audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
For me, dividends & interest, SS and capitol gains.
Dividends, interest, and capital gains harvested all count as money withdrawn from a portfolio.
For me, dividends & interest, SS and capitol gains.
I'm not withdrawing anything from the bag, just living off cash in the bank paying milli-percent. The dividends are all being re-invested. When I've done the net worth calculation it doesn't change.
Therefor I find that I've lived the last 2 years with zero impact on my net worth. The way the market is going this year me thinks I'll find I made dough.
Maybe I'm wrong in thinking the way I do, but to me at least if my net worth does not change then I haven't spent anything "down".
If dividends and interest are part of the portfolio (not disagreeing), what is rental income?
This is why to me it is difficult to accept the total return approach. If I spend only dividends, interest, and rental income, my ownership of these assets remains. Next year, they are still in the portfolio, producing income for me. If I sell shares, cash in CD's or bonds, or sell a rental, the sources of the income are gone.
I think dividends count in the percentage so your rate is 3.95%Just spend divs. Current yield is about 3.95%
I'm afraid you are indeed wrong. Or, more tactfully, you are mixing two different concepts.
Six months in, so I may not be a good representation of others. But, I've been spending down the "float" in our accounts or the amount of cushion in checking/savings, etc., before we get to a month to month situation. Additionally for us DW still works part time, retiree health care is taken care of an I have a small "temporary" pension of about $30,000 for 5 years. I anticipate we'll be drawing about 2% annually out of our true retirement funds beginning next year, but we may make it on a bit less. I think it will change over time. We'll wait until 66+ to draw SS and probably be hit by pretty high RMW at 71. We'll need to do some serious calculations before then to determine the best way to minimize the tax hit on the RMW's.several people noting they are withdrawing very little or 0. Just curious what you are living on.
Is this cash on the side that you don't see as part of your investments?
Is this rental income?
Is this SS or pension? (some noted this)
Is this dividend or interest?
Is this an annuity purchased with your investments/retirement $?
Just curious how 0 is obtained.
That sounds like a good question for your financial advisor. Make him earn his money!...I hear people talking about a 4% withdrawal rate as being "safe", ie your dough should last ~30 years.
If you are making 4% then there is no question, your dough will last forever.
What am I missing?
several people noting they are withdrawing very little or 0. Just curious what you are living on.
Is this cash on the side that you don't see as part of your investments?
Is this rental income?
Is this SS or pension? (some noted this)
Is this dividend or interest?
Is this an annuity purchased with your investments/retirement $?
Just curious how 0 is obtained.
I'm not withdrawing anything from the bag, just living off cash in the bank paying milli-percent. The dividends are all being re-invested. When I've done the net worth calculation it doesn't change.
Therefor I find that I've lived the last 2 years with zero impact on my net worth. The way the market is going this year me thinks I'll find I made dough.
IE, the cash in the bank is getting smaller but the investments are getting bigger with a net zero.
I count everything as "net worth"
If I spend a hundred grand a year and my net worth never changes what is my "withdrawal rate"?
In terms of the term withdraw rate, investments are assumed to be reinvested in some investment unless they are withdrawn. Rental income I would take the same way. Withdrawing does not mean you have to sell something. You may just not reinvest it. Things like SS are income streams that are hard to put a value on as you can't sell them. Retirement calculators treat these as income streams with no intrinsic value... thus not used in the withdraw rate calculation. These reduce the WR that your portfolio needs to generate for a given amount of spending.If dividends and interest are part of the portfolio (not disagreeing), what is rental income?
This is why to me it is difficult to accept the total return approach. If I spend only dividends, interest, and rental income, my ownership of these assets remains. Next year, they are still in the portfolio, producing income for me. If I sell shares, cash in CD's or bonds, or sell a rental, the sources of the income are gone.
One part you are missing it that the 4% rule usually assumes that your withdraw increases by inflation each year. Thus if you just make 4%, but are taking x1=4% *PV the first year, and x2 =(x1+inflation1*PV) the second year, and x3 =(x2+inflation2 *PV).. and so on. Your portfolio will eventually become zero. But this is really an overly simplified concept.This must be a "semantic" thing. I hear people talking about a 4% withdrawal rate as being "safe", ie your dough should last ~30 years.
If you are making 4% then there is no question, your dough will last forever.
What am I missing?
OK, I get it, but that number really doesn't mean anything.
If I make 4% and have more dough the next year than I had before I still had a withdrawal rate of 2% even though I now have more dough than I started with?
Yup semantics as I thought. The only thing that really matters is how much dough you have and how fast it's going down.
OK, I get it, but that number really doesn't mean anything.
If I make 4% and have more dough the next year than I had before I still had a withdrawal rate of 2% even though I now have more dough than I started with?
Yup semantics as I thought. The only thing that really matters is how much dough you have and how fast it's going down.
Firecalc assumes you go to war with the army you have. If you keep moving the goal post each year you are gambling each year that you will not "start out" with a big down year like '72 and lose the race.
Dividends won't keep up with inflation-or maybe will. Things change.