2022 Withdrawal Rates?

[audreyh1]

I know what my withdrawal rate will be each year because I take the same percentage out every Jan 2/3.

 

[Out-to-Lunch]

The financial company may not allow you to sell and buy the same fund within a month, I think, frequent trading.

You must realize that this is completely unrelated to my point. In the event that the point you raised is operative, you could instead purchase the same ticker at a different brokerage. It still would not be considered a wash sale by the IRS.

 

[Digger1000]

My withdrawal rate last year was 1.25% of my current investable assets. Or 2.2% of what my investable assets were at retirement 6 years ago.

 

[rkser]

I am new to the % withdrawal -

I did not pay attention to the year end totals of my portfolio & would like to go back & calculate my yearly % withdrawals.

Where & how do I find the year end 2021 saving (Portfolio) totals. We have our Schwab & Vanguard accounts in the aggregator Fidelity Full View. I do know our expenses in 2022.

This is a good way to keep me straight & narrow & it is a good idea to transfer (%) next year expenses transferred to a Bank.

We are both retired, depend solely on our portfolio for our living expenses, I am 66, will draw SS at 70. DW is 61. We were in 22% & 24% marginal tax bracket last few years.

The dividends from Taxable accounts go the Bank where the living expenses come from & some Cap Gains income, do Roth Conversions from Tax Deferred.

Yes, lot to learn to keep finances straight.

 

[FREE866]

If it’s based on 2022 beginning balance my WR was 3.3%

Not sure If that’s the right way to calculate the number.

 

[flyingaway]

You must realize that this is completely unrelated to my point. In the event that the point you raised is operative, you could instead purchase the same ticker at a different brokerage. It still would not be considered a wash sale by the IRS.

You are right. That is the so-called capital gain harvesting.

 

[audreyh1]

I did not pay attention to the year end totals of my portfolio & would like to go back & calculate my yearly % withdrawals.

Where & how do I find the year end 2021 saving (Portfolio) totals. We have our Schwab & Vanguard accounts in the aggregator Fidelity Full View. I do know our expenses in 2022.

This is a good way to keep me straight & narrow & it is a good idea to transfer (%) next year expenses transferred to a Bank.

We are both retired, depend solely on our portfolio for our living expenses, I am 66, will draw SS at 70. DW is 61. We were in 22% & 24% marginal tax bracket last few years.

The dividends from Taxable accounts go the Bank where the living expenses come from & some Cap Gains income, do Roth Conversions from Tax Deferred.

Yes, lot to learn to keep finances straight.

You probably have the December monthly statements.

 

[audreyh1]

If it’s based on 2022 beginning balance my WR was 3.3%

Not sure If that’s the right way to calculate the number.

Normally your withdrawal rate would be the funds you withdrew from investments to spend in a given year divided by the start of that same year investment portfolio.

That’s how most of the SWR calculators work - they remove the withdrawn funds at the beginning of each year before then calculating historical performances on the rebalanced remainder to arrive at the end of year value.

 

[NW-Bound]

... One thing I am a little fuzzy on is how to view additional taxes due to Roth conversions? Should I consider that part of my WR or treat it differently?

Like all other taxes, I include such conversion-related taxes as part of my expenses (and thus part of my WR) ...

... I personally figure that taxes on Roth conversions are accelerated future expenses. I wouldn't do conversions if I didn't think they were saving us money on future taxes; therefore, I don't count them as current spending...

I include the taxes on Roth conversions as expenses. Even so, my total WR in 2022 was 1.2% of portfolio on 1/1/2022, even though the withdrawals were spread over the entire year as the need arose.

Perhaps I need to do much more Roth conversions, I am not sure.

I have not done my taxes yet to see where I truly was with respect to the top of MFJ 24% tax bracket and the IRMAA bracket.

 

[FREE866]

man, you folks with 1-2% WRs are so home free...congratulations!....thats such a nice buffer...I feel content at 3-5% now ( its actually been closer to 3% most years) but once I start collecting SS, hoping to push that for 13 years when I turn 70, I should be in that range as well

 

[NW-Bound]

I include the taxes on Roth conversions as expenses. Even so, my total WR in 2022 was 1.2% of portfolio on 1/1/2022, even though the withdrawals were spread over the entire year as the need arose.

Perhaps I need to do much more Roth conversions, I am not sure.

I have not done my taxes yet to see where I truly was with respect to the top of MFJ 24% tax bracket and the IRMAA bracket.

Oops, meant to write "top of MFJ 22% tax bracket". I wish I had that much money to do up to top of 24% bracket, although what's another 2%? Maybe just do more to get it over with may not be a bad thing.

