Escape velocity, how do you know?

[skyking1]

Why? Because one's portfolio can be part of one's identity... just like the development of one's muscles, # of pull-ups that one can do, and so on. To witness a diminished stash, is to accept a diminished self. I would rather live a more modest life, skipping on luxuries (or even necessities), but advancing the vitality of the portfolio. Careers come and careers go. But what remains, what endures, is the money that we saved and invested. Why voluntarily diminish that?

you have a flawed sense of self, you keep posting that over and over. You are far more than your money or portfolio or any other metric of $$.

 

[TheWizard]

Why? Because one's portfolio can be part of one's identity... just like the development of one's muscles, # of pull-ups that one can do, and so on. To witness a diminished stash, is to accept a diminished self. I would rather live a more modest life, skipping on luxuries (or even necessities), but advancing the vitality of the portfolio. Careers come and careers go. But what remains, what endures, is the money that we saved and invested. Why voluntarily diminish that?

Yes, an investment portfolio that doubles in value every ten years or so is a great thing to have.
We should all aspire to greater wealth!

 

[tutan]

Answers can be squishy because everyone’s definition is different.

For me, it’s no longer caring about the numbers. I stopped tracking my NW last year and no longer care about market returns. I still track expenses but only through force of habit. I don’t track my WR anymore. I know I will never outlive my assets so I just don’t bother with all the financial projections and modeling that I used to obsess about when I first FIREd.

Yes, you are there! If only I can be so sure too. Hmm..

 

[sdtech]

When we retired we kept our spending within our pension and used our investments for one time expenses like cars, home upgrades…. After 8 years and doubling our savings we are spending more on fun and travel.

 

[twirler]

I'm trying to ask a question that I suspect will only have "squishy" answers as opposed to firm metrics. I'm interested in everyone's thoughts on the matter, but I'm especially interested in the answers from people who feel like they have lived this situation. Let me jump into it.

I'm defining "escape velocity" as, your stash is overall still growing even after funding all of your expenses. In my particular situation, over the last ~4 years, my withdrawal rate has been in the range of 5-12%*. But, my investible assets are up about 135% over that time. If I look at my monthly figures averaged over that 4 year period, my investible assets grow each month by an amount that is approximately equal to what I spend in a month.

It is true that equity returns over this period have been unusually high, and it is true that I had an extremely aggressive AA during this time, so in no way do I think this is a sure thing over all the rest of my life.

For those of you who have been retired for a while and have a growing stash, do you feel like there were/are signs that you've reached escape velocity, and what are those signs?

*The 5-12% WR was a conscious choice to BTD a little. No need to warn me that that rate is too high to sustain over the entire retirement.

Your soft question will get a soft answer.

It's about adaptability. When your WR is as high as yours I am assuming you have plenty stashed. The real question is during downtimes will you be satisfied and able to live? Everyone is a genius in a bull market. Good offense wins games good defense wins the championship.

 

[Montecfo]

Answers can be squishy because everyone’s definition is different.

For me, it’s no longer caring about the numbers. I stopped tracking my NW last year and no longer care about market returns. I still track expenses but only through force of habit. I don’t track my WR anymore. I know I will never outlive my assets so I just don’t bother with all the financial projections and modeling that I used to obsess about when I first FIREd.

Yes, I see this coming also. I did a lot of modeling and projecting during accumulation. Now with the portfolio up so much since FIRE and as we start to project future SS (which I always assumed would be zero), there certainly is a lot less relevance.

Which is a good thing: I am not sure how many folks closely track expenses and portfolio deep into retirement. Unless, I guess your plan cuts things close and there is no option.

 

[BizzyC]

Why do you care if it continues to grow? Unless you have a burning need to leave a bunch to charities or heirs, that money is nothing more than bragging rights. I intend to spend the stuff, myself. What is left over after our time goes to selected charities, but we won't be around to bask in the glory of that contribution.

For me personally, it has nothing to do with bragging rights, and everything to do with feeling financially secure. I'm single, both parents passed, no children. I have one brother and one sister of extremely modest means who would not be able to help me, and who may need a bit of help from me later on. If I mess up, there is no cavalry coming.

But, as you can probably surmise, there is a tension between watching the stash (and my sense of financial security) grow vs. spending and enjoying the money.

 

[BizzyC]

Exactly. You may be feeling optimistic now because of a cyclical growth upturn is happening but are you prepared for a bear market, 20% or more downturn in your equity assets? Those equity returns can turn negative on a dime, usually when you least expect it. As long as your OK with 50% shrinkage then you should have no problems.

This is the big deal, of course. I can say that for the entire time of accumulation mode for me, I give myself an A+ for staying the course and never, not one time, pulling money out of equities because of a swoon in the market. I'm in all low cost index funds (other than my old Megacorp stock), so that makes it easier to ride the bucking bronc. Now in retirement, building up that fixed income ladder to be able to do the same in the future. Still somewhat in progress on this, I have about a 2 year ladder (rungs maturing every quarter), but am missing a couple of rungs. I've got some PMs to smooth over the rough spots if necessary.

