want to leave the kids too much - bad for family harmony.

 

[jazz4cash]

Soar on 4. Thrive on 3. Will do with 2.
My planning assumes 4% but I assume I will only need 3 and currently consume 2.
Oh, it's a pole? Couldn't tell on iPhone.

 

[Major Tom]

I'm not quite sure how to vote, as I'm not yet 60, though I do hope to reach 90, or close. I began portfolio withdrawals at the age of 47, with a WR of ~2.4%, based on the portfolio value at that time. Fast forward 6 years and, until yesterday, the dollar amount of my withdrawals was the same, as I have not been adjusting them for inflation. If I do a reset and express it in terms of the current portfolio value, my WR, although the same in dollars, would now have been ~1.9%. Yesterday, I decided to give myself a raise, so expressed in terms of the current portfolio value, my WR is now ~2.2%.

I really don't know where my portfolio value will be in 6.5 years when I turn 60. I also don't know whether I'll take early SS or not at 62. In the interests of "normalizing" my results for a start age of 60, I'm thinking I'll probably be at somewhere between 2 and 2.49% of the portfolio value at that point, so will vote for that option.

If the above seems wordy, I think it represents how few (none?) of us doggedly stick with the same WR through our whole retirement.

 

[MissMolly]

My actual comfort zone is 0%. I "retired" from my career job of 27 years in 2010 (with a pension) but then started consulting. The consulting proved to be far more successful than I ever would have guessed, so I am still adding to the stash. My pension is 100% of base expenses with nothing left over. My husband will start drawing SS next year (April 2018) at age 66. I will start drawing 50% spousal at Dec 2019 (my age 66) and then I will file for my full at end of 2023 when I turn 70 (I am the higher earner). But I am loath to withdraw any amount from savings/investments because I can't help thinking "well what if something happens in 5 years, 10 years, 15 years and I really need that money?" So, I dunno.

 

[Fedup]

I voted 3.5-4%. But I think I spent less than that last year even with 4 months vacation in Europe. But it's not that I'm afraid of spending, but I think enough is enough. I don't want to waste money either.

 

[Dawg52]

In my early years of retirement I was in the 2.5-3.0% range. The year I bought a vacation condo that blew my conservative wd rate. And when I upgraded my primary residence that did as well. Now days after starting SS my rate is closer to 1.5%. I'm too lazy to figure my average rate over the last 10 years.

 

[Nature Lover]

I retired with an expectation that a WR of 3.0-3.5% would be comfortable.

 

[Meadbh]

I voted 3.0 to 3.49%, and that is the range I've been in since ER four+ years ago.

I think four main factors influence the choice:
1. One's understanding of the research on portfolio sustainability (I've read and modelled everything)
2. Whether one has a pension or not (I don't)
3. One's personal risk aversion (I view the risk of inflation as at least equal to market risk)
4. Marital or partnership status (being single, I don't have to provide for others, but I am totally responsible for providing for myself).

 

[Walt34]

A pension and SS covers our expenses and then some so we haven't taken anything out yet, and may not until we run into RMD's The pension drops 30% when I pass on and that's a heavy hit for DW since SS would also stop until she's age 66 + a few months. So the pile of money is there to tide her over until then. When she's 66 we'll probably start withdrawals.

I have absolutely no idea of what we'll spend it on.