But making mistakes in writing like the above bothers me. I hate signs of senility. It creeps up on you. And some day, you find yourself no longer remembering the last 4 digits of your SSN, like my mother as I asked her recently.

And about having a low WR, anybody can do it, or most anybody. You just need to spend less.

 

[W2R]

Oops, meant to write "top of MFJ 22% tax bracket". I wish I had that much money to do up to top of 24% bracket, although what's another 2%? Maybe just do more to get it over with may not be a bad thing.

But making mistakes in writing like the above bothers me. I hate signs of senility. It creeps up on you. And some day, you find yourself no longer remembering the last 4 digits of your SSN, like my mother as I asked her recently.

I have been worried about my forgetfulness lately, too. But you really cheered me up! Not only can I remember my own SSN, I fully remember my late ex's SSN, a quarter century after I divorced him. I can't remember the names of most movies I saw 50 years ago, though.

And about having a low WR, anybody can do it, or most anybody. You just need to spend less.

Exactly! That's what I try to tell people who say, "you're so lucky" to have saved enough to retire. Spending less is a skill and like most skills, the more we practice it, the better we get at it.

 

[NW-Bound]

I have been worried about my forgetfulness lately, too. But you really cheered me up! Not only can I remember my own SSN, I fully remember my late ex's SSN, a quarter century after I divorced him. I can't remember the names of most movies I saw 50 years ago, though.

Exactly! That's what I try to tell people who say, "you're so lucky" to have saved enough to retire. Spending less is a skill and like most skills, the more we practice it, the better we get at it.

Sorry, but you still have some years to go to reach the age of my mother. I hope you will continue to do well.

My mother-in-law is not doing much better than my mother, but of course I have seen people doing a lot worse with actual Alzheimer. My ladies are just having the benign senility at this point, I think.

Well, at some point, learning to spend more may be a desirable skill too. And of course I mean actually getting some true enjoyment and not just spending to get rid of excess money.

For my upcoming Transatlantic cruise, I got an offer from the cruise line to upgrade from our junior balcony suite to a "real suite", actually their top-of-the-line of 950 sq.ft. and a 100 sq.ft. balcony by submitting a bid. They hinted that the chance of winning the bid would be good if I bid $3000/person, and that's on top of what we already paid for the junior suite.

I passed.

I know it would be very nice (way nicer than any hotel room or suite I ever stayed in), but I don't have a bottomless pocket from which to fish out stacks of Benjamins.

I would have to do a lot more than the above fancy cruise suite to move up my WR, but I cannot see myself doing that. Not yet.

 

[Chuckanut]

I expect our 2023 WR to be about 2%. It will be about 3% if the Ford Maverick that I have on order is ever delivered.

Of topic, but curious.

Is the Maverick being held up by Ford's recent battery issues?

 

[RobertTN]

As a newbie to the forum and I early retired just a few years ago, I would love to understand why (not in a bad way) people have such low withdrawal rates. Mine is also lower because I am afraid of just starting out in retirement at a younger age (and want to make sure my money lasts). Is it the fear of making sure there is always money there? Or is it a lifestyle choice that you just do not need that much and thus that fact translates into a lower withdrawal rate?
Really trying to get my arms around what is a reasonable withdrawal rate beyond the math.

 

[COcheesehead]

As a newbie to the forum and I early retired just a few years ago, I would love to understand why (not in a bad way) people have such low withdrawal rates. Mine is also lower because I am afraid of just starting out in retirement at a younger age (and want to make sure my money lasts). Is it the fear of making sure there is always money there? Or is it a lifestyle choice that you just do not need that much and thus that fact translates into a lower withdrawal rate?
Really trying to get my arms around what is a reasonable withdrawal rate beyond the math.

I don’t set a withdrawal rate. I spend pretty much as we want and back into what rate that equates to. We are in the low 2% range now. If I went to 3% or 4% I not sure what else we’d spend it on. We have a nice house, cars, toys, we travel, we buy good wine, we donate.

 

[audreyh1]

As a newbie to the forum and I early retired just a few years ago, I would love to understand why (not in a bad way) people have such low withdrawal rates. Mine is also lower because I am afraid of just starting out in retirement at a younger age (and want to make sure my money lasts). Is it the fear of making sure there is always money there? Or is it a lifestyle choice that you just do not need that much and thus that fact translates into a lower withdrawal rate?
Really trying to get my arms around what is a reasonable withdrawal rate beyond the math.

Many folks here have eternally frugal disease (which helped them retire early) and their heirs will be very very blessed. /s

Don’t worry about it unless you are routinely exceeding what FIREcalc says is reasonably safe for you. Depending on your age and asset allocation that could be 3.3% to 4%.