 

[BizzyC]

Answers can be squishy because everyone’s definition is different.

For me, it’s no longer caring about the numbers. I stopped tracking my NW last year and no longer care about market returns. I still track expenses but only through force of habit. I don’t track my WR anymore. I know I will never outlive my assets so I just don’t bother with all the financial projections and modeling that I used to obsess about when I first FIREd.

Excellent point. I think this would definitely qualify as a sign.

My first 2-3 years, I was tracking to the penny everything I spent. Literally a bottoms up tally kept in an excel file. Eventually, I went to a top down method of taking a snapshot of value of my checking account at the start of the year, plus any deposits made and minus the value at the end of the year to capture what I'd spent in a year.

I do still track NW, investible assets (for me just NW minus house equity), and WR. The WR still gives me pause, but the NW and investible assets have both increased quite a bit.

 

[skyking1]

For me personally, it has nothing to do with bragging rights, and everything to do with feeling financially secure. I'm single, both parents passed, no children. I have one brother and one sister of extremely modest means who would not be able to help me, and who may need a bit of help from me later on. If I mess up, there is no cavalry coming.

But, as you can probably surmise, there is a tension between watching the stash (and my sense of financial security) grow vs. spending and enjoying the money.

Where does Social Security fit in to the schedule?

 

[brett]

I was ready to go at 55 from a financial perspective but not ready from a personal perspective. We had a handle on our after tax spend, our planned spend in retirement, and our investment ROI. We purposley tended toward the very conservative analysis.

What changed from 55-58? Stock options became cystalized. Job satisfaction declined. Too much travel. Decrease in senior management positions on the 6-12 month horizon. The personal urge to downsize and travel increased each year.

My goal was set on a package to the point where I had the names of two highly recommended employment lawyers. I only had to wait 8 months. Spent that 8 months making a rough plan for retirement. I was thrilled when it happend. Termination settlement took 2 months start to finish.

Never looked back, never regretted it for a moment. No hard feelings toward my employer. It was just business I had 25 happy/successful years, well paid, well treated, gold standard benefits topped off with a nice negotiated separtion package. Time to call it a day as it were.

 

[Diogenes]

For me personally, it has nothing to do with bragging rights, and everything to do with feeling financially secure. I'm single, both parents passed, no children. I have one brother and one sister of extremely modest means who would not be able to help me, and who may need a bit of help from me later on. If I mess up, there is no cavalry coming.

But, as you can probably surmise, there is a tension between watching the stash (and my sense of financial security) grow vs. spending and enjoying the money.

The two are related. Of course it's boorish to brag to others, but there's a persistent element of bragging to one's own self. As others have ever so helpfully noted in this thread, our identity and worth as humans, is greater than our pecuniary worth. But... a large amount of dollars, is not only smile-inducing; it also builds confidence, a keener sense of having accomplished something in life, a belief that the decades of work weren't just clock-punching or pithy water-cooler banter or very elegant TPS report cover-sheets. At a minimum, a bigger stash means successfully spinning the hamster-cage of "late stage capitalism". It means succeeding in the system, rather than having succumbed to it. The [private] bragging, and the sense of security, closely overlap.

 

[BizzyC]

Where does Social Security fit in to the schedule?

I'm theoretically planning to claim it between 67-70 yrs. old. There is no SS included/accounted for in the 5-12% WR figure, that comes strictly from the last 4 years' numbers.

In FIRECALC runs, I run a bunch of different scenarios, but if I'm including SS, I only include 70% of it at max.

 

[skyking1]

I'm theoretically planning to claim it between 67-70 yrs. old. There is no SS included/accounted for in the 5-12% WR figure, that comes strictly from the last 4 years' numbers.

In FIRECALC runs, I run a bunch of different scenarios, but if I'm including SS, I only include 70% of it at max.

why do you do that? You know you will take SS. Plan for it and then you might be able to relax a bit.

 

[Lewis Clark]

But, as you can probably surmise, there is a tension between watching the stash (and my sense of financial security) grow vs. spending and enjoying the momoney.

You are not the only person feeling this way. I'd be fine if my portfolio stays constant, but would not be happy with a significant drop. If the stash is growing it cannot be simultaneously shrinking.

 

[Andre1969]

I think the idea of switching to spend mode, after spending most of your previous life in accumulation mode, can be a hard transition to make. But, once you finally do it, and get accustomed to it, it probably feels normal.

 

[pacergal]

I am SIRE, have pension and ss, which is what I have based our "budget" on. I rely on our investments for the one -offs, extra emergency expenses, etc.
I re run FIRECALC yearly to see how much "extra" is available every year via their spending scenarios.
So far, our investments continue to grow slowly, despite withdrawals.
We don't have as much saved as many here do, but have enough to get us through and hopefully pass some on to our kids.

OP- yes you do have high withdrawal rate now. As long as you have the money to allow that, it is not a problem. Make sure you and your investments could handle a large downturn, and you could adjust spending if needed.
Enjoy your time here on Earth. It goes much faster than you think.