The efficacy of 4% implies that everyone of a certain remaining actuarial number of years has a similar (performing) asset allocation. Where do I find the formula for the appropriate asset allocation at a given year on the continuum to maintain 4%?
I thought the 4% was supposed to be based on the total net worth the first year you were retired, then that amount is adjusted up for inflation each year. Are y'all just taking 4% of whatever your net worth is at some point each year?
I thought the 4% was supposed to be based on the total net worth the first year you were retired, then that amount is adjusted up for inflation each year.
So far I'm doing a straight 4% of my portfolio value so if the market drops so does my spending .I never thought of including the value of my house is anybody besides Lazy doing that ?
I hope not.
Ha
Darn ,that would have given me one heck of a 4% allotment not sure what I'd do with all that extra money but I'd like to try !
This website is for people who retire early. Because of that, I would assume that most of the people are younger than 65. In my situation, my wife and I will not collect SS for 5 years or so. As a result, our withdrawal rates (right now) are significantly higher than 4%. However, 5 years from now we will have additional SS income and my wife will start to collect a monthly retirement check from her former company. When this happens, our withdrawal rate will drop to be slightly less than 4%. As a result, I can tolerate a withdrawal rate at 8.5% for the time being.
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I hope everything goes according to plan because if one of you die you are left with a diminished portfolio and half the amount in SS & pension .
I hope not.
and by extension, if i am going to sell my house relatively soon, shouldn't i be able to consider that cash part of my 4% generating stash now?
Moemg, the withdrawal plan albundyz describes is similar to what I suspect many of us who retired a few years before collecting SS are using. The numbers vary by individual circumstance of course (I'm at a 6.5% prior to collecting SS), but FIRECalc tells us we can withdraw more up front since SS and pensions will reduce portfolio withdrawals to much smaller numbers once they kick in.
I suppose you could if you are reasonably sure of the net amount you'll receive. However, if the sale isn't in the near-term, that means the investment in your home isn't liquid. I would think, that in that case, you'd want to exclude the equity value when determining your annual drawdown (4% or otherwise).
I thought the 4% was supposed to be based on the total net worth the first year you were retired, then that amount is adjusted up for inflation each year. Are y'all just taking 4% of whatever your net worth is at some point each year? I know that's one choice, as is the 95% of 4% option. But I guess I was assuming most people used option one, if they were doing a "4%" strategy.
I started at 3.5% of my NW my first year, and I'm adjusting up for inflation at 3% per year. In about 10 years (at age 62) we'll start our SS draw, assuming it's still available. Then when we reach 70.5 I'll repay the total and do the John Greaney SS annuity plan.
In 5 years or so I will readdress our situation, and may increase the draw to 4% if we're doing well. But even if we can't we should be fine with the original plan.
so stop trying to confuse me. it's not as if others haven't already tried.
Just a thought Harley,
If you are worried about SS still being viable why would you repay your withdrawals and up the SS component of your ER? Won't this increase your exposure to SS cut backs should there be any or are you worried about means testing for SS? I think Greaney's plan is viable as long as the SS rules don't change. But you seem worried they will.
Grunt
OK, if you insist. BTW, what's the name of this group of folks who have tried (and failed) to confuse you? Maybe I'm qualified to join
no doubt some self-appointed illuminati. lucky for you, i don't believe they are currently recruiting.
by that then i guess you've already set aside from your 4% generating pile an amount equal to what you plan to use to purchase your downtown seattle condo?