Confession: At 3% I’m also under withdrawing given age etc., but I consider some of the nest egg to be a backstop for long term care costs as well as helping family members financially. And honestly we aren’t able to spend all we withdraw now which is why I’m loath to withdraw even more. I review occasionally. We also gift more than we used to. I hope to put a lot of it to good use before passing on.

But I have no interest in going lower. 2%? 1.5%? That seems very low to me.

 

[Digger1000]

I have a low swr, 1.3%, because I am poor and 100% invested in the stock market. And I am living the same way in retirement as I did my previous 51 years, extremely frugally and extremely happily.

 

[FREE866]

I have a low swr, 1.3%, because I am poor and 100% invested in the stock market. And I am living the same way in retirement as I did my previous 51 years, extremely frugally and extremely happily.

this is inspiring! tell us more....I'm 6 years in basically all stock too.....how long have you been retired and fully invested?

 

[Digger1000]

this is inspiring! tell us more....I'm 6 years in basically all stock too.....how long have you been retired and fully invested?

It will be 6 years April 3rd that I've been retired. I've been 100% stocks for the most part since I started investing 32 years ago.

 

[SecondCor521]

As a newbie to the forum and I early retired just a few years ago, I would love to understand why (not in a bad way) people have such low withdrawal rates. Mine is also lower because I am afraid of just starting out in retirement at a younger age (and want to make sure my money lasts). Is it the fear of making sure there is always money there? Or is it a lifestyle choice that you just do not need that much and thus that fact translates into a lower withdrawal rate?

I'm at around 1% net WR.

I hit 4% in 2014. Still enjoyed working, so stayed another two years at a 60% savings rate. That dropped my WR% some more.

Didn't realize I had income that comes from outside the portfolio. That dropped it another 1% or so.

Have been invested in at least 90% stock my entire investing career, and have been above 95% all but about two years. Retired in 2016 and the stock market has gone up since then. That dropped it some more.

Could spend more, but don't because of the eternally frugal thing that audreyh1 mentioned. Also I'm not convinced spending more would make me any happier.

Not fear in my case; more just a habit.

 

[Dtail]

My composite average WR% in 6 years of retirement is 3.59%. Waiting at least to age 66 for SS. Lump sum small pension at 65.

 

[Lstansbury]

3.69 percent including taxes (higher due to a Roth conversion). I spent more than expected. Finished up a partial kitchen remodel.

 

[bbbamI]

Both retired in 2009. At the time dh was 54 and yours truly 51. DH receives a small non cola'd pension. We own our home and have no mortgage. The WR is based on the portfolio balance at the beginning of each year.

All expenses are included...from marshmallows to federal taxes.

2009 Projected WR.....0 (dh worked part of that year, we had to take no reserves)
2010 Projected WR....3%......Actual 2.71%
2011 Projected WR....3%......Actual 3.27%
2012 Projected WR....3%......Actual 2.87%
2013 Projected WR....3.5%...Actual 4.94%
2014 Projected WR....3.5%...Actual 2.68%
2015 Projected WR....3.5%...Actual 3.57%
2016 Projected WR....3%......Actual 2.01% (dh started SS in June)
2017 Projected WR....3%......Actual 1.5%
2018 Projected WR....3%......Actual 4.1%
2019 Projected WR....3%......Actual 1.17%
2020 Projected WR....3%......Actual -.75% (I started SS in January)
2021 Projected WR....3%......Actual -.63%
2022 Projected WR....3%......Actual -.23%

 

[daylatedollarshort]

As a newbie to the forum and I early retired just a few years ago, I would love to understand why (not in a bad way) people have such low withdrawal rates. Mine is also lower because I am afraid of just starting out in retirement at a younger age (and want to make sure my money lasts). Is it the fear of making sure there is always money there? Or is it a lifestyle choice that you just do not need that much and thus that fact translates into a lower withdrawal rate?
Really trying to get my arms around what is a reasonable withdrawal rate beyond the math.

For years, what WR to have was a pretty easy decision for us because if we took out more than above a certain amount, we would go over the ACA cliff and lose $20K or more a year in subsidies. We live in a HCOL are so I had to hone my skills in optimizing every expense to not go over the cliff.

What we found is we weren't any less happy living on that amount, so why not just continue? Other reasons include wanting to gift money to the kids; enjoying not having to worry about running out of money; having a sustainable living, low consumption mindset; and actually getting a kick out of finding bargains and lowering expenses. Trying to live well with low overhead to me is like a fun math and logic problem to solve.